Property Sector - Strong response for Glomac Puchong Overweight

- We gather that Glomac’s latest launch in Puchong – comprising of 105 units of double-storey terraced houses - was fully sold within a day. These units, which boast a land area of 22’ x 75’ and a build-up of 2,100sf, are priced at an average of RM700,000 each.  

- Recall that this development is an extension to its maiden development in Puchong, called Lakeside Residences. This leasehold land is located behind Tesco hypermarket and near YTL Land & Development’s Lake Edge and Malton’s Mutiara Puchong developments. The development is accessible from the Damansara-Puchong, Kesas and Bukit Jalil highways.

- Buoyed by the strong response, we understand Glomac plans to accelerate the 2^nd  Phase of this development with another 100 units of double-storey link house to be launched by end of this year. We believe the 2^nd phase will see strong take-up rates as well given the good location within a matured township.

- This follows strong take-ups at IJM Land’s Seri Riana Residences in Wangsa Maju - 60%-95% units sold were sold (RM500-RM550psf) at the first two blocks of the high-rise development. SP Setia meanwhile is on track to achieve its RM4bil sales target where current sales at Johor market is at RM1.1bil or up 24% YoY . 

- Sunway is also testing the market. It had decided to go ahead with the launch of several commercial units at Sunway Geo Phase 1 and Sunway Velocity - that were previously deferred. We were slightly surprised that response has been decent with 80% of the office suites and 3-storey retail shops were booked at Sunway Geo and Sunway Velocity respectively, although office suites at the Velocity only saw 45% booking. 

- All in, despite the weak sentiment, right products at the right location would see strong demand due to strong urbanisation and accommodative interest rate environment. Hence, we maintain our OVERWEIGHT stance on the property sector because current valuations are depressed with property stocks trading at deep discounts of 40%-50% to NAVs. New sales guidance by developers are very much intact and we think there  will be a return of pent-up demand in properties. 

- We expect the market to re-rate established township players such as IJM Land (FV:RM3.80/share) and Mah Sing (FV: RM3.60/share) with  Bandar Rimbayu and Southville City as key developments to drive sales.

- Meanwhile we have HOLD recommendations on Sunway Bhd, Bandar Raya Developments and SP Setia.

Source: AmeSecurities