Property demand to improve end-2014 ahead of GST, says UBS

KUALA LUMPUR (June 3): Demand for property is expected to improve towards end of the year as potential home-owners buy ahead of the general sales tax (GST) implementation in April next year that would raise prices across the board, according to UBS Investment Research.

In a note last week, the research house said the focus would be on the more competitively priced 'bread-and-butter products', such as landed and township developments.

“We expect developers to be more active in the second half of this year after a slow start to the year due largely to uncertainties in the market,” said UBS analysts Edwin Siow and Chris Oh.

Siow and Oh said they maintained a "buy" call for Mah Sing Group Bhd and S P Setia Bhd, but downgraded UEM Sunrise Bhd to a "neutral" call from "buy".

According to the analysts, the property sector is expected to remain resilient due to favourable demographics, rising urbanisation, low unemployment and reasonably low interest rates, which will help sustain demand.

They added reforms and the Economic Transformation Programme (ETP) should invigorate economic growth, create new wealth and attract investors.

“This will be positive for property demand,” said Siow and Oh.

“We expect Prime Minister Datuk Seri Najib Razak’s structural reform agenda to have a positive spill-over effect on the sector on a macro and longer-term basis.”

Siow and Oh noted the property sector index has been recovering over the past few months, signalling the return of investor confidence.