Huge gap between income levels and house prices unsustainable
The mismatch between property prices and affordability is becoming more apparent as property price growth continued to far exceed income growth. Jones Lang Wootton Executive Director Prem Kumar said the mismatch between property supply and demand was very glaring as income levels were not able to support property prices, as the rate of increase in property prices was greater than the rate of increase in employment income. Prem Kumar said joint loans were usually leveraged by developers to sell the more expensive properties but they were not able to catch up with the growth in property prices. (Malay Mail Online)

Malaysia property market improves, but malls in trouble
Overall demand for the property market is now better after a sluggish 2016, but there might be trouble for the retail sector, said Knight Frank in its report highlighting Malaysia’s real estate for the first half of 2017. It found that while there is still some demand for office spaces and residential properties, the demand for retail was sliding. With the increase of supply and competition, malls are facing challenges in sustainability in the retail market. Operators are refurbishing, rebranding and repositioning their malls to improve footfall. Klang Valley alone has over 1.1 million square feet of cumulative retail stock but saw sales dipping by 1.2% in 1Q this year compared to 2016.(Malay Mail Online)

Local developers face more pressure than Chinese in local property market
Rehda is appealing to the government to create a level playing field for the local industry to compete with the Chinese property developers. Local developers are operating under conditions which have squeezed profit margins from 35% to less than 15%, while developers from China do not have low cost and Bumiputera quotas, and are given a five-year tax break. Other than rising costs, the tight regulation is one of the factors that have resulted in earnings pressure. The local property market is a highly regulated sector, with over 50 laws, regulation and guidelines. (NST Online)

Menara Maybank

Maybank open to financing property development projects
Despite property developers lamenting the difficulty in getting financing for their development projects, Malayan Banking Bhd (Maybank) said it is open to financing property projects provided they are feasible and meet the bank’s strict guidelines. The bank will look at the project to be constructed, the conditions of the land, the ability of the developer and its sponsors, and the existing regulations. Although a developer may only intend to finance the acquisition of an empty piece of land for future development, the bank still puts more emphasis on the potential development project itself, as repayment relies a lot on the sales proceeds. Therefore, borrowers must already have an idea of the future project before they approach the lender. (The Edge Markets)

CIDB: Construction cost to drop 5% by 2020 with IBS
The Construction Industry Development Board Malaysia (CIDB) expects a five per cent reduction in construction cost by 2020, if the use of Industrialised Building System (IBS) is made mandatory by then. IBS factories in Malaysia currently operate at between 50% and 60% capacity. Initial component and construction costs will be quite similar. However, the reduction cost would come from the low number of workforce and shorten duration completion of projects. Malaysia has a total of 237 IBS companies but they only produce certain housing construction components. (NST Online)

Matrix expects record high GDV on new launches
Matrix Concepts Holdings Bhd expects the total GDV of its ongoing projects for FY18 to hit a new record, surpassing FY17’s RM1.9 billion, on resilient demand for its new property launches. The group saw strong demand for its property launches over the past six months and is on track to meet its target of RM1.4 billion worth of new launches in FY18 which are mainly residential projects in Bandar Sri Sendayan, Negeri Sembilan, and Bandar Seri Impian in Kluang, Johor. (The Edge Markets)

Paramount Corp 2Q net profit down 39% on lower property earnings
Paramount Corporation Bhd’s net profit declined 39% to RM14.67 million in 2QFY17, mainly on lower profit contribution to its property segment. Revenue increased 27% to RM184.56 million on higher contributions from both property and education divisions. The group said strong sales for the quarter were recorded from its property arm mainly in its Utropolis Batu Kawan in Penang and Sejati Residences in Cyberjaya developments. (The Edge Markets)

DBKL: Condo management can impose rule barring Airbnb
Although Airbnb has been declared legal by the government, apartment and condominium owners may only rent out their units on the app if their management’s bylaws permit it, said DBKL. A circular from the Urban Wellbeing, Housing and Local Government Ministry states that in the case of strata properties, a management body’s by-laws will determine whether units in a building can be rented out via Airbnb. There have been calls for the online accommodation service to be regulated like e-hailing services, citing the safety risks posed to neighbours of those renting out their units on a daily basis. (Free Malaysia Today)