Property developers are gearing up to push out more units this year
By Joseph Wong email@example.com
After last year’s slight improvement in the property market, developers appear to be keener in launching more units in 2020. Observers who are keeping tabs with the more prominent property developers are noticing that while many remain cautious, more units are being launched this year.
For example, township developer LBS Bina Group Bhd (LBS), in announcing its 2020 sales target of RM1.6bil, is planning to launch 5,496 units of homes this year.
Eleven new launches, which has an estimated gross development value (GDV) of RM2.32bil, will be built in seven locations. The projects which will be concentrated in the central region are predominantly new phases of on-going developments including KITA @ Cybersouth township, LBS Alam Perdana township and Midhills 2.
The other projects to be unveiled in 2020 included single-storey link houses in Bandar Putera Indah in Batu Pahat; semi-detached units and double-storey terrace houses in Cameron Golden Hills in Cameron Highlands; and affordable single-storey houses in Chemor, Perak.
A total of 53% of the total launches will be priced below RM500,000, said LBS group managing director Tan Sri Lim Hock San when announcing the launches last month.
He said the new launches would support the increased sales target, which he believed is achievable as LBS exceed their 2019 sales target of RM1.5bil, hitting RM 1.63bil compared to RM1.53bil in 2018. This is in spite of the challenging market conditions caused by softening consumer sentiments and global trade tensions, Lim said.
“LBS has continued to focus on quality townships and affordable developments in strategic locations, a segment that remains relatively strong in subdued market sentiment. This focused approach has proven effective, as reflected in LBS’ financial performance.
“LBS is sustaining well amidst a challenging economic and property market environment. We managed to secure a CAGR (compound annual growth rate) of 20.37% for the past five successive years as a result of our ‘people-focused’ approach and wider adoption of Industrialised Building System (IBS) and design optimisation,” Lim explained.
Similarly, another prominent developer, Sunway Property, is also launching more properties this year albeit a chunk of the launches are in Singapore.
But Sunway Property’s Singapore launches are crucial components in the developer’s goal of achieving its RM2bil sales target for 2020 while other overseas ventures will drive the developer forward.
Buoyed by its success in surpassing 2019’s sales targets of RM1.3bil to reach RM1.55bil in sales, Sunway Property is launching close to RM3.5bil worth of properties in gross development value (GDV).
In announcing this, Sunway Bhd property division managing director Sarena Cheah said this move was in line with its plans for geographical diversification. She added that while Sunway has already expanded overseas, it had not fully tapped into this segment of their extensive portfolio.
“Sunway’s recurring income from our portfolio of invested properties currently strengthens our financial sustainability. Geographical diversification will further deepen sustainability for us,” she said.
“In line with our Master Community Developer brand promise, powered by our build-own-operate model, we will continue to invest in our integrated townships and developments to ensure growth for our communities with about RM 1.1 billion of investment properties currently being built.”
Launches planned for Malaysia include Sunway Avila Retail which has a GDV of RM31mil, Sunway Velocity 2 Tower C (RM300mil), Sunway Belfield Tower A (RM360mil). In Penang, the developer will kick-off its much-awaited RM2.4bil integrated development Sunway Valley City which is expected to replicate its successful Sunway Velocity development in Klang Valley.
The 25- acre development is located in Paya Terubong, Ayer Itam, one of the matured neighbourhoods in Penang. In Johor, the developer will be launching Sunway Maple which has a GDV of RM100mil in Sunway Iskandar, while the RM167mil 288-room Sunway Big Box Hotel in Sunway Iskandar will be completed this year.
Cheah said that delivering lifelong value for purchasers continue to be Sunway Property’s key focus for the Malaysian market.
“100% of our launches this year will be within integrated developments or are transit-linked, in-line with the continued resilient demand that we are seeing from purchasers for properties which are connected and offers great convenience. Our new land banking efforts will also be in tandem,” she said.
“We will continue to deliver lifelong value to homebuyers by developing quality liveable urban homes which are connected, and strategically-located, and price the homes within the range of RM600,000 to RM800,000.
“Our commercial launches which constitute 30% of our total launches this year will be within integrated developments with an immediate catchment in populous areas to ensure the success of our business community,” she added.
“With this, homebuyers can be assured of lifelong value, and attain ideal urban lifestyles where they can live, learn, work, stay and play in safe and secure havens while being future-proofed with the inherent potential capital appreciation of the properties,” said Cheah.
But not everyone is as optimistic. Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia (PEPS) president Michael Kong said: “The atmosphere is still cautious.”
The outlook for the property market remains as muted as last year’s and the status quo is unlikely to change, he said. “I reckon the current situation will persist for another year or so,” he said.
In Sabah, 2019 was a relatively quiet year for properties in terms of launches as most developers held back and adopted a wait-and-see approach towards the market, said Propertyhub Sdn Bhd director and group chief strategist Enoch Khoo.
“However towards the end of 2019, the developers have been preparing for their launches in 2020,” he said.
Some of the notable projects to be launched in Q1 2020 are The Logg and Likas Vue in Likas, 313 Suites in Penampang, as well as Vetro 11 and Sutera Bay in Kota Kinabalu.
The Logg by KTI Property Sdn Bhd will have 438 units, Likas Vue by Asian Pac Holdings Bhd (650 units), 313 Suites by BIH Group’s subsidiary Alphabet Properties Sdn Bhd (226 units), Vetro 11 by Q Avenue Sdn Bhd (260 units) and Sutera Bay by Singapore-listed property developer GSH Corporation (283 units).
“There is much optimism at the start of 2020 with the announcement from BNM (Bank Negara Malaysia) on its pre-emptive measure to secure improving growth trajectory by cutting OPR (overnight policy rate) to 2.75%.
“However this sentiment would probably be overshadowed by the recent Corona Virus outbreak which has caused many uncertainties on a global scale,” Khoo said.
Sabah is very dependent on the tourism industry, which is expected to suffer a drop of arrivals for tourist, he explained, noting that properties relating to the tourism market may see a reduction.
Barring other unforeseen circumstances, the property outlook for Sabah should remain stable as the property market is not too dependent on foreign investors, he said. “I would say 2020 is a cautiously optimistic year for Sabah property outlook,” he said.
“In Sarawak, there are indeed more developers making plans to have 2020 launches, but I would remain cautious insofar as using that as an indicator. A lot of these plans have been made prior to 2020, a couple of years in the making,” said property investor Charles Liew.
“Therefore, the fact that 2020 appears to be a magic number, I believe would not sway the prudent investor to all of a sudden decide this is a year to buy anything against market trends,” he said.
The year 2019 remained a soft year despite BNM’s move to reduce interest rates as they sought to revive economic activities across all sectors, including the real estate industry, said Liew, who is also Shine Pharmacy Sdn Bhd founder and CEO.
“We need to understand that from an economic point of view, sentiments and expectations in the market are key drivers. Rosy expectations, therefore, would inevitably lead to more spending in the market, and spending in the market promotes a chain reaction that would spark industries like the housing industry to experience a better year than years gone by.
“One thing to note also is the unexpected impact of the Wuhan Virus, as fears spread across the globe. There have been murmurs in the real estate market from agents that inspections and appointments have been pushed back as a result of the uncertainties caused by the Wuhan Virus outbreak,” he said.
Looking ahead, the property market likens to a high-strung horse waiting to be released. Towards the later part of 2019 and early months of 2020, an increase in activities was felt in the real estate market, with a lot of landed properties seemingly coming into the market. But as this is just the start of the year, property stakeholders will have to see how 2020 progresses.