Maybank IB says interest rate hikes dampen Malaysia’s property sector

To make sure that jobs are shipped on time, property developers could possibly delay some of their new launches to prevent prospective LAD payment in see of labour shortages, stated Maybank IB. — Picture by Shafwan Zaidon

Monday, 04 Jul 2022 12:39 PM MYT

KUALA LUMPUR, July 4— Maybank Financial investment Lender (Maybank IB) is retaining its neutral connect with on Malaysia’s assets sector due to rising pitfalls these kinds of as slower product sales amidst the growing fascination price ecosystem and delays in new home launches, as effectively as increasing uncooked substance expenditures.

It also expects shopping for sentiment on major-ticket objects to be afflicted by political uncertainties forward of the 15th Common Election.

“Further curiosity level hikes will not only strike buyers’ affordability but also really-geared home builders.

“The fragile restoration in the property sector could be impacted by labour and raw substance shortages, primary to gross sales and earnings hazards (slower operate progress, increased operating costs and prospective Liquidated Ascertained Damages [LAD] payment),” it said in a exploration take note now.

To be certain that projects are sent on time, home builders could possibly delay some of their new launches to keep away from potential LAD payment in check out of labour shortages, mentioned Maybank IB.

Meanwhile, it famous that additional desire rate hikes will not only hit buyers’ affordability but also very-geared developers this sort of as UEM Sunrise Bhd, while political uncertainties ahead of common elections usually negatively have an affect on the acquire of huge-ticket things.

“These gross sales/margins-suppressing headwinds this kind of as labour and uncooked material shortages, political uncertainties and interest amount hikes will most likely linger into 2023,” it mentioned.

With no the Dwelling Possession Marketing campaign (HOC), residential house gross sales in the initially quarter of 2022 (Q1 2022) declined 6. per cent quarter-on-quarter to RM23 billion from RM24.6 billion in Q4 2021.

“In our perspective, while the HOC managed to raise the getting sentiment for properties, demanding manage on housing provide this sort of as housing approvals and plot ratio, as nicely as correct and well timed housing knowledge for improved housing arranging and launches are similarly vital to fix the persistent overhang challenge in the region.

“Complications might crop up as land is also a point out matter and the state governing administration can legislate on land matters therefore, suitable coordination among the federal governing administration and condition governments is considerably wanted in get to remedy the overhang concern,” included Maybank IB. — Bernama