Developers expect better days despite continuing challenges

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Ho (left) and Tong at the media briefing for the Rehda Property Industry Survey and Market Outlook for 2024. – KAMARUL ARIFFIN/The Star

Ho (left) and Tong at the media briefing for the Rehda Property Industry Survey and Market Outlook for 2024. – KAMARUL ARIFFIN/The Star

PETALING JAYA: The property sector has seen improved sales performance in 2H2023 on the back of fewer launches and with a focus on clearing previously completed but unsold stock. Developers are also more optimistic about the industry outlook for 2H2024, with a majority looking to expand their land bank and increase their companies’ capital expenditure in the next 12 months.

These sentiments are based on the Real Estate and Housing Developers’ Association Malaysia (Rehda)’s Property Industry Survey and Market Outlook for 2024, which was conducted to assess the market performance for 2H2023 and the outlook for 2024, with participation from 152 Rehda members in Peninsular Malaysia.

For sales performance, the survey noted total launch units of 11,032 in 2H2023, representing a decline of 23% compared to 1H2023. 41% or 4,627 of the launch units have been sold. 

Overall, sales performance in 2H2023 has increased by 6.6% compared to 1H2023, with a total of 12,017 units sold compared to 11,272 in 1H2023. 61% of the sales were formed by units from previously completed but unsold stock, an improvement compared to 65% in 1H2023. 

The most launched selling price was in the RM300,001 to RM500,000 range, with apartments/condominiums and serviced residences taking the lead. This price category also constituted the most launched selling price in several states – Selangor, Johor, Penang, Negeri Sembilan, Melaka and Perak. 

Interestingly, the most launched selling price for Kuala Lumpur in 2H2023 is in the lower category of RM150,001 to RM300,000, whereas in 1H2023, the most launched selling price was found to be RM1mil and above. 

A total of 52% of the respondents also reported completed but unsold units as of Dec 31, 2023. The primary reason cited was loan rejection, followed by high pricing and low demand/interest on the developments.

Rehda president Datuk NK Tong said that the lower margin of financing continues to be a challenge for many potential home buyers. 

“If somebody wanted a 90% loan or an 80% loan, and got a 70% loan, they would have to come up with cash which then puts it out of their reach, so that is as good as a rejection for the potential home owners,” he said, adding that loan rejection is spread quite evenly across the board and is not limited to the purchase of expensive properties.

“In fact, often financial institutions are more conservative with people with less income,” he said.  

The survey also revealed a higher number of unsold completed units in the RM300,001 to RM400,000 category at 11% compared to 3% in 1H 2023. In addition, completed but unsold bumiputera lots in the price category of RM300,001 to RM500,000 also form the majority.  

“As much as this could be a sign of unaffordability among the B40 and lower M40 categories, this is also affecting developers who have taken up the cross-subsidy method to build these houses. Not only that the sales of their open market units are affected due to the higher price, but so are the sales of their affordable units that they had to cross-subsidise for,” Tong noted.

Additionally, 56% of the respondents faced construction challenges in 2H 2023, with a little over half of them remarking that the high price of building materials was critically impacting their business operations and would contribute to a significant increase in property prices. 

Looking forward into 2H2024, 45% of respondents said they will be launching new developments while 55% said they will not.

“Among the reasons for not launching, I think the approval delays from authorities is (something that is) controllable, as the Prime Minister himself is calling for faster approval. However, we continue to see delays in approvals as fed by developers.

“While the Housing and Local Government Ministry (KPKT) has a very robust regulation, the decision of those approvals lies within the state and local authorities which the federal government has no control over,” he added. “So some states are very proactive and they move faster, but others are slower, so that is the challenge (for developers).”

Despite the challenges, respondents indicated optimism for 2H2024. The outlook was in line with optimism in the domestic economic environment, business prospects, consumer purchasing power and residential sector’s growth. 

About 85% also considered sustainability important to their companies, with Tong remarking that Rehda’s subsidiary GreenRE has seen a huge increase in the number of companies seeking green rating. 

“The amount of square feet we’ve rated over the past 10 years, (which is) in millions, are the same as what we will be rating in the next two to three years. So we can see the trend is rising and this is very good for the environment, the ESG movement and also for the consumers,” Tong noted.

However, deputy president Datuk Ho Hon Sang noted that the proliferation of green building-certified development, particularly in the more affordable price range of RM500,000 and below will be dictated by better consumer demand, better availability of financing as well as progressive government policies. 

“For the moment, green building concepts are more appropriate for developments in the range of RM400,000 to RM600,000. Hopefully, economic growth and progressive policies will eventually allow more homebuyers to access these properties,” he said. 


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