KUALA LUMPUR: Developer SP Setia has revised its sales target from RM4 billion to RM3.5 billion, its lowest in four years.
The revision was due to slow uptake of properties, AllianceDSB Research said in a report last week.
SP Setia, according to a report in Singapore’s Business Times, isn’t the only builder hurt by tepid demand although it also has Brexit to contend with in the form of the Battersea Power Station development.
Developers say that demand remains relatively intact but that tighter lending guidelines are stymieing the sector because banks are rejecting most of the loan applications, according to the BT report.
Prior to the tightening, housing demand had been robust on the back of easy bank credit and friendly developer interest bearing schemes.
“However, Malaysia’s household debt is now a staggering 89 per cent of GDP – a level of indebtedness that carries substantial risks given the economic uncertainties”, said the report.
Developers, including government-linked SP Setia, have turned to more affordable township projects in Malaysia to attract buyers. Even so, its earnings visibility is clouding.
AllianceDBS noted that sales of Battersea – owned in joint venture with the Employees Provident Fund and Sime Darby Bhd – which account for nearly half of SP Setia’s RM8.7 billion unbilled sales have slowed down markedly after Britain voted to leave the European Union.
It has downgraded the stock which is trading at around RM3.28 to a “hold”.
Meanwhile, the BT report said, Putrajaya was expected to propose new measures in next month’s budget to boost property sales.