News: Developers With Overseas Exposure To Perform Better: AmResearch

Jan 2, 2020

AmInvestment Bank Research (AmResearch) believes that despite the challenging property outlook in the next year, developers having overseas exposure will perform better in the medium term especially in Singapore and China.

“Sunway Bhd and IOI Properties are well positioned in this area and their property launches have been generally well-received both locally and overseas,” said AmResearch in a report.

“While most developers have achieved their new sales target, the numbers were lower year-on-year (yoy) whereby 9M19 sales were lower by 10% to 15% as compared with the previous year.”

The research body is having a “neutral” call view on the property sector despite the challenging outlook, reported The Sun.

AmResearch said the affordable segment will still be the sector’s key focus, while also expecting no surprise earnings for the upcoming 12 months.

Read our guide on how to buy a property as a foreigner. 

“We expect the affordable segment to perform well, driven by resilient demand, especially from young professionals and families due to continued urbanisation. This is well reflected by the move by the majority of local property developers to focus on this segment,” it said.

It also expects a 4% to 5% earnings increase for the property sector this year due to progress of construction, timing of revenue recognition and current sales figure, resulting in a price-to-earnings ratio of 20 times.

“Companies such as Mah Sing, SP Setia, MRCB, Ecoworld and Titijaya Land have many projects still in their early stages, hence we do not expect strong revenue recognition in the next 12 months.”

The company expects that in 2020, landbanking activities similar to the previous year will occur, especially in small sized lands having good locations such as being near to the MRT/LRT, major expressways and KL city centre.

It also sees the REIT sector remaining stable in the short to medium term, especially shopping malls.

“Pavilion REIT and Sunway REIT are still enjoying high occupancy rates in their shopping malls. We believe the high occupancy rates are also due to strong management and brand names of the REITs, in addition to shopping complexes becoming one-stop centres for the Malaysian lifestyle providing F&B and entertainment options,” it noted.


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