City&Country: The Edge/CB Richard Ellis Klang Valley Housing Property Monitor (Oct-Dec 2010)

Property values along MRT line to appreciate

The value of houses located along the proposed MRT line, like those in Taman Tun Dr Ismail (TTDI) and Bandar Utama, are expected to appreciate. CB Richard Ellis (CBRE) Malaysia managing director Allan Soo says the house prices will rise quickly but it will also depend on how fast the MRT is built and how much traffic it carries.

“If the MRT makes life easier, I would rather take it than drive. The line is one of the better ones I’ve seen as it stretches from Sungai Buloh to Jalan Bukit Bintang to Cheras,” he says when presenting The Edge/CBRE Klang Valley Housing Property Monitor for 4Q2010.

Data for the last quarter of 2010 showed growth in property prices in almost all areas surveyed. However, the data collected and the word on the street were markedly different. “It is a surprise, to be honest,” says Allan Soo, in presenting the monitor. “The fourth quarter is usually quieter; even the agents say it is so. The data is a surprise to us. It doesn’t tally with what we know.”

Nevertheless, the positive growth is welcomed as 2011 gets underway. However, several areas showed a drop or low growth, such as 2-storey terraced houses in Jalan Datuk Sulaiman in Taman Tun Dr Ismail, which dropped 20.51% for the quarter. Soo believes that the area is facing stiff competition from surrounding areas that are guarded. “Security concerns and issues may have caused some areas in Taman Tun Dr Ismail to lose their flavour compared with guarded communities,” he says.

Two other areas that recorded low or zero growth are on the high-rise list. The first is
TTDI’s The Plaza, which recorded 0.74% growth. Soo believes this could be due to the positioning of the condominium, which means some units have better views than the others.

The second is Lanai Kiara in Mont’Kiara, which experienced zero growth in the quarter. Soo says competition is drawing buyers away from Lanai Kiara due to its age — there are newer condominiums in the vicinity to choose from.

On a positive note, the 1-storey terraced houses in the monitor showed positive gains compared with the year before. Streaking to the top of the list are houses in TTDI’s Burhanuddin Helmi.

“TTDI is still seen as a good location and the 1-storey terraced houses are the only things to buy if you missed out on the 2-storey homes,” Soo says. “The good performance of the Burhanuddin Helmi area is due to its better design and infrastructure.”

As for 2-storey terraced houses, all of those in the monitor showed strong growth, with houses in Bandar Sri Damansara SD10 surging 39.47% in 4Q. Bandar Utama’s BU1 homes were next, growing 32.73%.

Some older high-rises, such as Bangsar’s Tivoli Villas (+19.35%), TTDI’s Kiara Park (+15.56%) and Villa Flora (+15.38%), also outshone their younger competitors.

“Bangsar and Damansara Heights do not have any new supply, with the exception of One Menerung. As a result, the tenancy market is still very established and strong in comparison with others,” Soo says. “Moreover, the high-rise market in Bangsar and Damansara Heights is stable. The secondary market grows and allows older units, like those in Tivoli Villa, to go up in price. This doesn’t happen in other places.”

As for the good performance of TTDI’s Kiara Park and Villa Flora, Soo says their large land size and good location and designs trumped the competition.

In summary, all areas and property types showed some growth. Soo believes 1Q2011 will be quiet. “This quarter will be flat but things will improve from the next quarter onwards,” he says.

As for concerns about escalating property prices, Soo says the 70% loan-to-value ratio for the third housing loan has made an impact, especially on houses priced at RM3 million and more, due to the high financial outlay.

He uses a three-tiered pricing structure to explain the performance of the property market in the coming months. In the top tier are houses priced from RM3 million, followed by the middle tier comprising properties priced from RM1 million to RM3 million. The last tier consists of houses priced below RM1 million.

The houses in the first tier, Soo says, will not do well for the reason mentioned earlier. Second-tier homes in selected hot spots will do well but houses in the last tier will do very well, he adds.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 847, Feb 28-Mar 6, 2011

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