By Justin Lim
KUALA LUMPUR (March 3): The current low interest rate environment bodes well for the property market due to lower borrowing costs, says Paramount Corp Bhd group chief executive officer Jeffrey Chew.
Against this backdrop, coupled with the fact that the local economy is widely expected to recover in 2021, he is hopeful that the property market this year will be better than the last two years.
“Interest rates have come down and hopefully will stay low, prompting people to start buying properties,” Chew today told a virtual media briefing on Paramount’s financial results for the year ended Dec 31, 2020 (FY20).
The property developer achieved total property sales of RM770 million in FY20, 11% higher than the RM692 million recorded in FY 19 despite the fallout from the Covid-19 pandemic. It is worth noting that Bank Negara Malaysia has slashed its key interest rates four times last year by a total of 125 basis points, to a record low of 1.75% since the floor was set in 2004.
Chew said Paramount saw sales grow year-on-year (y-o-y) in every quarter last year — except in 2QFY20 when it fell by 61 % y-o-y due to the impact of the Movement Control Order (MCO) that started on March 18, 2020.
This was despite the group having scaled back its property launches in FY20 to just RM834 million, from its RM1.2 billion original planned launches for the year.
Chew said the group has achieved a total sales of nearly RM100 million for the first two months of2021, double the RM48 million sales achieved in the same period last year, before the pandemic hit the country.
On the back of this optimism, Paramount is setting a property sales target of RM1 billion for FY21, with RM1.2 billion worth of new launches planned — 44% higher than last year’s new launches.
Chew said the group is not too concerned about market sentiments, but more about not launching enough products to meet market demands.
“I am confident that we will be able to hit that RM1 billion sales target if we get all the projects launched. The fear now is not being able to launch the targeted RM1.2 billion worth of new launches if we don’t get the approvals from the government on time.
“Buyers now buy properties because they like something new and with good features, compared to getting an old unit as the latter still requires re-furnishing and it is costly to do so,” he noted.
Chew is hopeful that the government will recognise the need to help property developers by accelerating the process of approval from all the authorities, so the property players can help the economy to recover faster post-pandemic.
Last Thursday (Feb 25), Paramount saw its FY20 net profit quadruple to RM486.66 million from RM104.95 million in the previous year, thanks to a one-off gain recognised on the disposal of the pre-tertiary education business of RM462.7 million.
Excluding the gain on disposal, full-year pre-tax profit from continuing operations came in at RM51.8 million, compared with RM88.8 million for FY19, mainly attributable to the lower contribution from the property division but was mitigated by lower non-recurring expenses and interest expense in the investment and others division.
Revenue, however, was down 15.92% to RM593.56 million in FY20 from RM705.97 million in FY19. At 2.30pm, Paramount shares were unchanged at 81 sen, bringing it a market capitalisation of RM498 million. There were 277,700 shares traded.
As published: The Edge