KUCHING: Property players with mixed development projects under their belt are poised to benefit from housing measures slated to be announced during Budget 2015.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) said amongst the key beneficiaries would be companies with good mix of medium to low-end pricing properties such as Mah Sing Group Bhd, IJM Land Bhd and LBS Bina Group Bhd.
To a lesser extent, the research firm said UEM Sunrise Bhd could also benefit from their product mix and landbank sale.
On the flip side, companies with sizable exposure to high-end properties such as Eastern & Oriental Bhd, SP Setia Bhd and Sunway Bhd could face some setbacks.
Thus, the research firm has a mixed view on the property sector currently as the Goods and Services Tax (GST) imposition next year could dampen consumer sentiments in the near term.
Following the rationalisation in petrol subsidy recently and the imposition of GST next year, the research firm expects measures more focused towards affordable housing in Budget 2015.
MIDF Research analyst Annuar Rahman anticipated some of the measures introduced a few years before to make a comeback.
“(Those include) for instance full loan facility under Skim Rumah Pertamaku or extended of 50 per cent exemption in stamp duty for first time buyers of houses worth RM400,000 and below and broadened.
“(Likewise), measures such as better incentive to encourage private developer participation to build low to medium cost properties and more units of 1Malaysia People Housing Programme (PR1MA) and People’s Housing Program (PPR) to be built in 2015.
“We also expect further relieve targeted at first-home buyers such as zero-rated GST for properties worth RM400,000 and below as lobbied by Real Estate and Housing Developers’ Association (Rehda).
“The floor price of properties accessible to foreigners could also potentially be raised and providing cheaper funding for first-time buyers,” Annuar said.
In the meantime, MIDF Research does not expect another round of hike in Real Property Gains Tax (RPGT) in Budget 2015.
The research firm recalled that the government had introduced various cooling measures for the property sector in the past few years.
It noted the RPGT was re-introduced in 2010 at a rate of five per cent against the zero to 30 per cent under the RPGT Act 1976.
Subsequently, the research firm observed the RPGT rate has been broadened and increased to limit speculative property purchases – one of the key factors in driving up property prices while various affordable housing schemes were introduced to benefit the middle income segment.
“To some extent, we believe those measures have been effective as property transaction declined 10.9 per cent in 2013 while transaction value grew by 6.7 per cent to RM152.37 billion according to the Valuation and Property Services Department Property Market Report for 2013.
“While the impact from the hike in RPGT rates tabled during Budget 2014 is still inconclusive, initial signs have started to show with some of the property developers holding back launches in the first half of 2014 (1H14) and cutting back revenue target for financial year 2014 (FY14).
“Notwithstanding, the latest House Price Index (HPI) reading for the first quarter of 2014 (1Q14) period saw a gain of 9.6 per cent year-on-year (y-o-y) growth,” Annuar noted.
Hence, given the focus on affordable housing in Budget 2015, MIDF Research expects small to medium market capitalisation companies to be among the beneficiaries for the property sector.
The research firm explained that the rationale is due to their product mix of medium to-low pricing properties which is largely seen as favourable to sustain healthy demand admist rising house prices and slower take up rates.