KUALA LUMPUR (May 25): Sime Darby Property Bhd (SDP) sees 2023 to be a challenging year for the property industry due to rising raw material prices and the recent hike in the overnight policy rate (OPR) to 3%.

Despite the pressure, the property developer remained optimistic that it could deliver its sales target of RM2.6 billion for the financial year of 2023 (FY2023).

“I think it is a difficult time especially today, as you see a lot of price increases. There is a lot of pressure on property developers to stabilise margins, but we believe that we will be able to deliver, not just sales numbers but also be able to deliver our products to the consumer,” SDP group managing director Datuk Azmir Merican told a virtual briefing on the group's results for the first quarter ended March 31, 2023 (1QFY2023).

SDP has set a lower sales target in FY2023, compared with RM2.6 billion the year before. The group exceeded its target in FY2022, achieving RM3.7 billion in sales.

On why it had lowered its sales target, SDP said that the group is weighing the continued economic challenges globally.

“As for SDP, we actually brought forward RM816 million worth of industrial product launches that had been slated for 2023 as we reacted to meeting the increase in demand for industrial properties,” SDP said when contacted by The Edge.

The group assured that it will look for opportunities and introduce products that resonate with market demand.

Nonetheless, SDP remains cautious for the second half of 2023 (2HFY2023) on the back of the OPR hike, said SPD chief marketing and sales officer Datuk Lai Shu Wei.

“For the sales outlook, I think we have seen in 1Q2023, we are still driving a very healthy and good sales momentum, and we are also very encouraged with what we do.

“We are also very cautious for the 2H of the year — as you know the OPR rate has been raised, and I think the sentiments from the market is to be a bit more cautious, but we will continue to be very engaging with our customers,” he said.

For 1QFY2023, the group’s net profit rose 17% to RM60.67 million from RM51.84 million previously, while revenue for the quarter rose 43% to RM685.33 million from RM480.33 million a year earlier. The results were mainly contributed by its property development segment.