Low interest-rate level helping drive property demand

By S BIRRUNTHA / Pic BY MUHD AMIN NAHARUL

THE residential property market outlook remains positive underpinned by the low borrowing interest rate.

Paramount Corp Bhd CEO Jeffrey Chew (picture) said current demand for residential properties is healthy based on buyers’ interest compared to 2019 and 2020.

“Low-interest rates are a major factor in the purchase of residential properties this year. With low-interest rates, it gives buyers the advantage of owning a home rather than renting.

“The Overnight Policy Rate is expected to remain low in the near future to ensure the recovery of the property market can be achieved,” he said during the group’s financial year 2020 (FY20) results virtual briefing yesterday.

Chew noted that the residential property overhang stood at 57,390 units in the third quarter of 2020 (3Q20), while unsold units under construction stood at 113,576, due to higher pricing and unstrategic locations among other reasons.

Although there was an issue of overhang due to unsold properties, he said it was not a major problem when it came to overall property sales in 2020.

He added that the country’s economic recovery and job market will be one of the impetus to the real estate market.

Chew said demand for land-based residential units is also expected to be the top buyer’s choice compared to multi-storey residential units such as condominiums and apartments fuelled by the implementation of the Movement Control Order (MCO) to contain the Covid-19 pandemic.

“With the MCO period, buyers now are more likely to want their own landed property because there is more freedom and they can do various activities compared to multi-storey residential units.

“In fact, the MCO caused many apartments and condominiums to close their facilities, such as swimming pools and gyms due to the threat of spreading the Covid-19 virus,” he added. Nevertheless, he noted that this trend cannot be guaranteed to last long and it may just be a temporary demand.

Chew said the group’s property sales in 2020 surpassed the previous year’s sales by 11% due to higher sales enjoyed in the second half of 2020.

The launch of new projects, namely Sinaran in Utropolis Batu Kawan in Penang, Sandalwood at Greenwoods Salak Perdana (Sepang) and Sejati Lakeside (Cyberjaya) had contributed to the higher sales last year.

Paramount’s net profit jumped to RM486.66 million in FY20 ended Dec 31 from RM104.05 million in FY19, while its revenue dipped to RM593.56 million from RM705.97 million previously.

For its 4Q20, earnings fell 91% to RM3.59 million from RM39.12 million registered in the same quarter a year before as revenue fell to RM188.39 million from RM209.62 million previously.

The group’s real estate segment generated a revenue of RM584.4 million in 2020, which is lower than RM700.3 million recorded in the previous year.

Paramount said among the factors contributing to the decline include disruption in construction works, as well as additional and unprecedented costs for related projects and compliance costs arising from Covid-19.

The group aims to launch real estate projects with a gross development value (GDV) of RM1.2 billion this year, which is 42% higher than last year.

By segment, the launches include high-rise (55% to total GDV), landed 40% and 5% commercial properties.

Paramount’s key residential projects for this year include “The Atrium”, a high-rise development located in Jalan Ampang, Kuala Lumpur, with a GDV of RM202 million and “Arinna” in Kemuning Utama, Shah Alam (Selangor) with a GDV of RM198 million.