KUALA LUMPUR: In light of last week's volatile market brought on by fears of a double-dip recession in the US and its impact on global economic growth, Tan Sri Leong Hoy Kum, Mah Sing Group Bhd managing director and CEO, shares his perspective with The Edge Financial Daily.
TEFD: Given the recent turmoil in financial markets and the looming signs of a global recession, what is Mah Sing's outlook as a developer in the property market?
Leong: Property has always been seen as a good hedge against inflation, and on long term our young population base, new household formation and high saving rates will continue to drive demand for properties.
Currently, demand is buoyed by our favourable employment conditions and good housing affordability. Demand has so far been domestic-driven, and for Mah Sing, most of our buyers are locals who are buying for own stay and investment (not speculation). Hence, these are serious buyers who will still go for properties in good locations and concepts by branded developers.
On the outlook, we see continued demand for landed residential properties in good locations, especially in gated and guarded schemes. Investors know that land is scarce and construction cost will always continue to rise, albeit in manageable doses. Hence it is inevitable that properties in good locations will continue to appreciate as well, and astute buyers would want to lock in their investments at today's prices. Demand is also moving towards mass housing, that is well located townships offering properties within the RM500,000 range.
For the commercial segment, smaller SoHo (small office home office) and SoVo (small office versatile office) properties will continue to be popular due to the affordable price points and lack of such supply in selected locations. We also find well sited semi-detached factories which have multiple uses (corporate office, warehousing and light manufacturing) to be in demand as supply is very low, only approximately 10%.
Do you expect to see demand affected, and what does it mean for your operations?
So far, properties under RM1 million are selling like hot cakes and those from RM1 million to RM2 million still do well. These include landed residential, high-rise like serviced apartments and SoHo, as well as the new concept SoVo as the absolute pricing is still within reach of most buyers.
Properties above RM3 million tend to attract a different, smaller target market. Hence, developers offering these products must have holding power. We have done RM1.24 billion sales as at June 30, 2011, and are on track to achieve our sales target of RM2 billion this year. Our sales to date have been good because of a strong response to all segments of our properties, as we have established a strong branding based on our track record of offering innovative, niche products after conducting in-depth market research.
We have enough landbank to last us for the next five to seven years. And with the emphasis on affordable housing in the next few years, we are looking for a large tract of township land to offer properties in the RM500,000 range.
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