AmInvestment 'neutral' on property sector

KUALA LUMPUR (June 9): AmInvestment Bank has remained ‘neutral’ but cautious on the property sector due to elevated house prices, banks’ cautious landing in residential property and house buyers' inability to qualify for a house mortgage.

In a research note, the research house said subdued consumer sentiment and dented job security against a backdrop of the prolonged pandemic were also holding consumers back from committing themselves to the purchase of big-ticket items, particularly, a house.

“However, we do see a bright spot in the affordable segment catering to owner-occupier house buyers versus property investors or speculators,” it added.

AmInvestment said this basic demand for housing is driven by new household formation backed by relatively young population demographics, rapid urbanisation and the trend towards single-person households and nuclear families versus extended families.

On the financial results, the firm said property companies posted mixed results for the first quarter of this year and the latest lockdown could badly hurt sales and property investment segments.

“It could potentially dampen seasonally higher second half of the year's sales. All sales galleries and showrooms are currently closed while construction activities, which are still awaiting government’s approval, may lead to delivery delays and additional charges for liquidated ascertained damages.

“The earnings for companies with exposure in property investment, particularly the retail and hotel business, will be further hit as shopping malls have to be closed except for shops that fall under the ‘essentials’ category,” it said.

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