Developers are looking to focus on the affordable market this year, heeding the call for more supply in this segment.
KUALA LUMPUR — Property developers are expected to explore the affordable market this year as it will be where the demand is.
Knight Frank Research said that the market is anticipated to continue its lacklustre performance into 2015 and the focus is now on the affordable housing market segment.
It said in Budget 2015, the government introduced the Youth Housing Scheme (YHS), a smart partnership between the government, Bank Simpanan Nasional, Employees Provident Fund (EPF) and Cagamas; announcing that more housing units will be built under 1Malaysia People’s Housing Programme (PR1MA). It also extended the 50 per cent stamp duty exemption until Dec 31, 2016 amongst measures to assist youths and first-time home buyers.
TA Research said a number of high-end launches have been shelved, as developers are switching their focus to the affordable segment of the market, where demand is more resilient.
It said some of the projects launched post-Budget 2014 include block B of YTL Land & Development Bhd’s Fennel@Sentul East condominiums, which saw a take-up of 80 per cent soon after it was opened for sale in mid-November.
CIMB Research reported affordability remains close to its highest ever and robust sales by developers should provide impetus for a re-rating of property stocks.
With pipeline launches worth RM5.96 billion in gross development value (GDV), leading developer Mah Sing Bhd said it will be focusing on affordable housing segment in line with the government’s initiative to encourage home ownership under the Malaysian YHS.
Mah Sing group managing director and chief executive officer Tan Sri Leong Hoy Kum said that about 84 per cent of its residential launches this year will be priced below RM1 million, with 80 per cent below RM700,000 and 44 per cent below RM500,000.
“Mah Sing is targeting a minimum of RM3.43 billion sales in 2015, same as 2014, but of course we are aiming to do better,” Leong said.
“2014 has been a challenging but rewarding year as we managed to deliver our various key performance indicators in terms of sales, landbanking and also financial performance,” he added.
Mass market homes that it had previously released have seen good take-up, such as the D’sara Sentral in Sungai Buloh, Lakeville Residence in Taman Wahyu at Kuala Lumpur and Savanna Executive Suites in Southville City@ KL South in Bangi. Units at these projects are priced from RM548,000, RM529,800 and RM338,000 respectively.
New launches this year will come from its Bandar Meridin East township in Iskandar, Johor Bahru; M Residence 3 in Rawang, Selangor; Icon Residence in George Town, Penang; and Star Residence in Subang Bestari, Selangor. The launches have a combined GDV of RM5.96 billion.
The group plans to develop an integrated mixed development with a GDV of RM9.3 billion for the 88.7-acre site in Puchong, comprising serviced residences, office towers, retail lots, shop offices, a retail mall and a hotel.
Meanwhile, the 960-acre site in Seremban is slated for an integrated township with a GDV of RM7.5 billion, comprising two-storey terrace houses priced from RM350,000, superlink homes, semi-detached units, bungalows and commercial components.
In Johor, Mah Sing’s Bandar Meridin East project is expected to benefit from the Pengerang oil and gas project which will create 10,000 new jobs while its Southville City@KL South in Bangi has a direct interchange from North South Expressway, easily within reach of end stations for MRT 1 and 2 in Kajang and Putrajaya.
Similarly, property giant SP Setia Bhd will be selective in launching new projects this year as buyers take a cautious approach.
Its acting president and chief executive officer Datuk Khor Chap Jen said the company will look towards delivering properties sold in the past and launch more mid-range products focusing in areas with established infrastructures and amenities.
Khor said certain products offered, depending on type, location and pricing, such as mid-range landed properties and affordable high-rise units, would fare well this year.
“The Malaysian market will still be resilient this year although buyers will take a cautious approach and a wait-and-see attitude in view of the impending Goods and Services Tax and global economic volatility. This is underpinned by young demographics and rising affluence,” Khor added.
UOA Development Bhd, which planned to roll out more than RM2 billion worth of properties last year, sees no slowdown in demand for its developments and will continue to focus on mid-range properties to mitigate the effects of property cooling measures.
Its general manager Eugene Lee said that the company’s launches in Kuala Lumpur last year – located in Sentul, Jalan Ipoh, Old Klang Road, Kepong, Taman Desa and its flagship development at Bangsar South – are priced below RM1 million and targeted at first home buyers and young working adults.
Lee was reported as saying that demand for affordable homes would still continue in Greater KL namely in apartments and offices and will remain as the group’s “bread and butter” in future.
UOA Development has 1,240 acres of undeveloped land scattered around Greater Kuala Lumpur.
CIMB Head of Research Terence Wong said that UOA has seen good success with its launches within the affordable range in Kuala Lumpur.
Sime Darby Property Bhd’s Managing Director and Group CEO Datuk Abdul Wahab Maskan said the property sector is consolidating and adapting to the cooling measures implemented since Budget 2014.
“The effects of the cooling measures are more evident in the higher-end segment compared with the thriving demand in the mid-market and affordable segments,” he said.
He said the growing population of young housebuyers will also be a key driver in the affordable and mid-market segments.
Gamuda Bhd’s Managing Director of Property Division Chow Chee Wah said it was clear the government wants to intensify its efforts with affordable housing schemes to benefit first-time homebuyers.
He said that the domestic buying interest will remain high this year and Gamuda will be venturing into both the northern and southern regions of the Klang Valley, where population growth is expected to be accelerated by new transport infrastructure that eases the commute to the city centre.
“These new developments will also be significantly more affordable due to their distance from the city centre. Away from the city, customers will enjoy a better quality of life and home ownership experience,” he said.
He said steady growth and continued demand for their existing developments are expected with factors such as good locations and attractive prices.