Earnings were cushioned by foreign contributions.
Private home sales have been on a downtrend for the past couple of years, but the country’s listed developers still continue to book healthy profits in 2015.
According to a report by RHB Research, the secret behind this growth is overseas diversification. When developers realised that the market is headed for a downcycle, most chose to recycle their capital into overseas markets or build up their recurring income base by acquiring investment properties locally and overseas.
“So the impact of a weak local residential market had not been as pronounced as one would expect. We see a trend of developers diversifying into overseas markets. Besides the traditional markets such as UK, Australia and China, some are venturing into emerging markets such as Cambodia and Myanmar, or developed markets such as Netherlands and Japan,” RHB Research said.
“Going forward, we expect the local residential market to remain challenging on the back of subdued investment demand and constrained liquidity due to the cooling measures. Also, the supply pipeline remains high especially in the suburban segments. We expect more price incentives as developers seek to clear their existing stock. Notwithstanding this, we think the developers’ stock prices had priced in a lot of bad news, and prospects for selected players are actually quite bright,” RHB added.
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