- According
to the press, the government is considering setting a RM1mil floor price for foreigners
vs. the current minimum price of RM500k in an effort to control the rise in property
prices.
- In
addition to that, the revised guidelines would also consider a slightly lower
base price threshold of RM800k for residential properties in selected economic
corridors, namely Iskandar Malaysia, to ensure the success of these corridor
hotspots.
- According
to a news report that cited unnamed sources, the revised guidelines have already
been discussed at ministerial level.
- While we
believe this is a good move so as not to crowd the RM500k range and which should
provide less competition to middle-income earners, foreigners still account for
a small percentage of property buyers in Malaysia.
- Additionally,
foreigners tend to acquire properties in the RM1mil bracket given the large price
discounts compared to prices in the overseas markets.
- Furthermore,
concerns about a property bubble is very much subdued ever since the introduction
of responsible lending by Bank Negara Malaysia. We believe that the recent high
property prices itself have deterred speculative activities and this is evident
in a lower transaction volume.
- On the
flipside, our on the ground checks recently revealed that demand continues to
be strong for landed residential units priced between RM400k and RM600k,
although some buyers have seen their loan approvals rejected due to the new
lending guidelines by BNM.
- We
maintain our OVERWEIGHT stance on the property sector, with IJM Land (FV: RM4.00/share)
as our top pick. The launch of Canal
City in July may see IJM Land generating at least RM2bil in new sales
every year as we believe Canal City would provide RM600mil to RM1bil in new
sales yearly.
- We also
have BUY on IGB Corp, CapitaMall Malaysia Trust and Al-Aqar KPJ REIT. We have HOLD
on S P Setia, Bandar Raya Developments, Sunway, Glomac and Pavilion REIT.
Source: AmeSecurities
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