KUALA LUMPUR: Mah Sing Group Bhd says home purchases may quicken in the second half as buyers snap up properties ahead of the implementation of a new tax, helping Malaysia’s fourth-biggest property developer meet its record sales target for 2014.
A 6% goods and services tax that will start in April 2015 is expected to result in higher property prices, Tan Sri Leong Hoy Kum, group managing director of Mah Sing, said in an interview yesterday. The company is targeting sales of RM3.6bil this year, he said.
Cheap credit has helped boost demand for properties and allowed Mah Sing and other developers to post record profits last year, prompting the Government to impose steps to cool the market and ease household debt. Builders such as UEM Sunrise Bhd and Sunway Bhd are scaling down new projects after cooling measures led to slower sales, a business daily reported April 28, citing a real estate association.
“We are not scaling down, we are launching selectively the right products to match market demand,” Leong said.
“The household debt is not a concern as it is also backed by high financial assets like properties, and property is seen largely as one of the best hedges against inflation.”
Bank Negara shortened the maximum length on mortgages in July, saying household indebtedness had risen by an average 12% per annum in the past five years. The Government stopped developers from helping buyers by absorbing some interest payments on loans and raised the capital gains tax to 30% on homes sold within five years.
Shares of Mah Sing rose 0.4% at the close, the most in a week. The stock has gained 3.7% this month, trailing a 4.4% increase for the Bursa Malaysia Property Index.
Mah Sing was seeking overseas expansion in countries such as Australia, Singapore, Indonesia and the UK, Leong said. The company also planned to inject its commercial and industrial assets into a real estate investment trust, or REIT, in three to five years, he said.
The company had RM8.8bil worth of commercial projects comprising shopping malls, hotels and service residences being constructed or planned, Leong said.
“That is part and parcel of our plans, and it’s still in planning stages,” he said. “Eventually, it will be the exit strategy for us as we cash out” while still controlling the assets, Leong said. – Bloomberg
