Recent stock market rally boosts residential buyers' confidence

KUALA LUMPUR: Buyers' interest in Kuala Lumpur residential property has started returning in the second quarter of this year, particularly towards the later part of the quarter, according to DTZ Nawawi Tie Leung Property Consultants Sdn Bhd.

In its DTZ Property Times 2Q2009 report, the research report showed buyers' confidence within the residential property market was buoyed by the recent stock market rally on Bursa Malaysia, which restored investor's confidence somewhat, especially towards high-end residential properties.

"Buyers were also motivated by low bank lending rates, more realistic asking prices and the 'irresistible' freebies, incentives and attractive packages offered by some property developers," said DTZ Malaysia executive director, Brian Koh.

The report noted the increase in the number of residential transactions, particularly within the sub-sale market.

"Projects which have seen improved sales enquiries and sales included the preview launch of Eastern & Oriental Bhd's St. Mary Residence serviced apartments in the Golden Triangle in June where about 85% of the 169 units were snapped up," said Koh.

Koh said the residential sector remains challenging over the next six months as the overall economy is not expected to improve until end 2009, despite certain positive policy measures undertaken by the government.

"The recently announced overhaul in economic policies, particularly on the repeal of the foreign investment committee's (FIC) approval for property transactions involving foreigners would boost interest from foreigners in the local property market, specifically the high-end residential segment," he said.

Koh added residential property prices would continue to undergo a correction in the short term due to impending new supply and weak economic conditions.

Prices of high-end condos in the KLCC area have generally dropped between 10% and 20% from the previous year.

Besides, five projects are expected to be completed by 2H2009, supplying 951 units of high-end condominium units around the KLCC.
The report showed the overall rental market in KL picked up slightly during the second quarter, said the report.

Koh said average rents of high-end condos in the KLCC area has increased by 6.5% from the last quarter to RM4.08 psf per month.
However, the rental market is expected to face downward pressure due to the incoming supply of condo units in the second half of 2009 and towards the early part of 2010.