IN spite of an unprecedented challenging year, the property sector continues to remain steady as developers continue to hold their own by switching their strategy up to remain competitive.
On a one-year basis, the KL Property Index – which is made up of listed shares of property companies – has risen more than 10%, thus reflecting the resilience of the local property industry.
At the 2021 Malaysian Housing and Property Summit last week, Country Heights Holdings Bhd founder and executive chairman Tan Sri Lee Kim Yew said the Malaysian property market has remained resilient and he believes property prices will stay competitive after the pandemic.
In the spirit of being resilient, Lee said his motto has always been to turn crisis into opportunities.
For Matrix Concepts Holdings Bhd chairman Datuk Mohamad Haslah Mohamad Amin, experience in handling past crises has helped stir the company through the current pandemic.
“Since Matrix Concept’s inception over two decades ago, we have experienced two major economic downturns, namely the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis,” he says in the group’s recently released 2021 Annual Report.
“The lessons gained from those events have been embedded in the group’s approach in giving great emphasis on financial prudence and operational sustainability.”
As such, Mohamad Haslah emphasises that Matrix Concepts has always maintained a healthy financial position and sound cashflow management throughout the years.
This vigilance, he adds, has been “a formidable armour” in the group’s management of the Covid-19 pandemic.
Looking ahead, Mohamad Haslah says the group intends to further enhance its operational and cost efficiencies while further exploring new and innovative methodologies in its activities.
“The threat and challenges posed by the pandemic remains real and it seems that we must grasp the possibility of restricted physical movements and prolonged uncertainties to be a theme for our financial year ending March 31, 2022.”
The insurmountable challenge to inoculate most of the country’s population and the discovery of new variants suggest that uncertainties could possibly be prolonged beyond the next 12 months, he adds.
“The group will continue to monitor the latest developments relating to the pandemic and has put in place contingencies to address shortcomings caused by any disruption.
“Matrix Concepts will remain true to its ethos of prudent financial management without sacrificing opportunities for growth and improvements,” says Mohamad Haslah.
IJM Corp Bhd chairman Tan Sri Krishnan Tan, in the group’s latest annual report, says business recovery will ultimately depend on the pace of the national immunisation programme.
“The main factors determining the rate of global recovery in the near term remain pandemic-related, particularly the pace of vaccinations, the containment of variants of concern, the degree of successfully addressing economic scarring and the mending of societal foundations that may have been deeply altered.”
He adds that robust property sales of RM1.7bil in its financial year ended March 31, 2021, as well as a successful reduction in the group’s completed local inventory amounting to RM605.95mil, has put the property division on a strong footing to continue engaging the market with its wide array of products.
Meanwhile, Mohamad Haslah says Matrix Concepts intends to further enhance its operational and cost efficiencies while further exploring new and innovative methodologies in the group’s activities.
“There will be greater emphasis on increasing the adoption of digitalisation and exploring alternative sales and marketing channels in the financial year 2022.”
UOB Kay Hian, in a recent report, says digital trends that were embraced by developers to spur their marketing and boost sales will remain post-pandemic.
“Developers have invested in this space to address the pain point of the conventional approaches.
“This could help them achieve cost efficiency and drive profitability by cutting down sales personnel, advertisement spending, paper works and more importantly, speed up sales conversion.”
The research house says the pandemic has forced individuals of all ages to embrace the digital revolution, adding that Malaysia is in a better position with a relatively low median age of 29.
“This makes transformation easier as the younger population is more tech-savvy and the simplified and fully digitised platforms would have bolstered user experience.
“Also, this will allow developers to be more prepared with the arrival of 5G, where more innovations such as smart homes and cities, 3D printing and blockchain real estate will be enabled to push the industry to become more productive.”
Since engaging their digital transformation journey from mid last year, UOB Kay Hian says property sales conversion had sped up from an average of nine months to less than a month.
Nevertheless, the research house believes that the lockdown impact on developers is milder this time round.
“Our channel checks also suggest property inquiries and bookings online were still active despite the closure of sales showrooms. Importantly, virtual marketing helps developers to substantially cut down traditional big-board advertising or marketing roadshows and campaigns.”
Mohamad Haslah says the recent upturn in the property market, albeit marginally, has provided further encouragement to the group to achieve further improvements in its new property sales performance in the current financial year.
“The experience the group has gained to hasten construction activities from a complete halt will stand in good stead to face another tumultuous financial year.
“We remain cautiously optimistic of another rewarding year in the current financial year, with our optimism driven by major realtors being most optimistic of the property sector in Negri Sembilan – particularly Seremban – over the next year, supported by the continued and steady increase in average house price for landed properties.”
With interest rates not expected to be raised in the near future, Mohamad Haslah says buyer sentiment will be further uplifted by the attractive packages on offer under the Home Ownership Campaign (HOC).
“For the current financial year, the majority of the group’s planned launches will consist of products below RM500,000 to satisfy the strong demand for landed properties within such price range,” he says.
The HOC was initially kicked off in January 2019 to address the overhang problem in the country.
The campaign, which was initially intended for six months, was extended for a full year.
It proved successful, having generated sales totalling RM23.2bil in 2019, surpassing the government’s initial target of RM17bil.
The government reintroduced the HOC in June last year under the Penjana initiative to boost the property market after it was adversely affected by the Covid-19 pandemic.
The campaign has been extended to the end of this year, with property consultants and developers fully supporting the move.
In March this year, during the Real Estate and Housing Developers’ Association’s briefing on the property market for 2021, its president Datuk Soam Heng Choon revealed that since the HOC was reintroduced last June, a total of 34,354 residential units valued at RM25.65bil had been sold as at Feb 28, 2021.
In spite of the steady state of the current property market, UOB Kay Hian, however, feels that long-term fundamentals remain challenging.
“We believe structural concerns pertaining to an escalating overhang, political uncertainties, worsening household debt-to-gross domestic product and deteriorating house price-to-income ratio could continue to cloud the sector’s long-term growth prospects.
“Nevertheless, we acknowledge that any improvement in economic fundamentals as well as favourable policies such as reviving the My Second Home Scheme and the relaxation of lending requirements would spur property demand.”