After 4 years of BULL, this year is BEAR (for how long?)

Affin Investment Bank Bhd said that Malaysia’s property market is heading towards a cyclical slowdown after 4 years of property bull cycle. It expects developers to have lower take up rates and weaker margins due to the higher competition as well as tough government property cooling measures. Some of the measures implemented by the developers to mitigate the slowdown include launching new projects across different property hotspots to diversify geographical risk and tap into a new pool of buyers.
Nevertheless, Affin Research expects developers’ earnings for 2014 and 2015 to be resilient due to high unbilled sales from previously. For the six developers under their coverage, they expected them to achieve 15% earnings growth in 2014 and going down to a growth of just 5% in 2015, driven especially by overseas earnings from heavyweights like IOI Properties and SP Setia.
Well, this is indeed a positive news amidst all the negative news from some agents who said that the secondary market is still not going up despite some expectations that demand would move over to the secondary market after the primary market has slowed down. I think this may still be due to the pessimism on the actual direction that the property market is actually heading. Once this clears up, we may see some cheers in the secondary market.
written on 26 March 2014
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