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AmInvestment expects 27% earnings growth for developers in 2024

AmInvestment expects 27% earnings growth for developers in 2024

Nonetheless, these problems have been mitigated by recent events, such as the stabilization of building material prices and the increased availability of foreign labor on construction sites. This facilitates faster construction for ongoing projects and makes it easier for developers to identify progress billings in 2023–2024. Furthermore, the research organization anticipates that when developers debut their projects aggressively in 2023, revenue contributions from recently launched projects like Affinity at Serangoon will increase.

Comparable to pre-pandemic unbilled sales, the overstock problem has eased. The 1.4 times average unbilled sales for Affinity Site Plan covered by AmInvestment are deemed to be “a level comparable to the pre-pandemic period.” stated in a Tuesday message.

The statement highlights that developers such as Sunway Bhd, UEM Sunrise Bhd, Paramount Corp Bhd, and S P Setia Bhd, who have higher unbilled sales, stand to gain the most from the expedited site progress operations.

The research firm also predicts that investor mood will gradually improve and that the oversupply conditions in the Malaysian real estate market would gradually ease.

“Over the past three years, there has been a declining trend in the volume of unsold properties due to the proactive inventory monetisation strategies employed by developers.” As seen, developers have been able to expedite the launch of new properties due to the improving cash flows brought about by the declining inventory levels.

It also stated that its forecast of a 3% overnight policy rate for 2023 has come true, suggesting that Malaysia’s cycle of rate hikes may be coming to an end. This could encourage more optimistic feelings among buyers in the real estate market.

“The trend of affordable housing will continue”

According to AmInvestment, the prior property boom in 2008–2013 was followed by a deceleration in the growth of the Malaysian house price index, which was partly due to the mismatch between supply and demand for houses below RM500,000 each.

Lower household savings and the difficulties of obtaining high-margin financing to buy high-end properties make the situation worse. Once interest rates stabilize, prospective buyers will exercise greater discernment while making their selections.”

According to AmInvestment, property investors who hold three or more housing loans are restricted to a 70% loan-to-value ratio. This restriction, along with other factors, is anticipated to moderate the growth of house prices and cap the price of high-end residential real estate. Better growth in this sector is contingent upon factors such as higher income levels and high-value job for floor plans under the New Industrial Master Plan 2030.

In addition, on January 11, 2024, Malaysia and Singapore are anticipated to sign a memorandum of understanding to establish the Johor-Singapore special economic zone. The purpose of this zone is to support industries, particularly renewable energy, create more job opportunities, and benefit developers with holdings in Iskandar Puteri, such as UEM Sunrise and Sunway.

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