City & Country: Investors stay cautious

The Klang Valley landed-housing market may be hot but we are not in a property boom, says Allan Soo of CB Richard Ellis (Malaysia).

“A property boom is characterised by people going mad about prices and rushing to buy, but we don’t see this happening in Malaysia,” he said when presenting The Edge/CBRE Klang Valley Housing Property Monitor for 1Q2010.

He says while certain segments of the market are hot, generally there is still uncertainty moving forward with some potential investors staying cautious and taking their time before taking the plunge.

Sampling for the housing property monitor reveals that prices on the secondary market moved up during the first quarter, due to credit-fuelled demand.

“It was easy to secure loans with favourable terms,” Soo says. Consequently, people invested in upgrading their homes, creating a demand that helped push prices up.

Soo likes gated-and-guarded landed homes and projects such as those in Ara Damansara in Petaling Jaya, Glenmarie in Shah Alam, and Desa Parkcity in Kuala Lumpur.

Prices in Desa Parkcity, in particular, have spiked in recent times. For example, 2-storey intermediate Zenia Parkhomes houses with an average land size of 22ft by 65ft and built-ups of  between 2,500 and 2,700 sq ft, launched at RM620,000 in 2006, are today being put on the market by owners at more than double the price, for as much as RM1.5 million.

The 3-storey intermediate Zenia Parkhomes houses with an average land size of 22ft by 70ft and built-ups between 3,200 and 3,600 sq ft, which were sold in 2006 for RM870,000, are now going for as much as RM1.75 million or at a whopping 101% premium.

A recent posting on The Edge property portal’s (www.theedgeproperty.com) “Today’s Hot Deal” section, a 3-storey intermediate Zenia Parkhomes unit measuring 22 ft by 65 ft with a built-up of 3,412 sq ft was sold for RM1.6 million.

In another posting, a 3-storey Zenia Parkhomes but this time an endlot, 22 ft by 65 ft with built-up of 3,466 sq ft was sold for RM1.8 million.

The success of Desa Parkcity has convinced Soo that the way forward for most developments is gated-and-guarded, as consumers seek security and a balanced lifestyle. Developers, Soo says, should also provide amenities such as retail outlets and clubhouses.

Is the demand for landed homes creating a bubble? Soo certainly sees the possibility of a price bubble forming rather than a supply bubble. “I don’t see an oversupply in landed homes and there is no major supply coming onstream to dilute the market,” he reasons.

Meanwhile, the 1Q2010 monitor shows that 2-storey terraced houses sampled in most areas moved up in price from 4Q2009. The most significant price growth was seen at Pusat Bandar Puchong’s Taman Wawasan (3.33%), followed by all-time favourite hot spot Bangsar Baru (2.04%).

Prices, meanwhile, stayed unchanged at Bandar Sri Damansara SD7, USJ, and Puchong Jaya. It must be noted that y-o-y, all areas surveyed showed a rise in value, with Bangsar Baru leading the pack with 13.64%.

Single-storey terraced houses sampled showed steady performance. Those in Puchong Perdana and Taman Tun Dr Ismail’s (TTDI) Jalan Abang Haji Openg rose 3.33% and 2.17% respectively from the preceding quarter, with the rest unchanged. 

Interestingly, y-o-y values at TTDI’s Jalan Burhanuddin Helmi and Bangsar’s Lucky Garden dipped 2.17% and 0.88% respectively.

While the demand for landed homes has risen, the same is not true of most high-rise units. “Demand has slowed,” says Soo. However, with the recent announcement of 10.1% GDP growth for Malaysia in 1Q2010, this could change.

Due to lacklustre demand, values at most areas sampled during the quarter under review either stayed unchanged or dipped slightly from 4Q2009. The exceptions were Sri Hartamas’ Plaza Damas (Mayfair) where prices rose by 2.7%, Bangsar’s Tivoli Villa (1.61%) and Sri Penaga (1.49%). 

Still, y-o-y, values of nearly all condominiums sampled improved, with Sri Penaga leading with a 4.62% rise, closely followed by TTDI’s The Residence (4.41%). Those that dipped in value were KLCC’s Stonor Park (2.44%), TTDI’s The Plaza (1.47%) and Bangsar’s Cascadium (0.85%).

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 807, May 24-30, 2010.