HOC will help property market recalibrate, says EcoWorld

By NG MIN SHEN / Pic By HUSSEIN SHAHARUDDIN

Malaysia’s property market could recalibrate to its natural level by next year as many unsold units would have been cleared from the system as a result of the Home Ownership Campaign (HOC), said Eco World Development Group Bhd (EcoWorld).

Its president & CEO Datuk Chang Kim Wah said all property developers expect to clear “quite a lot of stocks” during the HOC, which began on Jan 1 this year and ends on June 30, 2019.

“With that, going forward – say maybe after this year, next year onwards – the market would have recalibrated. It will come to a new beginning again. Then people will start new launches, there’ll be new buyers in the market. We hope that sets new optimism in the property market,” he told a press briefing on the group’s financial results for the second-quarter ended April 30, 2019 (2QFY19) in Kuala Lumpur yesterday.

The industry has some RM20 billion worth of unsold residential property at the end of 2018 and hopes the HOC would help clear at least RM3 billion worth.

On the matter of country’s increasing residential property overhang, Chang said this would not be a problem, despite developers continuing to launch new projects.

“Even though we have new units coming in, you will see a delay in a lot of launches by developers over the last two years. So, we would expect somehow there would be a balancing act coming in along in the next year or so,” he said.

The property developer recorded sales of RM1.026 billion for the seven months from November 2018 to May 2019, boosted partly by “a strong rebound in sales following the official launch of the HOC on March 1, 2019”.

Sales were also spurred on by initiatives under the group’s own Home Ownership Programme (HOPE).

Although the HOC will be ending in June, the group is optimistic of achieving its sales target of RM6 billion over the next two financial years ending Oct 31, 2019 (FY19) and FY20.

“We don’t see any problem with the end of the HOC as we also have our own campaigns, such as HOPE, and we will continue to enhance the amenities and local infrastructure within our own projects.

“We’re continuing more in making the differentiation between us and our competitors. If we continue to do that, we’re quite confident our sales momentum will continue and maybe even accelerate,” Chang said.

EcoWorld’s net profit fell 4.5% to RM41.17 million in the second-quarter ended April 30, 2019 from RM43.13 million a year ago on higher administrative and sales and marketing expenses.

Revenue for the quarter slipped 1.2% to RM543.18 million from RM549.71 million the year prior.

The group is confident of achieving better results in the second-half of FY19 (2HFY19), underpinned by its effective stake in the future revenue of properties sold by its subsidiaries and joint-ventures amounting to RM6.09 billion as at end-May 2019.

Its unit, Eco World International Bhd (EWI) recorded a net loss in 2QFY19 due to the completion method of earnings recognition adopted in the UK.

However, the group said it is on track to record “substantially higher profit in 2HFY19” as compared to 1HFY19, based on the targeted handovers of several additional residential blocks in the next few months which will enable profit recognition from these sales in the upcoming quarters.

EWI recorded RM586 million in sales for the first seven months of FY19. It is also actively pursuing new build-to-rent opportunities in London and is currently in negotiations to finalise the terms for a sizeable deal before year-end.