PETALING JAYA: Sime Darby Property Bhd
(SimeProp) is maintaining its RM4bil sales target for 2026 despite mounting construction cost pressures and cautious homebuyer sentiment, while remaining open to a possible review after its mid-year assessment.
Group managing director and chief executive officer Datuk Seri Azmir Merican said the group is balancing pricing adjustments, design rationalisation and cost management measures to preserve margins while keeping its products affordable and attractive to buyers.
“The sales target is a result of projects that we have launched and will be launching.
“Hence, for the projects that we have launched, we are unable to pass the costs.
“For the projects that we are launching, we are doing a couple of things.
“One is to look at the price and rationalise the design so that we are able to retain healthy margins and, at the same time, continue to launch the product at a sensible and attractive price.
“This is the balancing that we are currently doing.
“With that, we still hope to hit our RM4bil sales target.
“Nonetheless, I want to be pragmatic and be quite transparent.
“We are going into our mid-year review cycle where we will be sitting down with the senior team and getting feedback.
“Typically, if we are going to revise, we will do the revision when we do our second quarter of financial year 2026 (2Q26) numbers,” he said during the company’s 1Q26 results briefing yesterday.
In terms of pricing pressure, Azmir said the group is contending with the impact from higher diesel prices and rising material costs which have prompted contractors to seek additional compensation despite fixed-fee contracts.
“As a result of the ongoing volatility, diesel prices, for example, were as high as RM7.50 per litre a month and a half ago.
“We started out last year with diesel prices at RM2.50 before it moved up to RM2.90 and then to RM7.50. Now, it is at RM5 per litre.
“Diesel is used heavily in construction. Everything that we bring to site has to be transported.
“Earthworks also use a lot of diesel. So, it is a big factor in terms of cost.
“Also, a lot of material prices have increased. As such, we have to be reasonable.
“Although we have locked in contracts that were awarded, the majority of contractors have written to us to say they have incurred additional costs.
“We are in the middle of negotiations.
“Our contracts are fixed fee, but being practical, we have to also be responsible as developers,” he said.
On homebuyer sentiment, Azmir said buyers are becoming more cautious amid broader global uncertainties, although stable interest rates remain supportive for the property market.
He added speculative spending is expected to be less as a result, but there is also a segment of people that will need to transact because they are looking for a home, and this is a sizeable segment.
“This is a segment that we need to focus on compared with the first segment.
“We believe that we have a strong product,” Azmir said.
For 1Q26, the property group’s net profit surged by 34% year-on-year (y-o-y) to RM158.78mil or earnings per share of 2.33 sen.
The improvement was mainly attributable to the fair value gain of RM65.1mil recognised upon the completion of a built-to-lease data centre, stronger contributions from the investment and asset management segment, coupled with a lower share of losses from joint ventures.
Other gains in the current quarter included a RM12.4mil gain from the disposal of an asset held for sale.
This was despite the lower revenue recorded for 1Q26, which fell by 8% y-o-y to RM799.18mil, mainly due to lower contributions from the property development and leisure segments.
Commenting on the group’s performance in 1Q26, Azmir said: “It is a slower start in terms of revenue because of some delay in launches and progress from one or two of our business units.
“But we made this up because of a strong and healthy performance from our very diversified asset portfolio, which translated to a 34% y-o-y increase in profit after tax and minority interests.”
SimeProp achieved total sales of RM918.9mil in 1Q26, representing 23% of the full-year sales target of RM4bil.
As at May 17, 2026, total bookings stood at RM1.1bil.
The group’s unbilled sales as at March 31, 2026 stood at RM4.1bil, providing clear earnings and cash flow visibility beyond the next three years.
In 1Q26, SimeProp launched projects with a combined gross development value of RM563.4mil.
Industrial products remained the largest sales contributor at 53%, followed by residential landed properties at 24%, residential high-rises at 17% and commercial at 6%.
Moreover, the majority of sales remained largely within the Klang Valley, with an increase in contribution to 92%.
Azmir further said the group is closely monitoring market demand and intends to maintain a balanced product mix, going forward.
