KUALA LUMPUR: Property sales are expected to perform better in 2022 as the economy continues to recover and there is a further reduction in unsold stocks.
Recent statistics from the National Property Information Centre (Napic) showed continued positive signals during the third quarter (Q3) of 2021.
Property sales had rebounded 20% quarter-on-quarter (q-o-q) to RM17.8bil during the quarter after the decline in Q2, while unsold stocks continued to improve by -60.6% q-o-q and -59.8% year-on-year (y-o-y) to 46,889 units in Q3 thanks to aggressive marketing packages by the developers.
In total, sales for the first nine months of 2021 rose 16% y-o-y to RM52.4bil, moving closer to the pre-Covid sales level of RM52.8bil registered for the corresponding period in 2019.
Based on its conversations with developers, Maybank Investment Bank (IB) Research expects sales momentum to pick up in Q4 post-economic reopening.
NAPIC website
The research house noted that most developers were expecting a better sales outlook in 2022, although this may come at the expense of lower margins on moderated pricing.
Maybank IB also cautioned that the fragile recovery in the sector may be upset by higher raw material costs and potential interest rate hikes as well as political uncertainties ahead of the coming general election.
The brokerage noted that while property players posted weaker earnings in Q3, sales momentum has remained strong.
Of the six developers under its coverage, Maybank IB said Mah Sing Group Bhd had come in above expectations, while Sime Darby Property Bhd, UEM Sunrise Bhdand Sunway Bhd came in below expectations.Meanwhile, Tambun Indah Land Bhd and S P Setia Bhd were in line with expectations.
“While earnings were largely dragged by the imposition of stricter standard operating procedures that had led to slower work billings between June and August 2021, sales remained strong thanks to established digital marketing platforms.
“All developers achieved stronger-than-expected sales in Q3 and are looking to exceed their initial sales target for FY21,” the research house said in a report yesterday.
During the Q3 reporting season, Maybank IB had upgraded Sime Darby Property, S P Setia, Tambun Indah Land and UEM to “hold” as the stocks had declined more than 10% post the brokerage’s sector downgrade on Nov 1. Consequently, this presents investors with potential upside of about 10%.
Maybank IB has upgraded the property sector to “neutral”, with calls to investors to be selective.
“While we are holding to our belief that 2022 sales should perform better as the economy recovers, we think the positives have been priced in at current valuations.”