City & Country: Healthy growth in residential market

THE residential market performed well last year, according to Nabeel Hussein, associate director of C B Richard Ellis (Malaysia) Sdn Bhd. Presenting The Edge/C B Richard Ellis Klang Valley Housing Property Monitor for 3Q2014, he says, however, that it failed to show the same growth in capital value seen in previous years as a reduction in the availability of finance, concerns about economic growth and the government’s cooling measures served to dampen sentiment somewhat.  

“In general, the housing sector, especially the primary market in the Klang Valley, performed well in 2014. Many developers enjoyed brisk sales for new launches as buyers accelerated purchases ahead of the cooling measures, which are expected to impact the market in 2014.”

Nabeel says there was also healthy demand in the secondary market in the mature areas of the Klang Valley, with prices of landed properties growing considerably in locations such as Petaling Jaya, Shah Alam, Subang Jaya and Puchong.

1-storey terraced
For single-storey terraced houses, Bandar Sri Damansara and Bandar Kinrara saw the highest price growth q-o-q at 12.8%, while Taman Tun Dr Ismail’s Burhanuddin Helmi area recorded the lowest growth at 4.7%.

According to Nabeel, the concern with these locations is the number of alternatives available. However, he adds that the limited size of quarterly samples may not show the true picture.

Bangsar Park recorded the lowest growth y-o-y, at 13.6%. Nabeel says the transaction prices of 1-storey terraced houses in Bangsar Park reached RM1 million each — the highest for such houses in Greater Kuala Lumpur.

“The potential upward price trend of these 1-storey terraced houses is limited unless some upgrading work on the building is carried out. We noticed that some of the original 1-storey terraced homes have been converted into 1½-storey terraced houses with modern-design facades, which would probably push the price up further. A similar upgrading of 1-storey terraced houses to 1½ storeys has also been seen in other mature housing areas such as OUG and the older parts of Petaling Jaya,” he says.

Bandar Kinrara also performed well for the single-storey terraced category. Nabeel says 1-storey terraced houses in Bandar Kinrara are among the most affordable choices with easy accessibility and good amenities and environment.

2-storey terraced
For the double-storey terraced segment, price growth was minimal throughout Greater Kuala Lumpur as only USJ 6 in Subang Jaya saw movement q-o-q, with a 14% rise.

According to Nabeel, USJ 6 house prices tend to be lower compared with similar units in USJ 4. “The rise in house prices in USJ 6 is actually in tandem with that in USJ 4, and the only difference is that buyers can purchase properties at lower prices in USJ 6 compared with similar choices in USJ.”

Y-o-y, BU12 in Bandar Utama, Petaling Jaya, saw the lowest growth as demand for properties there appears to have slowed in the past year, with buyers preferring other nearby areas such as BU1, says Nabeel. “The general opinion appears to be that BU1 is better located and offers better infrastructure, facilities and services compared with BU12.”

He adds that demand for properties in Bandar Utama appears to have slowed in the past year.

Nabeel says despite minimal growth for 2-storey terraced properties, Bangsar had the highest growth in this category.

He says Bangsar has been among the most-favoured locations in the Klang Valley for a number of years, driven by a mature catchment, limited supply, good accessibility, developed infrastructure, security and other factors. “These are established housing areas with good schools, easy accessibility and excellent community infrastructure.

Double-storey terraced house prices in TTDI’s Athinahapan area also saw healthy growth. “TTDI has been one of the most-favoured locations in the Klang Valley. Furthermore, the announcement of the Sungai Buloh-Kajang MRT alignment, with a stop in TTDI, has also brought renewed interest in TTDI.”

Pusat Bandar Puchong was the lowest mover in this category. Nabeel says this is because the area is mature and the property values and yields have stabilised. “Other neighbouring developments such as Bandar Puteri offer newer and better alternatives. Again, this could be due to the sample size available during the review period.”

High-rise

Nabeel says 1-storey terraced houses in Bandar Kinrara are among the most affordable choices with easy accessibility and good amenities and environment

For high-rise properties, not many products saw price movements. Nabeel says the main advantages of high-rise properties are affordability and convenience. “However, they tend to be more susceptible to competition, and price increases will depend greatly on location and surrounding developments.”

Menara Damansara in Bandar Sri Damansara was the only high-rise product that saw growth q-o-q. Nabeel says Menara Damansara represents an affordable alternative within a good location, making it attractive, especially as capital values elsewhere continue to rise.

However, the product that caught the most attention, based on the data provided, was Mont’Kiara Pines in Mont’ Kiara.

“Mont’Kiara Pines completed a major renovation three to four years ago and the building is well maintained and looks decent although it is an old building, completed in 1993,” Nabeel says. “Transaction prices are shooting up for these old buildings because of the big price gap between the newly completed buildings and the older ones, which are in well-kept condition. Overall, the older buildings are affordable compared with the new ones in the same area.”

The announcement of the Sungai Buloh-Kajang MRT alignment, with a stop in Taman Tun Dr Ismail, has brought renewed interest in the residential area

Policies to impact housing market
Looking at the many policies announced in Budget 2014, Nabeel says the housing market in 2014 will be impacted by its implementation.

Nabeel says the most significant policies are the new measures announced under Budget 2014 and the various proposed changes in Iskandar Malaysia. He expects an overall slowdown in the residential market in 2014.

“The housing market has been mostly stable, with increases in capital values in some locations. We’re continuing to see increased activity in the southern Klang Valley areas as this has been an ongoing trend for some time now. The most notable location is Cyberjaya but other areas are seeing an uptick in development activity as well, driven by good infrastructure and other factors.”

He adds that there’s a significant amount of development in areas such as the southern part of Puchong and Cyberjaya, mainly in the form of condominiums and serviced apartments. “Sales for most of these developments have been strong. The upcoming MRT also means that there is vigorous interest in the Sungai Buloh and Kota Damansara areas as well as Cheras and Kajang localities.”

According to Nabeel, the cooling measures announced by the government are expected to dampen the market, although less impact will be seen in the owner-occupier segment.

“Most of the areas and properties covered in this report cater to such end-user demand and not speculation by investors,” he says. “We expect the hardest-hit areas to be those catering to the middle-income group, who are faced with increasing costs and other financial obligations but do not qualify for the government relief programmes.”

This article first appeared in The Edge Malaysia Weekly, on January 20, 2014.