With the property market trending towards low-cost and mid-tier housing as consumers avoid luxury properties, more developers are tightening their belts in anticipation of the lower profit margins found in these segments.
This is seen in LBS Bina Group Bhd’s recently announced 2019 outlook, in which the construction-cum-property player set a sales target of RM1.5 bil for the coming year, a 17% downward revision of its 2018 target of RM1.8 bil.
Sales growth to moderate
The figure duplicates its 2018 sales performance of RM1.53 bil. Properties in Klang Valley accounted for 90% of these sales, with 63% priced below the RM500,000 mark. It also follows on four consecutive years of sales revenue growth for the developer, rising from RM645 mil in 2014 to RM1.43 bil in 2017.
Launches above RM1 mil comprise just 1% of LBS Bina’s portfolio, says Lim.
“It was a challenging year both locally and globally in 2018, due to factors such as the general election, fluctuations in crude and palm oil and the ongoing US-China trade war as well as a weakened ringgit,” says LBS Bina group managing director Tan Sri Lim Hock San.
“However, there is still strong underlying demand for quality and affordable units. Our strategy to focus on more affordable units within self-sustaining and matured townships continues to be well-received by the market and has helped us ride through the challenging market conditions.”
In addition to segmentation, the developer also shared that profit margin management would be a core part of its strategy moving forward, as a corollary to the defensive sales target it has set for itself in 2019.
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