I seriously do not believe there are developers not affected by current slowdown, no matter how established they may be. There are many projects for which keys have been handed over but the developers are still selling remaining units. It does seem that the market is doing extremely badly? Well, if we are to look at the results from the listed ones which were announced recently, the developers are generally still earning profits! Healthy ones too. Some are even hitting their targets. One of the established ones, Mah Sing is targeting to launch size new property projects with a total gross development value (GDV) of RM2bil in 2016.
Mah Sing said that it is confident to maintain last year’s sales target of RM2.6 billion for 2016. Of the RM2bil upcoming launches, 61% percent will be for the residential segment, while 34% and 5% will be allocated for the commercial and industrial segments. Mah Sing’s six new projects are Cerrado serviced apartments in Southville City@KL South, Bangi, indicatively priced from RM388,000; new township Laman Ayu in Rawang, new blocks in D’Sara Sentral and Lakeville Residence in the central region, Ferringhi Residence 2 in Penang island and Meridin East township in Pasir Gudang. The one in Pasir Gudang is really quite affordable, from RM350,000 for landed homes.
Its group managing director and group chief executive officer Tan Sri Leong Hoy Kum said a few things which we should take note. Mah Sing is still scouting for lands but not in a hurry. In fact there may be opportunities for cheaper land since the market is now on a downtrend. The demand remain strong for houses over the medium to long term. In future, Mah Sing may start a real estate investment trust. It hit last year’s target because the focus was on mass market products with a primary sales focus in the Klang Valley or Greater KL. Mah Sing has 35 active projects currently which will last them for the next 8 years.
The focus on affordable has to continue. The reason is simple, just look at the average salary of working couples in Malaysia today versus the prices for newer launches. The only ones which will appeal to the majority would be the affordable ones. That’s why there are so many newer launches which are smaller sized high-rise units priced around RM500,000 or lower. If possible, please do not believe that these sub 1,000 sq ft units would reach RM1 million or beyond. Seriously, who can keep buying them? Sorry, perhaps the right question is, who could afford them? Any property strategy should also include the secondary market in secondary areas too. That’s where majority are not looking today. Happy searching.
written on 29 Jan 2016
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