My view is exactly opposite yours. You clearly have no ideas whatsoever how the economy works, or simply put in this way, how the world works. If you were a developer, would you lower down the properties prices just because you have unsold units? Launched price RM 1million for a superlink freehold villa in KL, would you sell at RM700k just because there is no demand? Some economic theories only work best under the perfect world. DEVELOPERS are cash rich. In the property world, it belongs to the cash rich investors, cash rich developers. Developers will find ways to market their products, BUT WILL NEVER LOWER DOWN properties prices just because they have unsold units. The world belongs to those who have holding power. If malaysia were a tax free country like Brunei, you will be surprised how many Malaysians will use cash to buy properties. Have you seen Hermes, LV prices going down or up years after years. By reading a few comments from the developers how could you conveniently concluded your findings? The smart bosses just finding ways to sell their products by urging the government to help. Simple as that. Welcome to the real business world! Developers already paying high prices for acquisition of lands, you want lowered property prices by developers? Highly unlikely!
Posted by Bodohjim > Oct 4, 2014 01:28 AM | Report Abuse
My view is exactly opposite yours. You clearly have no ideas whatsoever how the economy works, or simply put in this way, how the world works. If you were a developer, would you lower down the properties prices just because you have unsold units? Launched price RM 1million for a superlink freehold villa in KL, would you sell at RM700k just because there is no demand? Some economic theories only work best under the perfect world. DEVELOPERS are cash rich. In the property world, it belongs to the cash rich investors, cash rich developers. Developers will find ways to market their products, BUT WILL NEVER LOWER DOWN properties prices just because they have unsold units. The world belongs to those who have holding power. If malaysia were a tax free country like Brunei, you will be surprised how many Malaysians will use cash to buy properties. Have you seen Hermes, LV prices going down or up years after years. By reading a few comments from the developers how could you conveniently concluded your findings? The smart bosses just finding ways to sell their products by urging the government to help. Simple as that. Welcome to the real business world! Developers already paying high prices for acquisition of lands, you want lowered property prices by developers? Highly unlikely!
@bodohjim I dont see why it is not possible for developers to drop price. You are talking about cash rich developers, in that case yes, dropping price is the final option.
But if there is a develop that has high gearing and low in cash, if he is desperate to have cash to pay for interest expense, dropping price is what he will do, just like small developers in China.
Housing development is kind of biz with high capital, high risk, high revenue but only reasonable return. If we take Mahsing as an example, we will realize that they are just earning very reasonable margin which is about 15% and less. Mahsing is a good example as its cost of land is very close to market value as the land was acquired and developed/turned into revenue in short time. We should not take those companies with land acquired many years ago at much lower than market price and giving us false numbers that housing development delivers huge margin.
This should not limit to property counters only; in fact the phenomenon applies to the broad market. Please do not pick property counters as scapegoat.
Developers won't lower price to clear stock? Not true! I&P offered to clear their stocks of semi-de in Kinrara and condo in Jln Ampang in 2005/06, although not a lot but still a discount.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
GoldenShares
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Posted by GoldenShares > 2014-10-03 22:22 | Report Abuse
GOOD !