City & Country: Mostly stable as activity picks up

Nabeel: There is a general improvement, thanks to economic and government policies and the election passing without incident

THE housing market in the Klang Valley has been mostly stable with increases in capital values in some locations, remarks Nabeel Hussein, CB Richard Ellis Malaysia's vice-president of research and consultancy, after releasing the 2Q2013 The Edge/CB Richard Ellis Klang Valley Housing Property Monitor.

The period leading up to the 13th general election in May was relatively quiet, but now, things have picked up in not only housing, but the other segments of the property sector as well, he says.

"Overall, there is a general improvement, driven partly by economic and government policies and partly by the fact that the election passed without incident."

According to Nabeel, property consultants continue to see heightened activity in southern Klang Valley. "This has been the trend for some time now, notably in Cyberjaya, but other areas are seeing an uptick in developments as well, thanks to good infrastructure and other factors."

Northern Klang Valley, however, remains slow because of poor infrastructure and a general lack of attractive developments and buying interest.

"There has been a significant amount of development in such areas as southern Puchong and Cyberjaya, mainly in the form of condominiums and serviced residences," says Nabeel. "Sales progress in most of these developments has been strong."

The monitor shows that apartment and small office/home office developments continue to do well mainly due to pricing and location advantages.

"On the other hand, the market for higher-end gated bungalow developments is somewhat slow due to pricing, limited availability of financing and a lack of suitable locations," Nabeel observes.

1-storey terraced houses
In Bandar Sri Damansara, the prices of these properties showed no improvement quarter on quarter, but grew 11.9% year on year. In Abang Haji Openg, Burhanuddin Helmi and Aminuddin Baki in Taman Tun Dr Ismail (TTDI), price growth was 10%, 4.9% and 2.6% respectively q-o-q and 16.7%, 14.7% and 14.3% y-o-y.

TTDI has been a preferred location for a number of years, thanks to a mature catchment, limited supply, good accessibility, developed infrastructure, security and other factors, says Nabeel.

In Lucky Garden in Bangsar, prices rose 6.3% q-o-q and 10.4% y-o-y while in Bangsar Park, they grew 5.6% q-o-q and 8% y-o-y. Price growth in Bandar Kinrara and Puchong Perdana in Puchong was 21.9% and 11.1% respectively y-o-y while in Bandar Kinrara, it was 8.3% q-o-q.

Nabeel says while 1-storey terraced houses are affordable, their supply is limited. Also, in many cases, the units are not large enough for the typical Malaysian family.

"Thus, we believe the prices of these properties will increase marginally, except in the very best locations."

In TTDI, the prices of 2-storey terraced houses continued to rise

2-storey terraced houses
Nabeel says these properties remain the most popular type of residences. "They seem to represent a solid long-term investment."

In Sri Damansara 7 and Sri Damansara 10 in Bandar Sri Damansara, price growth was 6.3% and 8.1% respectively q-o-q and 21.4% and 14.3% y-o-y.

In TTDI, prices in Athinahapan climbed 18.2% y-o-y. This was the only area in TTDI to post a price growth of 8.3% q-o-q. Meanwhile, in Zaaba and Jalan Datuk Sulaiman, prices rose 25% and 18.2% respectively y-o-y.

Bandar Utama 1 (BU1) was the only area in Bandar Utama to post positive growth

q-o-q (10%) as well as y-o-y (19.6%). BU12 had a stagnant q-o-q while prices depreciated 2.1% y-o-y.

The general opinion seems to be that BU1 is better located and offers better infrastructure, facilities and services than BU12.

High-rises
Menara Damansara was the biggest mover in terms of price growth, showing an increase of 20% q-o-q and 36.4% y-o-y.

"Menara Damansara represents a very affordable alternative in a good location, making it attractive, especially as capital values elsewhere continue to rise," says Nabeel.

Units in Villa Flora, Kiara Park, The Residence and The Plaza at TTDI recorded healthy q-o-q price growth of 5.2%, 4.2%, 2.3% and 1.1% respectively and y-o-y growth of 10.9%, 13.8%, 12.5% and 6.4%.

Mont'Kiara Pines condos in Mont'Kiara saw a price increase of 2.2% q-o-q and 10.7% y-o-y while the prices of units in neighbouring Mont'Kiara Sophia were 7.1% more y-o-y but unchanged q-o-q. In Lanai Kiara, prices grew 1% q-o-q and 2.1% y-o-y.

The monitor shows that condos in Sri Hartamas did particularly well with price movements at Plaza Damas (Mayfair) and Sri Putramas challenging those at Menara Damansara. The prices of Plaza Damas units posted a rise of 7.1% q-o-q and 17.6% y-o-y while in Sri Putramas, prices were 6.1% higher q-o-q and soared 30% y-o-y.

Units in Goodyear Court in USJ recorded a price increase of 7% q-o-q and 15.1% y-o-y while Sri Penaga condos cost 3.7% and 9% more q-o-q and y-o-y. Units in Cascadium, meanwhile, recorded a price growth of 3.7% q-o-q and 9% y-o-y while for Tivoli Villa units, it was 13.6% y-o-y.

According to Nabeel, demand for older developments, such as MK Sophia and Tivoli Villas, is stable, but perhaps not strong enough to post a material increase in price.

"Additionally, both MK Sophia and Tivoli Villas are located where there are considerable alternatives of similar age, quality and price."

Although the monitor did not feature newer projects like Verve Suites, MK 10 and 11, Nabeel believes they will continue to lift the quality of property development in the Klang Valley.

"These products are among the most upscale in the submarket of Mont'Kiara," he says. "While it should be noted that these developments were sold on a fully furnished basis, other developments have offered similar packages and incentives."

In the KLCC area, Parkview Serviced Apartment posted a price growth of 2.3% q-o-q and 10% y-o-y while in Stonor Park, it was 5.6%
q-o-q and 8% y-o-y.

On the outlook for the Klang Valley housing market, Nabeel says the oversupply of residential products needs to be looked at closely, depending on the location.

"On a macro level, the residential market looks to be reasonably well balanced, although a considerable number of condominiums is due for completion in KL between now and 2015."

On the Klang Valley rental market, Nabeel says it is subdued mainly because the country has a relatively high rate of home ownership. He believes the high-rise rental market has stabilised after weakness between 2008 and 2011, although upcoming completions pose a challenge.

He also points out that the pace of new launches has picked up since GE13, especially in southern Klang Valley.

"Areas like Semenyih, where S P Setia has just launched a project, and both Sime Darby and China's Country Gardens own large tracts, are poised to see significant development in the coming years."

This article first appeared in The Edge Malaysia Weekly, on September 2, 2013.