RHB Research maintains Neutral on Malaysian property

  • Property
  • Tuesday, 18 Feb 2014

KUALA LUMPUR: RHB Research is maintaining its Neutral recommendation on the Malaysian property sector on news the government is mulling to impose a new policy to curb property bulk buying and stop the Property Investors Club (PIC) concept.

It said on Tuesday if implemented, those developers with more high-rise projects as well as those in the Iskandar Malaysia area could be affected.

“Some downside in property stocks is possible, given the news, but will be minimal as sector valuations are already cheap,” it said.

RHB Research said the news could hit sentiment but the impact would be minimal as sector valuations have largely factored in the negative impact of all the cooling measures.

News reports stated the government was in talks with industry players to bar individuals from buying properties in bulk.

The reports, quoting Urban Well-Being, Housing and Local Government Minister Datuk Abdul Rahman Dahlan, stated some individuals were using the Property Investors Club (PIC) concept as a platform to bulk buy properties at discounted prices for sale in the secondary market at huge profits within one to two years.

“If implemented, bulk buyers will no longer be able to buy properties under the PIC. They will have to use an individual's identity card to buy and sign the sales and purchase agreement.

“This will become more complicated, especially in profit sharing, when different club members have different preference for units. While the new policy can further ensure the market's health, enforcement may not be easy,” it pointed out.

RHB Research said such a move would slow property sales even further in a market that was under pressure from the 30% real property gains tax (RPGT).

“We understand that many developers have bulk buyers under the PIC concept, but in general, we can expect developers such as UEM Sunrise (Neutral, FV: RM2.73), Mah Sing (Neutral, FV: RM2.44), UOA Development (Neutral, FV: RM2.45) and, to a limited extent, SP Setia (Neutral, FV: RM3.54), Sunway (BUY, FV: RM3.33) and IJM Land (BUY, FV: RM3.70) - with more high-rise projects in their product portfolio - to be more vulnerable. 

"The Iskandar Malaysia region too will see an impact as the area typically has more club buyers and speculative buying,” it said. 

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