12 November 2014

MKH remains top pick among property stocks: Alliance DBS

  12 November 2014

KUALA LUMPUR: MKH remains the top pick for Alliance DBS Research because of its large exposure to affordable housing, while Sunway will benefit from its strong unbilled property sales and construction order book.

The research house said on Wednesday skyrocketing property prices have crowded out genuine homebuyers due to declining affordability in recent years.
“We understand developers have been re-calibrating launch pipelines to include more affordable homes (less than RM500,000 a unit) to cater to the still-robust demand for the same.

“Incentives for first-home buyers announced in Budget 2015, including the extension of 50% stamp duty exemption and 100% loan financing, will continue to support sales of affordable homes,” it said.

Alliance DBS Research pointed out that product differentiation is key.

Property sales have slowed down although township developments remain resilient. Despite banning developer interest bearing schemes (DIBS), several other incentives such as high cash rebates and deferred down payment have been employed to sell properties, the research house said.

“Differentiated products with strong brand name are critical to sustain sales as potential buyers/investors adopt a more cautious stance, especially given Malaysia’s high household debt at 87% of GDP,” it said.

Malaysia’s house price index rose 6.6% on-year in 2Q14, the slowest since 2010, reflecting the softer sentiment.

“While cost-push factors are expected to continue to increase inflationary pressure on property prices, the impact would be relatively subdued given the more challenging outlook,” it said.

Alliance DBS Research said unbilled sales remain strong for most developers under its coverage following overwhelming property sales over the last two to three years.

“We continue to like developers with large exposure to affordable housing and landed residential properties, which should continue to outperform,” it said.



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