PETALING JAYA: Property developers can expect better earnings in the second half of the year, thanks to the normalisation of construction jobs, policy easing measures and a low interest rate environment.
Maybank Investment Bank Research (Maybank IB), in a report yesterday, said further policy easing measures, such as a new developer interest bearing scheme (DIBS) could be announced in Budget 2021 in November.
“Under DIBS, developers will be allowed to pay the interest on a property buyer’s home loan during the entire construction period. This would help to lift buying sentiment and encourage demand by making the upfront cost lower or more affordable.
“From our channel checks, we understand that the new DIBS has been discussed with various government and central bank representatives. We were told that selling prices would be more transparent under the new DIBS.”
Maybank IB, although positive on the policy to lift buying sentiment, cautioned that a much weaker economy due to rising job cuts and business closures, as well as more auctioned properties, may stifle the effects of the stimulus.
“The end of the six-month loan moratorium at the end of this month could lead to more business closures and a number of auctioned properties. Higher non-performing loans could prompt banks to be more selective and careful in approving loans, hence, affecting the demand for properties.
An analyst with a local bank-backed brokerage said the Home Ownership Campaign (HOC) will help to spur property sales for the remainder of the year. “The HOC has helped to spur sales, making properties more affordable and attractive to buyers. We expect this trend to continue for the rest of 2020.”
The government reintroduced the HOC in June under the Short-Term Economic Recovery Plan (Penjana). Under the campaign, stamp duty is exempted on the transfer of property and loan agreement for the purchase of homes priced between RM300,000 and RM2.5mil.
Meanwhile, the exemption on the instrument of transfer is limited to the first RM1mil of the home price, while full stamp duty exemption is given on loan agreements for sale and purchase agreements signed between June 1 and May 31,2021. In addition, the government has announced a real property gains tax exemption for Malaysians for the disposal of up to three properties between June 1,2020 and Dec 31,2021.
Maybank IB has maintained a neutral view on the sector and thinks property stocks will remain newsflow-driven.
“Our ‘buys’ are Sunway Bhd, SP Setia Bhd and Tambun Indah Land Bhd. We like Sunway for its diversified earnings base while SP Setia’s 2021 and 2022 earnings growth would be strong.”