My Space: Don’t just jump in

Among those at a get-together of Mont’Kiara home owners on Aug 15 was a family of four. Just as they sat down, their friend stopped by, declaring excitedly that he had just come from a new condominium launch in Petaling Jaya. The man announced that more than 90 of the condos had been sold by the time he got there that morning.

He was referring to Selangor Dredging Bhd’s (SDB) Five Stones, a condominium coming up in the established SS2 suburb in PJ. Curious to find out more, I proceeded to the Five Stones sales gallery-cum-show units in Jalan SS2/72. I found a horde of potential property buyers in the spacious gallery. Fresh juices and finger food flowed freely as Lacoste T-shirt attired marketing personnel attended to enquiries.

The gallery and show units were unveiled to registrants and SDB homebuyers on Aug 12 and 13. According to the developer, in two days, 70 of the 185 units (of a total of 377 units in the entire project) put on the market were sold.

From Aug 14, the project was opened to the public and as at Aug 17, some 130 units, tagged from RM470 psf onwards or between RM800,000 and RM1.2 million each (standard type) had been sold. Interestingly, it was the more expensive units, comprising lower-density villa and garden types, that were the first to be snapped up. The cheapest of these cost RM1.1 million.

The enthusiastic response to Five Stones reflects a recent return of interest in higher-end homes, especially in the Klang Valley.

The general upbeat mood is felt not only here but also in Singapore, Shanghai and other parts of the world as demand soars in the face of a recent flood of positive economic indicators against the backdrop of a rising global stock market. It must be noted, however, that a stock market correction is taking place as this article goes to print.

Not everyone is convinced the global economy is on the mend. Depending on whom you speak with, the jury is still out on whether the recovery is a “V”, “U” or even “W”. While the debate continues, a sense of relief is mirrored in improving sentiments on the property front.

In Singapore, the end-July launch of Optima @ Tanah Merah by TID Pte Ltd, a joint venture between Hong Leong Holdings and Japanese developer Mitsui Fudosan, got off to a successful start. The 293-unit mass market project priced at an average of S$810 (RM1,977) psf was sold out in three days. The pricing was at a 19% premium to the recently completed Casa Merah, which was launched during the 2007 boom, The Edge Singapore reports.

It was reported that 2,767 new private homes were sold last month in Singapore, the highest since the data was collated by the Urban Redevelopment Authority in 1996. This means that a total of 10,117 new units have been sold to date this year, or more than double the sales for the entire 2008. In 2007, over 14,000 units were sold. While prices continue to inch up, demand for high-end homes seems to be gaining momentum.

Meanwhile, ShanghaiDaily.com, quoting the Shanghai Uwin Real Estate Information Services Co, said the average price of new homes in Shanghai rose to a record high in the second week of August as luxury houses continued to attract buyers.

New homes, excluding those designated for relocated residents under the city’s urban redevelopment plans, were sold at RMB19,991 (RM10,363) psm between Aug 10 and 16, rising 17% from a week earlier.
Buying sentiment remained strong among investors as more pick high-end properties as a hedge against inflation. More than 200 units at Star River in Shanghai’s Pudong New Area, launched on Aug 8, were sold by mid-August, at an average price of RMB49,360 psm, said the report.

In Dubai, once the darling of property investors, average home prices fell about 24% in 2Q from a year ago, despite its residential market showing signs of stabilisation. The upside here is that the rate of decline is now falling and there has been a convergence between asking and achieved prices, consultant Jones Lang LaSalle Inc told Bloomberg.

Will the property momentum last? This has everything to do with the state of the economy. Reports that the global economy is recovering have convinced economists that Malaysia could have seen the worst in 1Q2009, prompting some to predict GDP will improve as early as 4Q this year. Others are more cautious, predicting a resurgence only next year but, definitely, the pessimism has dwindled.

Economic outlook aside, the urgency to hedge against inflation, availability of cheap funds as well as innovative and compelling mortgage schemes introduced by developers and financial institutions are helping to pull in property buyers — both owner-occupiers and investors.

Before rushing in to put your money on bricks and mortar, consider the all-important property buying checklist. Top of the list would be location, followed by the credibility of the developer as well as supply and demand for the property type.

A new wave of positive buying sentiment may be starting to sweep the market but do not expect all new launches to do well, now or upon completion.

Never buy just because you can afford it. Or if your best friend or enemy is doing so.

Au Foong Yee is the editor of City & Country

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 769, Aug 24-30, 2009.