In a research note today, it said, the Covid-19 breakout has caused a major upheaval in the global economy, leading most developers to continue assessing the economic situation while deliberating whether to continue or defer future launches. — Bernama pic
“We believe consumer sentiment remains weak for the time being with spending mainly focused on necessities while big-ticket items such as property take a back seat,” said AmInvestment Bank. “On the other hand, we remain cautious about the financial leverage of some companies as it is one of the key factors to their survivability during an economic downturn,” said the research house.
Nonetheless, the bulk of Crest Builder’s borrowings was used to finance its concession business where payment receipts are guaranteed by the government. Excluding the concession borrowings, the company was in a net cash position. Besides, the reintroduction of the home ownership campaign with stamp duty exemption to purchase residential properties priced RM300,000 — RM2.5 million and the exemption of real property gain tax for Malaysians on the disposal of residential properties made from June 1, 2020 to Dec 31, 2021 are positive news for developers.
It also views the long-term outlook for real estate investment trusts to be positive given the diminishing rate of Covid-19 infections in Malaysia while several stimulus plans by the government provide greater earnings visibility.