Lagenda expects affordable housing demand to remain steady

Lagenda Properties Bhd managing director Datuk Doh Jee Ming.

KUALA LUMPUR: Lagenda Properties Bhd remains optimistic that there will be steady demand for affordable housing in the country, despite concerns of a softening economy, elevated inflation and higher interest rates.

Managing director Datuk Doh Jee Ming said there is still healthy demand for affordable housing tailored towards the B40 segment’s financing repayment capability.

“The Covid-19 pandemic increased the need for affordable housing and highlighted the disparities in housing access and its impact on the health and well-being of vulnerable populations.

“With demand for affordable housing outstripping supply and favourable policies (such as the full stamp-duty exemption for purchase of homes priced RM500,000 and below for first-time home buyers), the runway is still long for Lagenda,” he told StarBiz.

In February, Lagenda announced that its 70%-owned indirect subsidiary, Lagenda Mersing Sdn Bhd, has purchased a piece of land worth RM398.2mil in Kulai, Johor.

The company acquired the 1,075-acre land from Seriemas Development Sdn Bhd, a wholly-owned subsidiary of Permodalan Nasional Bhd.

Lagenda intends to use the newly acquired asset to develop a large-scale affordable township that encompasses 12,000 residential units and a mix of commercial development.

Doh said the strategic acquisition will enable Lagenda to tap into a sizeable property market.

“Our studies have shown that there is a severe housing supply and demand mismatch in Johor, particularly in the affordable landed residential segment.”

Doh explained that affordable homes are currently high in demand but undersupplied.

He added that the affordable housing market is a niche segment that Lagenda presently occupies and has a strong market presence in.

“Lagenda plans to develop a large-scale affordable and self-sustaining township on the subject land upon completion of this acquisition.

“This affordable township will span circa 12,000 residential units accompanied by commercial portions with an estimated gross development value of RM4bil, subject to final planning and approval at a later stage,” he said.

For its financial year ended Dec 31, 2022 (FY22), Lagenda reported a net profit of RM177.77mil, compared with RM200.49mil in the previous corresponding period.

Revenue in FY22 rose to RM868.08mil, compared with RM835.55mil previously.

Basic earnings per share stood at 21.25 sen, compared with 24.99 sen a year earlier.

Going into FY23, Doh said demand for affordable housing has been relatively inelastic and at the right price point.

He said this trend is expected to be prevalent in the first quarter and beyond.

“From a sales perspective, from January to March, we have seen the momentum increasing steadily. We anticipate this momentum to continue as the year progresses as we roll out our launches.

“For 2023, we expect to launch more than 7,000 new units across three states, including our first launch in Johor. We are optimistic as Lagenda is still very much a young and growing company with a scalable business model,” he said.

Doh said Lagenda sees opportunities of increasing its presence in more states, as the large majority of Malaysians continue to prioritise affordable living spaces with quality lifestyle facilities.

“This was demonstrated in our first project in Kedah (Lagenda Darulaman) where 1,400 units were taken up within two months of launch.

“We are on a journey to be the preferred nationwide affordable housing developer, redefining affordable living and creating sustainable communities.

“Some of the parameters that we evaluate as part of our expansion strategy is location, internal rate of return and economic benefits versus capital outlay.”

On the outlook of the property market for 2023, Doh said key considerations from a macro-economic perspective such as the rising cost of living and increase in interest rates are the general dampeners on consumer sentiment and will have a direct impact on residential property sales.

“Having said that, accommodative policies, continuous government support, execution of measures outlined in the revised Budget 2023, as well as strategies and initiatives under the 12th Malaysia Plan would support the property sector.

“That said, as far as Lagenda is concerned, we remain robust and confident in our ability to deliver continued growth.”

Doh said the group’s niche focus on affordable landed housing allows the company to remain somewhat insulated during challenging times, as the demand for more affordable housing rises.

“We see an opportunity in increasing our presence in more areas as the large majority of Malaysians continue to prioritise affordable living spaces with top-notch facilities.

“Challenging times present an opportunity for us to capture a larger market segment and we are ready to face this head on,” he said. — By EUGENE MAHALINGAM

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