KUALA LUMPUR: Real estate will not be a superb hedge in opposition to inflation presently provided that property value appreciation shall be restricted as a result of ongoing provide glut, says RHB Research.
Further, the inflation upcycle won’t doubtless translate to substantial demand and earnings progress as a result of sharp enhance in constructing supplies prices that began in 2Q21.
“Many commodities resembling crude oil, metal, copper and aluminium are seeing vital value hikes.
“As financial progress has simply began to get better and given the continued oversupply situation, we don’t assume the builders will be capable to move on the extra constructing prices through increased property promoting costs,” mentioned the analysis agency.
In addition to lacklustre demand and rising prices, RHB famous that Budget 2022 didn’t embody any plans to draw new home and overseas direct investments, nor new financial corridors to restart the financial engine.
“There was additionally no point out of any new mega infrastructure initiatives, and solely a quick point out of the MRT 3 mission.
“The property sector will in all probability need to proceed tapping on the present ongoing infrastructure initiatives to spearhead the recovery,” it mentioned.
Meanwhile, RHB expects the following basic election to be known as quickly, which has confirmed to create lacklustre demand for property shares six months previous to nationwide polls as a result of uncertaint outlook post-election.
RHB estimates 2021 gross sales progress to be about 70% in comparison with a contraction of 16.4% year-on-year (y-o-y) in 2020.
For 2022, it initiatives 10-15% y-o-y gross sales progress given the upper base in 2021.
Its prime choose is Matrix Concepts with a goal value of RM2.47.
