CREDIT SUISSE: 2Q2015 Residential property transactions (by value) in Malaysia fell 8.0% YoY



The bulls vs the bears

We have come to a crossroads – is this the start of a property slowdown that might last a couple of years or is this just a temporary lull before sales pick up again?

Property developers are behaving very differently; we can tell who are the bulls (EcoWorld, IOI Property) and the bears (Mah Sing, Sunway, Tropicana, SP Setia).

The bears: Mah Sing has revised down its FY15 property sales target by 32% to RM2.3 bn; Sunway by 41% to RM1 bn, Tropicana -30% and SP Setia -13%. These developers are focused on clearing off inventories and watching their cash flows carefully, rather than launching aggressively. Mah Sing and Tropicana have aborted land deals on the belief that land prices could soften.

The bulls: EcoWorld and IOI Properties continue land banking, although they already have a relatively large land bank, which will last beyond ten years.

Should be interesting to see which developer's call is right.