IOI Group: Property Prices to Move Sideways After Cooling Measures
The IOI Group of Companies expects property
prices to move sideways in the near term due
to tighter loan borrowings by banks, said group
executive chairman Tan Sri Lee Shin Cheng.
However, he said property prices were expected
to start moving upwards once the cooling
measures introduced by the government took
place in time to come.
Last year, as an effort to control the property
prices, the government, in tabling Budget 2014,
raised the real property gains tax to 30 per cent
for properties disposed of within three years.
“After the cooling measures, we expect the price
will go up. The next hike will be higher than the
last hike,” Lee told reporters after IOI Properties
Group Bhd (IOI) presentation in conjunction with
Invest Malaysia 2014.
On the company’s future plan, Lee said that
IOI was planning to launch a few property
development projects this year despite the
slowdown in property sales.
IOI Group executive chairman Tan Sri Lee Shin Cheng
Asked on the property sizes nowadays, he said
they were getting smaller due to the slower
demand, and the group was also expected to
launch smaller units of houses or reduce the
number of house units.
“But for this year, we will launch more varieties
(of houses) and we are looking into affordable
houses,” he said.
Meanwhile, commenting on the group’s landbank,
IOI Corporation Bhd chief executive officer Datuk
Lee Yeow Chor said the company had no plans
to acquire land at the moment, however it was
looking for brownfield sites in Southeast Asia.
On the El Nino effects on palm oil production, he
said the effects of the prolonged dry weather on
the crops was not immediate, as the company
would only see the effects on palm oil production
after two months.
“There is a significant impact on the production
and the price of palm oil will be boosted but it is
not so immediate,” he added.
Young Population Key to Property Sector Resilience
group, implying a positive household formation
trend.
“We believe individuals in this age band are
potential home-buyers, with those in their
twenties looking to purchase first homes and
those in the thirties and forties likely to upgrade
to accommodate larger families, or buy a second
home as an investment.”
UBS Securities also said more young people are
migrating to larger cities/states such as Kuala
Lumpur, Selangor, Penang and Johor.
“Average household incomes are at four to 4.5
times mortgage payments or put differently,
mortgage payments represent 22% to 25% of
total household income. We believe this has been
facilitated by the longer repayment tenures of up
to 35 years from 25 years a decade ago.”
The research house has maintained “buy” ratings
on Mah Sing Group Bhd and S P Setia Bhd and
downgraded UEM Sunrise Bhd from “buy” to
“neutral.”
“In turn, property developers are focusing on the
more urbanised states.”
The research firm pointed out that Malaysia’s
unemployment levels have been low, with
unemployment rates rarely exceeding 4% of the
total labour force over the past 16 years.
The Malaysian property sector is expected
to remain resilient this year despite the
Government’s various cooling measures.
“The highest point was 4.5% during the financial
crisis in 1998. As the broader economy is
performing well, with first quarter 2014 gross
domestic product (6.2%) coming in ahead of
expectations, we expect unemployment levels to
remain at the current benign level.
UBS Securities in its report said the local property
sector will be d ɥٕ