Property market: Nothing much in 2016 as per Maybank Research

Just days ago, in a forum organised by PropertyGuru, the panelists agree that 2016 is going to be a ‘flat’ year where property market is concerned. This negative assessment is however considered positive as the prices are not expected to be dropping, merely stagnant. I wrote an article and summarised the findings as well. Read it here: Flat 2016? Good 2018, 2019 and Great 2020?  In an article in The Star, Maybank Investment Bank Research is singing a similar tune. It said that the slowdown in property demand would continue for another 12 months. In brief, nothing much is expected within 2016. 

Maybank said that it has not seen any broad-based pick-up yet. Due to the slowing economy in Malaysia, the overall property sales would remain weak. Banks are also very cautious and this has affected the buying sentiment as well. Besides that, many developers are also delaying new property launches, choosing to focus on affordable housing and clearing unsold inventories first. Company margins are also expected to be affected as the developers are definitely offering more rebates, discounts and marketing incentives. The research house said, “Rising compliance costs will also eat into developers’ margins. Elsewhere, various housing schemes under the Government have created a large incoming supply of affordable housing and this could pose a threat to existing players.”

Maybank Research also summarised the results announced within November and December 2015 thus far. Some have underperformed like Glomac Bhd, Mah Sing Group Bhd and UEM Sunrise Bhd. Two has performed better than expectations; Eco World Development Group Bhd and SP Setia Bhd. Both were due to stronger-than-expected progress billings at their landed property projects.” Sunway Bhd’s results were in line due to a steady or strong income from its investment properties and construction division. This helped to offset the slowdown in the property development business. 

Many may see negatives but I personally think that despite the slowdown since 2014, not all developers have shown bad results. In any crisis, results are bad for majority of all companies. As at today, many property developers remain resilient and you can see that many were quite flexible too. Delay some, change some and suddenly profits are secured even if not on growing mode. Oh yeah, if we truly love properties and yet we are worried about the short-term, it’s definitely okay to buy some of these property stocks. When times get better, we can always sell for cash and use it to buy their properties instead. Currently, I have very little property stocks as I still think secondary market is where the value is. Let’s see what happens in 2016 yeah. Will keep updating.

written on 21 Dec 2015

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