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Market likely to be slower until after GE13

FOR Malaysians, the start of 2013 has been exciting yet uncertain because of the 13th general election that is expected to take place in March this year. How will the polls affect the residential property market? And what can investors look forward to?

"We expect transactions to be slower in the first half of the year until the election results are known and accepted. After that, much depends on investor perception of the new administration's likely policies for the property sector," remarks Nabeel Hussain, CB Richard Ellis Malaysia's vice-president of research and consultancy, when presenting the 4Q2012 The Edge/CB Richard Ellis Klang Valley Housing Property Monitor.

For the rest of the year, the outlook for the Klang Valley housing market looks stable, he adds. "We expect to see a period of stabilisation with strong performance restricted to selected projects offering attractive and unique selling points. Activity should pick up again after the election, but as indicated earlier, much depends on the results."

According to Nabeel, the condominium market will most likely face downward pressure in prices as a large number of completions are due this year and next such as 222 Residency, Setapak, and The Sanderson, Bukit Serdang, as well as G Residence in Happy Garden, Kuala Lumpur, to be completed this year.

A quick glance at the 4Q2012 data reveals positive performances across all property types q-o-q and y-o-y. "This indicates the broad residential market continues to perform well, especially in the more mature areas covered in our survey," says Nabeel.

1-storey terraced houses


Q-o-q results reveal that in 4Q2012, the prices of 1-storey terraced houses in Puchong Perdana rose 11.11% while in Taman Tun Dr Ismail's (TTDI) Aminuddin Baki, they gained 7.14%.

"The 1-storey terraced houses in Puchong Perdana are relatively cheaper. Even with a double-digit increase in capital values, prices are still affordable and attractive," says Nabeel. "As for Aminuddin Baki, it is one of the more desirable residential addresses in the Klang Valley due to a combination of products, facilities, location, amenities, security, accessibility and other factors. It also benefits from a lack of new supply."

Y-o-y, the prices of 1-storey terraced houses in Bandar Kinrara, Puchong, rose 21.43% while they increased 15.94% in TTDI's Burhanuddin Helmi and 15.79% in Bandar Sri Damansara. While their price points are different, these popular areas have key similarities such as location, accessibility, nearby facilities and safety, Nabeel observes.

Short supply and strong demand have ensured the prices of 1-storey terraced homes will keep rising. Still, says Nabeel, "it really depends on the location, product and competing offers in the area. Overall, there is limited supply and even more limited sellers of these types of properties. Most of the new developments in the 1-storey terraced house areas surveyed are high-rise. As a result, prices should continue to be strong, especially as the prices of their main competitors — apartments and condominiums — continue to increase".

2-storey terraced houses

In Bangsar Baru, 2-storey terraced houses achieved q-o-q price growth of 11.11% followed by 9% each in TTDI's Athinahapan and Zaaba areas.These "old timers" continue to offer good value, although asking prices are high — over RM1 million.

"Bangsar Baru remains one of the prime residential neighbourhoods in the Klang Valley. Property transactions are limited in the area with few units becoming available for sale, further driving up prices. In any case, most of the units priced over RM1 million have been renovated and have additional built-up areas," Nabeel explains.

As for the homes in TTDI, he stresses again that the area is very popular and there is hardly any new supply. Also, few such houses come up for sale. "It is a seller's market," says Nabeel.

Worth noting in the 4Q2012 data is the lack of price growth in Bandar Utama's BU1 and BU12 from the last quarter, although the locale is much sought after. "We have seen price appreciation in BU1 and BU12 over a long period, but it is fair to say Bandar Utama is not quite as prime as Bangsar or TTDI. There is also a perception among homebuyers that TTDI is better planned and less crowded than BU," says Nabeel.

Y-o-y, Puchong Jaya homes achieved a price growth of 27.91% while in Pusat Bandar Puchong it was 22.22%. Both areas registered q-o-q price growth of 5.77%.

"Puchong is one of the residential growth areas in the Klang Valley as developments move southwards and residents benefit from the good infrastructure, especially in terms of transport. And despite the strong capital growth, properties there are more affordable than in competing developments within similar proximity of the city centre," Nabeel explains.

Overall, landed houses in the areas surveyed did well in 2012 with most recording double-digit price growth except in BU12 (+3.3%). "This may be because BU12 is not as well located as BU1 to 10 in terms of proximity to major amenities and facilities such as 1 Utama Shopping Centre, schools, clubhouse and so on," says Nabeel.

High-rises

High-rises performed well in 4Q2012 with no negative price growth registered in any of the areas surveyed.

"Overall, property market sentiment is still good. Additionally, many of the properties covered in our monitor are old and are looking more attractive now, given the higher per square foot prices of new launches, many of which are in less prime locations," Nabeel explains.

Condos in Bandar Sri Damansara recorded the highest price rise q-o-q — up 8.7% — followed by those in TTDI's Kiara Park (+6.06%). Nabeel says the condos in these areas did well because of their good neighbourhoods and prices that are more attractive than at new launches like The Greens launched in 2H2011 and Ascencia to be launched in 1Q2013 both, in TTDI.

No price growth was registered q-o-q by condos in TTDI's The Plaza, Mont'Kiara and Bangsar's Sri Penaga. "Activity on the secondary market, especially for high-rises, has slowed in the last few months, although some properties held on to their values," Nabeel says.

The prices of high-rises in KLCC too did not grow, which is not a bad thing, considering poor performance in recent quarters. "I think this is an indication that KLCC prices have found a new equilibrium. Additionally, with the prices of some new launches in suburban areas exceeding RM800 psf, KLCC prices do not seem as high nowadays. The challenge for the older KLCC properties is their size — in excess of 2,000 sq ft — which means prices are over RM2 million per unit in most cases."

New condominiums, such as The Elements in Ampang, and a few other high-rises in the outskirts of the city will be completed this year, but Nabeel does not believe they will affect prices much.

"For a number of quarters now, we have seen good sales performance in this new category of launches that offer smaller units in slightly secondary locations. These will offer a definite alternative to KLCC properties for many occupants and we expect rental demand for these new completions to be strong.

"In many ways, however, these properties are a completely different product from those existing in the KLCC area due to their smaller size and greater affordability. So they should not compete with KLCC properties for the same group of buyers and tenants."

What are the hot spots investors and homebuyers should keep an eye on in 2013?

"We continue to see developments moving towards the south of the Klang Valley to places such as Kajang, Cheras, Cyberjaya and Bangi and along the Elite Highway and Guthrie Highway," says Nabeel. "There is also interest in properties along the proposed Blue Line of the Sungai Buloh-Kajang MRT, although it appears that the transit premium for many of these projects has already been priced in."


This story first appeared in The Edge weekly edition of Feb 11-17, 2013.

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