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Monday, April 18, 2011

Residential property prices to grow by 10pc

Residential property prices are expected to grow 10 per cent this year given the rebound in transaction volume and higher replacement costs, AmResearch says.

The research unit of the AmInvestment Bank group said its previous forecast was a growth of five per cent.

It said replacement costs were on the rise due to escalating land cost as well arising prices of building materials from timber, aluminium, cement to steel.

The recent aggressive bids for land surrounding mature neighbourhoods would solidify the strong pricing trends as land traditionally accounted for between 25 and 30 per cent of residential prices, it said in a research report today.

"The expected reacceleration in residential prices would also be preceded by a sustained expansion in transaction volume, which is already underway now," it said.

It said developers had revealed that demand rebounded strongly in the past month as evident from the strong response to recent launches.

"We reaffirm our overweight stance on the property sector with SP Setia and IJM Land as our deep convictions buys," the research house said, raising its fair value for SP Setia from RM7.38 to RM8.10 and IJM Land from RM3.88 to RM4.00 per share.

By Bernama

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