Property market needs strong catalysts

KUALA LUMPUR (March 25):  There is a need for strong catalysts to spur property buyers' interest if we want to see the property market improve and accelerate into overdrive mode.

Speaking at The Edge Investment Forum on Real Estate 2017 themed “Have we hit rock bottom? What’s next?”, Kenanga Investment Bank Bhd head of equity research Sarah Lim (pictured) noted that the continues improvement in property loan indicators and the loosening of banking regulations could be strong catalysts for the Malaysian property market.

"The Singapore government has been easing their property cooling measures, Malaysia might follow as well," she said during her presentation entitled "Property Stocks: Bottoming out?".

Stronger economic growth or positive changes in property policies in Budget 2018 would be able to spur market interest as well. Lim also expected interest rates to remain unchanged this year.

After two years of market adjustment, she said, developers are now rolling out the right products —such as affordable or niche segment housing, to cater to market needs. With this, the property market may show improvements.

"Quality buyers are now emerging, which could be the possible reason for the higher loan approval rates," she added.

However, she said the critical checkpoint will be the sales in 1H2017.

Lim expected the residential segment, which is the biggest growth driver in the property sector, to have a flattish trend this year.

This trend, she added, could be observed in the share market, whereby most of the property companies are experiencing flattish growth in sales. However, selected companies such as Eco World Development Group Bhd, IOI Properties Group Bhd and Sunsuria Bhd have seen higher sales but this may be because of overseas drivers or due to a low base effect.