Residential property market to flourish in 2010, says investment bank

KUALA LUMPUR: The residential property market is expected to thrive this year as it rides on the surge in demand, particularly in the medium-high segment, says MIDF Amanah Investment Bank Bhd.

It said that though new property launches in key cities like Kuala Lumpur, Johor Baru and Penang were less encouraging, the expected stronger economy this year should see the launches of previously delayed projects.

"Our survey with key developers shows purchasing interest remained high with take-up rates of new projects at an average of 70% just from private previews or first few days of the launch," it said in its research note.

Despite signs of sectoral revival, it said the property sector still lacked foreign participation to drive its marketability.

More measures are needed to secure foreign participation apart from the present tax incentives and MSC-status benefits, said the investment bank.

As for the property sector, MIDF Amanah Investment Bank maintained neutral as it expects property sales to undergo a minor correction when Bank Negara Malaysia begins to tighten monetary policy and foreign funds start withdrawing should the economic recovery lose its momentum.

“However, we believe local investors will cushion the downside as property buyers will seize any buying opportunity. We continue to favour counters with exposure to the mid-to-high-end residential market and industrial developments," said the investment bank.

It said medium- and high-end properties benefited from an economic recovery as consumer purchasing power increased, participation in small-and medium-scale

property sector also increased from business expansion.

Residential sector remained a favourite for hedging purposes, it added. -- Bernama
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