Six companies line up RM6bil worth of projects nationwide
SIX developers will launch more than RM6.29bil worth of properties in the country this year amid a backdrop of property glut and rising bank interest rates.
Ideal Property Sdn Bhd will launch properties with a total gross development value (GDV) of with RM550mil, IJM Land Bhd RM987mil, Mah Sing Group Bhd RM2.2bil, Aspen (Group) Holdings Ltd RM959mil and Eastern & Oriental Bhd RM1.6bil.
Eco World Development Group Bhd has yet to finalise the GDV for its new projects in the country, while SP Setia Bhd is still deciding on a new launch.
They are optimistic enough to offer fresh housing schemes this year citing the growth in gross domestic product (GDP), strengthening ringgit, rising oil prices, and the growing number of young people who have yet to own a property.
The majority of the properties planned are priced below RM1mil. Mah Sing is focussing more on units which are in the price range of between RM328,000 and RM550,000.
Executive chairman Tan Sri Leong Hoy Kum says the group will focus on developing affordable products for the mass market.
“Mid-range products will spur growth in the immediate term. About 74% of the targeted sales are priced below RM500,000,” he adds. Up to 70% of their buyers are below the age of 40. It will leverage on the digital marketing to reach out to the younger target audience, he says.
Leong says the market was supported by Malaysia’s young demographic and growing population.
Its projects include M Centura in Sentul, Southville City in KL south, Questa Serviced Residence, Cerrado Residential Suites (Tower C and D), M Vertica in Cheras, and M Aruna in Rawang. Its launches are predominantly in the Klang Valley, Johor and Penang.
“Malaysia recorded a GDP of 5.9% in 2017, way above the projected 5.2% - 5.7% for 2017. Growth for 2018 is expected to be robust although at a slower pace. Ringgit has stabilised towards the end of 2017,” he says.
Citing HSBC Housing Survey 2017, Leong says 94% of Malaysian millennials have yet to own a property and plan to do so in the next five years, which effectively means there will be “long-term demand”.
On venturing overseas, he said: “We will evaluate overseas projects only if they offer equally good or better returns.”
In Penang there is growing demand for serviced apartments although there is quite a large segment of that in the Klang Valley currently.
Ideal Property plans to launch the RM550mil Sunsuri Residences, a serviced apartment project in Bayan Lepas this year.
Executive chairman Tan Sri Alex Ooi, dubbed the Condo King of Penang, says the Sunsuri Residences will provide good rental yield of about 6% per annum.
“Investors can rent out their units at about RM280 per night.
“Based on the daily rental and selling price of the units at around RM439,000, the yield per annum is about 6%,” he said.
The Sunsuri Residences with built-up areas of 600 sq ft and 800 sq ft are priced between RM439,000 and RM654,000.
According to Ooi, the younger generation will look to generating rental income with their properties.
“We have done the research and it shows that they don’t want to wait passively for the properties to appreciate in value.
“There is interest among young entrepreneurs to invest in serviced apartments to generate a monthly income.
“Although there are many hotels and AirBnB units on the island, some of them are not properly run and lack professional management.
“We plan to bring in a reputable management company to run the Sunsuri Residences,” he added.
EcoWorld is planning five projects for Penang, Iskandar Malaysia, and Kuala Lumpur. In Batu Kawan, Penang, the group plans to launch Brydon, the second of collection of Eco Horizon, comprising terraced, semi-detached, super-link, and linked-semi-detached houses.
EcoWorld (north) general manager Chan Soo How says the first collection for Eco Meadows, Ashton, did very well, having sold 70% since the launch last September.
The Ashton landed units are sold from RM840,000 onwards.
“This is why we are launching Brydon, the second collection this year, comprising bungalows and semi-detached houses,” he added.
According to Chan, 2018 will be tough for the property market but with the right location, connectivity, product type and concept, demand can be strong.
“Malaysia’s strong fundamentals bode well for the outlook going forward.
“For example, Malaysia’s population is young with an average age of 30 to 31 years old.
“Unemployment remains low at just over 3%. GDP is projected to grow further. The GDP was 6.2% in the third quarter of 2017,” Chan says.
The company has set a sales target of RM3.5bil in the country, with contributions from all 18 ongoing projects across Penang, the Klang Valley and Iskandar Malaysia.
Penang’s contribution is expected to remain at 10%, about the same as last year. The company handed over just under 5,000 units of residential homes and commercial properties last year. It will focused on handing over about 5,000 units this year.
“We will concentrate on higher conversion of unbilled sales into revenue,” Chan says.
As at October 2017, EcoWorld’s unbilled sales was at RM6.4bil against the company’s total GDV of RM74bil.
Like other developers, Eastern & Oriental Bhd’s RM1.6bil worth of properties are in Penang, Johor Baru and Kuala Lumpur.
They include the final phases of The Ariza Seafront Terraces (RM28mil GDV) and 18 East Andaman (RM632mil) in Seri Tanjung Pinang, Penang, the Avira Garden Terraces (RM80mil) in Medini Central, Johor Baru, and RM880mil worth of serviced apartments in Kuala Lumpur.
E&O senior general manager (marketing and sales) Wayne Wong says this year’s outlook is positive but muted, given the continued tight mortgage financing environment coupled with other global headwinds.
“Penang is expected to remain our key revenue driver, especially with the realisation of the Seri Tanjung Pinang (STP) 2 project. Sales in Penang have been promising despite the soft market conditions,” he says.
Penang projects have consistently contributed about 80% of its revenue in recent years.
Wong says the company will leverage on pockets of stronger sentiment across the region, which will involve enhancing their value proposition by devising appealing product packages and working with the banks to structure attractive financing packages.
“On the whole, properties in strategic locations are expected to be in a better position to weather the challenging times. Moving forward, we will be stepping up our marketing strategies by structuring appealing packages with tailored financing that may include best price packages, zero cost packages as well as deferred payment schemes.
“Our properties have been appealing to foreign buyers for their distinctive concept, craftsmanship, location in tandem with the recent recovery of the ringgit which has further injected greater confidence from investors to the market,” he adds.
Aspen (Group) Holdings Ltd president and chief executive officer Datuk M Murly says the group expecs the property market to improve. It will launch the HH Park Residence at Tanjung Bungah with a GDV of RM613mil and Viluxe Designer Bungalows worth RM346mil in GDV. There are plans to set up a new customer experience centre in Tanjung Bungah to showcase HH Park Residence.
Murly says the group’s focus is on established locations where the brand positioning of the developer and the project play an important role in launches.
“As purchasers have more choices, they will prefer to buy from reputable brands. A good location, fitted and furnished units are always our strategies.
“We have managed to attract catalyst investments in Aspen Vision City which will help to boost the commercial viability and ecosystem of the entire development,” says Murly.
He says Aspen has started construction for Beacon Executive Suite and the take-up rate is positive.
At IJM Land, senior general manager (north) Datuk Toh Chin Leong says the group anticipates a pick-up in the second half of 2018.
IJM Land Bhd plans to launch the RM156mil Sanctuary Ridge landed properties in Bukit Mertajam, the RM318mil 3 Residence at Karpal Singh Drive, and the RM513mil Mezzo for The Light Waterfront second phase next to the Penang Bridge soon.
SP Setia Bhd (north) general manager Ng Han Seong says the plan is to have a launch this year.
“We are still studying the options,” Ng says.
According to Deputy Finance Minister Datuk Lee Chee Leong, the number of completed residential units that have remained unsold increased by 40% to 20,807 units in the first half of 2017, compared with the same period of 2016.
Lee says condominiums and apartments costing over RM500,000 dominate total unsold units worth RM12.26bil in Malaysia.
Following Bank Negara’s decision to raise the overnight policy rate (OPR) by 25 basis points, banks in the country have raised their lending rates to 3.25% from 3% previously.
For example, Malayan Banking Bhd (Maybank) revised its base rate from 3% per annum to 3.25%, and its base lending rate to 6.9% per annum from 6.65% per annum, effective Jan 29.
Current housing interest rates hover around 4.65% compared with 4.25% previously.