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City&Country: Demand to stay strong

Demand for housing will remain strong in the next two to three years, driven partly by a lack of supply, says Christopher Boyd (picture), executive chairman of CB Richard Ellis (CBRE) Malaysia.

According to Boyd, incoming supply for the Klang Valley was at a low ebb in 2009, with completions of about 30,000 units or just under 2% of the existing supply.

“Supply picked up again last year to about 53,000 units, which is about 3.26% of the existing supply. The figures are lower than what the Klang Valley is used to,” says Boyd.

In comparison, housing supply in 2004 was about 8% of existing supply, and from 2005 to 2007, it hit just over 7%. Currently, there are about 155,000 units under construction in the Klang Valley which will be delivered over a period of three years.

“Supply is not picking up as you would expect in response to rising prices. Part of the problem could be the shrinking landbank for development,” says Boyd.

He expects the housing market supply to rest largely with the big players such as Sime Darby Property, which is planning about 17 launches in the first half of 2011.

Supply in the the top range condominium segment however, is much stronger. CBRE defines top-range condominiums as units priced at RM350 psf onwards. Nonetheless, he believes the oversupply situation is localised as some areas are undersupplied, such as Bangsar, which actually saw an increase in asking price last year,  he says.

Boyd will be among the speakers at The Edge Investment Forum on Real Estate 2011, titled, “Buy,Sell or Hold?” on April 9 at the Sime Darby Convention Centre in Kuala Lumpur.

His talk on “Will property prices drop soon?” will take a look at the property investment cycle, giving investors insights into where the market is heading as well as what and where to buy.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 850, Mar 21-27, 2011

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