Developers rebuilding strategies

More developers are ramping up their marketing strategies to boost sales and counter the slowdown in the property industry, according to a report by AllianceDBS Research.

It said developers were introducing various innovative schemes to alleviate financing burden for home buyers.

“These include effectively zero upfront payment, deferred payment schemes, attractive cash rebates and discounts, value-adding furniture/renovation packages and free legal fees.

“Maintaining prices at affordable levels (unit basis) remains the key sales driver to secure bank loan financing with approval appearing to be more stringent now,” it said in a report yesterday.

The research house noted that there have been delays in property launches in 2015, adding that as developers adjust to the softer demand, there is likely to be more launches in 2016 to maintain their earnings visibility.

“Property price growth is likely to remain subdued this year, converging towards its long-term average growth rate of 5% after registering double-digit rates from 2012 to 2014.”

Alliance DBS added that developers have been incorporating more affordable homes in their launch pipelines, as demand for affordable housing remains strong despite the weaker sentiment.

“Absolute property prices have been kept low by offering smaller built-up units. This is mainly to address the affordability issue, as buyers have been priced out by the skyrocketing prices.”

The research house also said the Government’s First House Deposit Financing Scheme (MyDeposit), announced in Budget 2016, had come onstream on April 7 to help first home buyers with a deposit contribution of 10% of the property price for properties below RM500,000.

“The RM200mil budget allocation for 2016 may contribute to 7,000 units or 3.5% of property transactions priced below RM500,000.

“Therefore, we believe the impact to the listed developers under our coverage is likely to be relatively muted given that most of their products are sold at higher prices.”

AllianceDBS noted that developers have been facing difficulties in converting their initial high bookings to sales because of stricter bank lending policies.

It said banks are also getting more cautious towards the property sector despite the keen interest shown by potential home buyers, especially genuine home-occupiers who may be purchasing properties for the first time or upgrading to better homes.

“While the property market has been rather lacklustre compared to the past few years, the overall house price index remains on the uptrend, albeit at a slower pace.

Affordable landed properties with ready infrastructure and amenities remain in demand, as attested by some of the recent launches.

“Developments that are integrated with current or planned public rail stations continue to be sought after. “Property buyers have been increasingly seeking value-adding properties as more affluent buyers continue to upgrade their lifestyle.” - The Star