Paramount flags 3%–5% price hike for new launches, keeps RM1.2b sales target

KUALA LUMPUR (May 26): Paramount Corp Bhd (KL:PARAMON) is expecting a 10% rise in construction costs following recent geopolitical shocks, and plans to increase the prices of its upcoming property launches by 3% to 5% to offset rising building material and fuel expenses.

Although about 80% of the group's construction costs for its ongoing projects are now insulated because prices were locked in before the conflicts erupted in the Middle East, new launches will inevitably face these higher cost pressures, deputy group chief executive officer Beh Chun Chong told a press briefing on Monday.

Construction costs, including building materials and fuel, account for up to 50% of total development costs, while land costs make up for 20%. The remaining are sales and marketing and labour costs, he explained.

Brent crude oil prices surged past US$120 per barrel in April following the closure of the Strait of Hormuz. While Brent crude had eased to US$85 at the time of writing on Monday, the global benchmark for oil prices have gained 41% year to date, from US$60 per barrel at end-2025.

Meanwhile, Paramount is maintaining its RM1.2 billion property sales target for this year, which it expects to be supported by property launches totalling RM1.8 billion in gross development value.

Paramount recorded RM1.03 billion property launches in FY2025, when it launched RM808 million worth of new projects, with sales declining 26% from RM1.4 billion in FY2024 due partly to a moderated launch pipeline and a challenging operating environment — arising from cost pressure from wage increase, US tariff, and expansion of sales and service tax.

While the group is ramping up launches this year to support sales momentum, group chief executive officer and executive director Jeffrey Chew Sun Teong said the pipeline is "not aggressive".

The group’s combined launches for the next two years are valued at about RM2.6 billion, which he described as only “slightly higher” than the level needed to support the group’s annual sales momentum and growth target.

For the January-March period this year, the group’s property sales came in at RM152 million, down 34% from the RM230 million sales it achieved in the same quarter last year.

Middle East conflict weighing on upgrader demand, but starter-home buyers not affected

Geopolitical tensions in the Middle East have affected consumer confidence, Chew said, particularly among upgrader-home buyers, who are adopting a cautious wait-and-see approach before committing to larger property purchases, he said.

There is also a “hollowing out” effect among local small medium enterprises (SMEs) due to growing competition from Chinese businesses and imports, Chen said, which is affecting upgrade demand among business owners.

Nevertheless, he is confident that underlying residential demand remains supported by Malaysia’s growing population, especially demand for first-time home buyers.

"The segment that's not affected is the starter homes or the first home buyers. So it's people who actually used to rent, or now need to move into a new place because they just got married," said Chew. Some are anxious to buy as they worry that raw material costs will spike, besides concern about developers holding back launches driving property prices up, he said.

Plans to secure land with potential RM2 bil GDV this year

Paramount is targeting the acquisition of additional landbank with a potential gross development value (GDV) of RM2 billion, mainly in the northern part of the peninsula and the Klang Valley.

Between December 2024 and March 2026, the group inked six deals to buy 373.9 acres of land with a projected GDV of about RM4 billion. Upon completion, the group will have undeveloped lands with a projected GDV of RM7.3 billion.

Paramount's net profit came in flat at RM14.40 million for the three months ended March 31, 2026 (1QFY2026), as revenue fell to its lowest in nearly five years due to fewer ongoing projects and the absence of new launches. Quarterly revenue dropped 29.7% to RM152.2 million from RM216.46 million, due to softer sales and slower revenue recognition from projects at early stage of construction.

..........

EdgeProp brings you another month of data-driven insights, exclusive interviews, and market commentaries. Subscribe now for your free copy!