City&Country: Real property index

Property agents see bungalow prices stabilising

Prices of bungalows on the Klang Valley’s secondary market are facing an inevitable backlash from the global economic uncertainty and changes in local government policies, real estate agents tell City & Country.

It is becoming apparent that what was until recently a sellers’ market is now looking at a correction. According to the agents, the cautious sentiment seen in the past two months is beginning to impact the market for high-end landed properties priced above RM1 million, with many owners willing to negotiate their asking prices.

“There has been a mismatch between the owners’ expectations and valuations [earlier this year]. Owners are now more realistic about their demands. There have been a few cases where owners agreed to settle on prices that were 5% to 10% lower,” says Kim Realty CEO Vincent Ng, citing as an example a recent bungalow transaction in Bukit Damansara in which the owner accepted an offer of RM750 psf instead of the initial RM800 psf asking price.

Agents note that many prospective buyers are cautiously holding on to their purse strings and adopting a “wait-and-see” approach when considering a property purchase. This is because prospective buyers do not want to commit to a new property, especially a very costly one, until they feel more confident about the economic situation.

Speculative buying of bungalows seems to have died down, the agents say, pointing out that recent transactions mainly involved upgraders. Moderate-sized bungalows with an average of five to six rooms and built-ups of 5,000 to 6,000 sq ft are the favourites at the moment.

Oriental Realty head of marketing Rose Wong says, “Generally, people are looking for comfort without being too extravagant — features such as lifts and swimming pools are not what they are looking for at the moment.”

The agents say bungalows on the outskirts of the Klang Valley are not as popular as those located in the heart of the country’s most affluent region, especially those in gated and guarded communities managed by developers. Bungalows near amenities continue to pull in interested parties on the secondary market.

Sarah Lim, a valuer and real estate agent at SANG Associates, says interested parties with a budget of RM2.5 million to RM3 million are asking for bungalows with built-ups of about 5,000 sq ft. However, properties that fall within this price range are generally in non-gated and guarded neighbourhoods, so the purchaser has to make a choice.

“Buyers are looking for a combination of good security, location and affordability, which is very difficult to find. Due to security reasons, there is a trend of people preferring to stay in condominiums, especially those who travel frequently. With condos providing security and facilities, the buyer can just lock up anytime and go with no worries of break-ins while they are away,” says Lim.

The real estate agents say the recent proposals made under Budget 2012 may further impact demand and house prices, and that the slowdown will become more obvious when the new real property gains tax (RPGT) rates kick in.

It was proposed that a 10% tax be applied on properties disposed of within two years of the purchase, and a 5% tax on those sold within two to five years of the purchase.

The current RPGT, imposed after Budget 2011, is 5% for all properties sold within five years of the purchase. The real estate agents whom City & Country spoke to believe the new RPGT rates will put a damper on the secondary market, especially the high-end property segment.

Bank Negara Malaysia’s maximum loan-to-value (LTV) ratio of 70%, when financing the purchase of a third house, is seen as a deterrent to many looking to upgrade to a bungalow. Hence, prospective buyers are hoping the government will reconsider the loan margins given by banks.

Wong cites a few cases of upgraders who had their applications for a higher loan margin to purchase a bungalow as their third property rejected by the banks. “In the end, after considering the current market condition, coupled with the proposed 30% downpayment on the bungalow, they decided to forego the opportunity.”

SANG Associates’ Lim says the government must also encourage more foreigners to invest in the country through property investment or real estate investment trusts (REITs). “[The authorities] should not just focus on trying to curb speculation and control prices,” she adds.

Sharmila Taluar, a senior real estate negotiator at Reapfield Properties, says, “Everyone is being very cautious with their spending ... next year will not be so robust.”

Sharmila sees property prices re-adjusting accordingly over the next six months to a year, depending on the location and type of properties.

Oriental Realty’s Wong concurs, “I don’t foresee a major dip in this cycle but I do expect a correction in prices.”

Prices of landed homes in the Klang Valley had spiked in the past year, with some properties enjoying a 100% increase in capital value. However, Wong expects prices to stabilise by year-end.
Despite the economic uncertainty and government policy changes, the real estate agents remain optimistic that in the long run, prices of bungalows will still rise, given the scarcity of land in the Klang Valley. Below are some asking prices of bungalows in selected locations in the Klang Valley.

Note: The photos used are general location shots and the properties photographed are not necessarily the ones referred to. All properties are freehold unless stated otherwise.

•    A bungalow with a land area of 11,800 sq ft and built-up of 6,000 sq ft in SS19 is priced at RM2.2 million. The unit is partly furnished with 5 bedrooms and 4 bathrooms. There is also 24-hour security in the neighbourhood.
•    A 2½-storey bungalow in SS16 with a land area of 9,000 sq ft and built-up of 5,000 sq ft, is priced at RM2.5 million. It comes with 6 bedrooms and 4 bathrooms.

Other parts of Petaling Jaya
•    In SS2, a bungalow with 4+2 bedrooms and 4 bathrooms, a land area of 6,045 sq ft and built-up of 2,800 sq ft is priced at RM 1.78 million. It is located near SJK(C) Puay Chai.
•    A bungalow at Mutiara Homes, with a land area of 6,200 sq ft and built-up of 4,200 sq ft, is priced at RM3.9 million. The furnished home comes with 6 bedrooms and 6 bathrooms. Mutiara Homes enjoys 24-hour security and is a five-minute drive from The Curve, Tesco Mutiara Damansara and Ikea.
•    A leasehold bungalow at Tropicana Indah in Kota Damansara, with a built-up of 3,900 sq ft and land area of 4,300 sq ft, is going for RM 2.07 million. The partly furnished unit has 6 bedrooms and 5 bathrooms. There is also 24-hour security.
•    A bungalow at Grove Waterscape in SS23, with a land area of 5,506 sq ft and built-up of 4,800 sq ft, is priced at RM 4.1 million. The 6+1 bedrooms and 8 bathrooms are partly furnished. The unit is located five minutes from the Kelana Jaya LRT station. Membership to the residents clubhouse is included. The bungalow has a 24-hour security system with CCTV as well as an intercom system that connects to the guardhouse.

Kuala Lumpur
•    With a land area of 6,000 sq ft and built-up of 5,000 sq ft, a 6+1-bedroom partially furnished Jln Athinahapan bungalow in TTDI is going for RM4.5 million. The bungalow is just a five-minute drive from SS2 and Tropicana Mall in Petaling Jaya.
•    A 4+1 bedroom and 5 bathroom, bungalow in The Ara, Bangsar, that spans 3,800 sq ft is priced at RM3.45 million. The 3½-storey unit is fully furnished and has a private lift, gym, sauna, swimming pool and 24-hour security.
•    A bungalow in Kiara View, with a built-up of 4,200 sq ft, land area of 4,500 sq ft, and 5 bedrooms and 5 bathrooms, is priced at RM2.8 million. It is partially furnished and comes with 24-hour security.
•    A 4,700 sq ft unit in Impian Bukit Tunku in Kenny Hills, with a land area of 5,200 sq ft, is priced at RM5.5 million. It has 5+1 bedrooms, 6 bathrooms and a swimming pool. Included in the purchase is clubhouse membership and 24-hour security.
•    Another bungalow in The Ara, Bangsar is priced at RM3 million. The unit has a land area of 4,000 sq ft, built-up of 3,500 sq ft, 4+1 bedrooms and 5 bathrooms, which are partly furnished. The bungalow comes with a private lift, swimming pool, 24-hour security and four basement parking bays.

•    A 2,567 sq ft bungalow, with a land area of 5,400 sq ft, is available at RM736,000 in Desa Anjung Putra in Putrajaya. Located on a hill, the unit comes with 4 bedrooms and 4 bathrooms. The bungalow is 10 minutes away from Alamanda Shopping Centre and is situated on Malay reserve land.
•    Meanwhile, a bungalow in Precint 14B, with a built-up of 5,000 sq ft and land area of 8,575 sq ft, is priced at RM 1.95 million. The partially furnished unit comes with 6+1 bedrooms and 6 bathrooms.

Shah Alam/Klang
•    With a built-up of 5,200 sq ft and land area of 5,596 sq ft, a bungalow in Setia Eco Park Shah Alam with 6+1 bedrooms and 7 bathrooms is priced at RM2.7 million. The partly furnished unit enjoys 24-hour security and individual home security systems.
•    A 4,160 sq ft bungalow in Ambang Botanic, Klang, with a land area of 7,200 sq ft, is priced at RM2.7 million. It comes with 4+1 bedrooms and 6 bathrooms. Included is a 5-star neighbourhood clubhouse membership, with facilities such as café, gym, swimming pool, playground, tennis and squash court. The unit is gated and guarded, with a three-layer security system, and is located close to a lake.
•    With a land area of 6,680 sq ft and built-up of 4,200 sq ft, a 5+1 bedroom and 6 bathroom unit in Kota Kemuning Hills is priced at RM 2.98 million. The unit is located near the Carrefour hypermart. It comes with 24-hour security, a free golf and clubhouse membership.
•    A 3,921 sq ft bungalow in Saujana Zero Lot, Glenmarie, on a land area of 4,000 sq ft, is priced at RM2.7 million. It comes with 5+1 bedrooms and 5 bathrooms. It enjoys 24-hour security in a gated and guarded community.


This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 881, Oct 24-30, 2011

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