PETALING JAYA (Aug 9): With lower volume and value of transactions recorded in the first half of 2016, the market outlook for high-end condominiums in Kuala Lumpur remains slow as buyers and investors continue to adopt a “wait-and-see” approach, said property consultancy firm Knight Frank Malaysia.
In its Real Estate Highlights research report, Knight Frank Malaysia noted that with the widening gap between supply and demand, as well as mismatch in product pricing and affordability in the domestic market, more developers are widening their target catchment by marketing overseas, taking advantage of the weak local currency which translates to attractive pricing and a low entry level for foreigners.
“The challenging property market environment has led to a greater level of marketing strategies with developers adopting innovative ‘push marketing’ to boost sales of selected projects and improve revenue.
“Meanwhile the impending completion of the Light Rail Transit (LRT) extension line and Phase 1 of the ongoing Sungai Buloh-Kajang Mass Rapid Transit (MRT) line by end-2016 will continue to promote more transit oriented developments (TODs) along the transportation routes.
“More developers are also looking to expand their land banks into the suburbs to offer a wider mix of affordable housing products that cater to the domestic market,” said the report.
Transaction value and volume drop
In Kuala Lumpur, the volume and value of residential property transactions declined by 8.3% and 11.4%, respectively, in 2015 when compared to 2014. Growth in the Malaysian Housing Price Index was also muted at 5.8% in 4Q2015, the lowest since 1Q2010 (5.7%), the report added.
According to the report, the completion of 1,033 units of high-end condos or residences from three projects (Pavilion Banyan Tree Signatures, 441 units; Vortex Suites & Residences @ KLCC, 432 units; The Residences at St Regis KL, 160 units) during the review period (1H2016) brought the cumulative supply in KL to 43,782 units.
By 2H2016, the scheduled completion of another five projects will contribute some 1,138 units to the existing stock. These projects are KL Trillion, Le Nouvel, Setia Sky Residences (Divina Tower), Three28 Tun Razak and One Kiara (Tower A).
During the review period, asking prices continued to remain resilient in most locations, said the report.
“Since 2015, the rental market, particularly in KL city, has been under pressure following job cuts due to the slump in crude oil prices and a slowdown in the economy.
“With heightened competition in a tenant-led market, there are owners willing to compromise on lower rentals to secure and retain tenants,” it said.
In the primary market, selling prices of high-end condos or serviced apartments in KL city range from RM1,300 to RM1,900 psf while branded residences are generally priced from RM2,000 psf onwards. In KL Fringe such as Mont’Kiara, newly launched condos or serviced apartments are priced from about RM800 to RM1,200 psf.
The report also said that prices in the secondary market continued to remain supple.
“During 2H2015, small to mid-sized units at about 600 sq ft to 1,300 sq ft in selected schemes such as ViPod Residences, The Horizon and The Troika were transacted at about RM1,300 to RM1,800 psf.
“Larger units at about 1,600 sq ft to 2,600 sq ft in selected projects such as The Troika, Pavilion Residences and Quadro Residences command prices from RM1,100 to RM1,600 psf,” it said.
Knight Frank added that despite cautious sentiment in the high-end residential segment, there were several notable previews and launches during 1H2016.
Among the notable projects unveiled recently were Latitud 8, a joint venture between Crest Builder Holdings Bhd, Prasarana Malaysia Bhd and Detik Utuh Sdn Bhd; and Aria by Hap Seng Land Sdn Bhd.
The 43-storey Latitud 8 is a TOD sitting above the Dang Wangi LRT station and is a single block mixed commercial development with a GDV of RM1.1 billion. Slated for launch by 3Q2016, Aria is located along Jalan Tun Razak and will offer 598 units in two blocks with built-ups between 630 sq ft and 1,502 sq ft.
Also on the watch list are mega projects with residential components such as the 19.4-acre Bukit Bintang City Centre (BBCC) development and the 15.8-acre Pavilion Damansara Heights.
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