EcoFirst plans to launch new residential homes below RM500k to meet affordable residential housing shortage

KUALA LUMPUR: Boutique property developer EcoFirst Consolidated Bhd new property development launches will be priced below RM500,000 per unit as the company aims to tap on the shortages of affordable residential homes in Malaysia.

Group chief executive officer Datuk Tiong Kwing Hee said the outlook for the property sector in 2022 remains challenging amidst the adverse impact of the Covid-19 pandemic situation in Malaysia.

“I believe the residential market will gradually recover in the second half (2H) of 2022, but prices will remain flattish despite the rising raw material prices.

“However, if the economic recovery picks up faster than anticipated, there will be pent-up demand in the property sector,” he said in a statement today.

He said EcoFirst is market-driven and only concentrate on prime location development, and are price-sensitive.

“We are aware of the changing market trends and landscape in the country and are flexible to make the right adjustments to focus on the current market segmental needs and demand promptly,” Tiong said.

The company has engaged independent market study to gauge the demand-supply dynamics of the location, products and branding before the drawdown of EcoFirst’s bridging finance and launching of new development projects.

Based on the market observation and study, many of the unsold residential units in Malaysia are priced between RM500,000 to RM1.5 million, while unsold residential properties priced below RM500,000 are usually those located on the outskirts.

This explains the overhang situation in Malaysia despite the shortage of affordable residential homes.

According to the Housing Bureau Statistics, Malaysia is still in need of affordable residential homes with a shortage of one million units.

Most of these shortages are around the Klang Valley region.

Moving on, Tiong said the Home Ownership Campaign (HOC), which was initially launched in 2019 for six months, has helped to cushion the Covid-19 impact on the property market.

The HOC offers a waiver of stamp duty and tax exemptions, which were reintroduced in June 2020 to boost the property market following the Covid-19 outbreak at that time.

The campaign will end by the end-2021, but the Real Estate & Housing Developers’ Association (REHDA) has asked for another extension of the campaign to provide continued assistance to first-time home buyers.

As Malaysia continues to see a demand and supply mismatch in the property market and the property overhang situation in the country, property developers have been grappling with it even before the pandemic.

Tiong said the company is cautiously optimistic about the earnings prospect for the financial year ending May 2022 (FY22) as EcoFirst focuses on developing high-value land in strategic areas with attractive pricing and development features tailored to the requirement the mass-market segment.

“We’re also cautiously optimistic about a gradual recovery in the property development as Malaysia move out from a pandemic to an endemic stage,” Tiong said.

As of 27 October 2021, more than 94 per cent of the adult population have been fully vaccinated, while the interstate travel ban has also been lifted recently in early October 2021.

Malaysia is projected to see improvement from the fourth quarter of 2021 onwards as businesses and consumers gradually adapt to a new normal.

The recovery is expected after the company slipped into a net loss of RM2.1 million for the first quarter (Q1) ended 31 August 2021 (FY22).

The net loss recorded is in line with the sharp decline of 83.3 per cent in revenue to RM2.7 million compared to a year ago.

According to the filing with Bursa Malaysia, the decline in performance was mainly due to the postponement in the launching of new development and no revenue from the property development segment was recorded.

The property development segment continues to be negatively affected by the Covid-19 pandemic for the quarter.

Despite the sharp decline in earnings, the company’s balance sheet remains relatively stable, with net asset per share standing at 42.16 sen per share as of 31 August 2021 compared to 44.31 sen as of 31 May 2021.