HOTTEST PROPERTIES
- Sri Kayangan Townvillas
- Pusat Bandar Rampai, Setapak
- Platinum Victory 13 Jalan Genting Kelang
- Cyberjaya Selangor
- No.33 Jalan Lawan Pedang 13/27, Section 13, Sha...
- Lot 61, Setia Avenue, Jalan Setia Prima, Setia ...
- PV 13,Jalan Genting Kelang
- Laman Seri Business Park, Section 13, Shah Alam
- Sungai Kandis
- Mukim Bukit Raja Daerah Petaling
Property prices to climb higher
Housing property prices are expected to continue rising in the next 12 months, especially for landed homes. However, the increase for landed homes will be at a slower pace compared with 2010, at an estimated 5% to 10%. In 2010, a minimum 20% in prices was recorded in certain hot spots in the Klang Valley, according to property consultants polled by The Edge Financial Daily. Among the contributing factors cited are pent-up demand and limited supply compared with high-rises. KGV-Lambert Smith Hampton puts the number of incoming landed houses in Wilayah Persekutuan at 1,575 units and apartments/condominium at 17,922 units.
The high-end condominium market is expected to remain stable with some price increase, though at a slower rate than landed homes due to oversupply and a slow rental market. Some consultants believe the high cost of landed homes may drive buyers, particularly first-time home buyers, to more affordable condominiums. This is likely to benefit the mid-market condominium segment the most. Two noteworthy trends have emerged in the past few years — the growing popularity of gated and guarded homes, and smaller, more affordable luxury high-rise units.
Consultants also caution that further interest rate hikes and the cooling measures may dampen the property market. From 2007 to the present, the property market has seen significant changes, none more significant than the growth in the landed homes segment. The global financial crisis in 2008 had minimal impact due to better regulation by the central bank and the domestic-driven property market. Luxury high-rise residences, which were performing well prior to 2008 with strong take-ups and rising capital values, were more effected by the crisis but are on the road to recovery.
Landed homes, however, held steady throughout the crisis and have shown tremendous growth since. Transaction volume and value hit record highs in 2010 with over 376,000 transactions valued at RM107.44 billion, of which RM10 billion was in the Klang Valley, which remains the most active market in the country. Michael Yam, president of the Real Estate and Housing Developers’ Association, said developers held back launches in 2008 during the financial crisis. Better market sentiments returned as the world economy began to recover, pushing up demand for housing.
“Due to the long lead time for construction, housing could not be supplied upon demand, resulting in rapidly rising home prices, particularly in urban areas where demand and costs, particularly land, are high,” he said, adding that the situation was exacerbated by rising oil and steel prices. “Based on the five major cost components that make up selling prices — cost of land, materials and labour, interest cost, approval process and profit margin — prices of properties, particularly landed homes, will continue to rise,” Yam said. Coupled with inflationary pressures and fundamental demand underpinned by the socio-demographics of our population, rising costs and prices are here to stay, he added.
Read on for the property consultants’ views on the performance and outlook of the Malaysian residential market.
Tang Chee Meng
COO, Henry Butcher Marketing
Snapshot of the residential market
The market peaked in 2H07, thanks to investors’ confidence streaming from the bullish stock market and investor-friendly measures. The exemption of real property gains tax (RPGT) in April 2007 attracted strong foreign investment, particularly in the high-end condo sector around Kuala Lumpur City Centre (KLCC), extending to Ampang Hilir, Bangsar, Damansara Heights and Mont’Kiara. It was the first time residential prices topped commercial office values.
The high-end condominium market is expected to remain stable with some price increase, though at a slower rate than landed homes due to oversupply and a slow rental market. Some consultants believe the high cost of landed homes may drive buyers, particularly first-time home buyers, to more affordable condominiums. This is likely to benefit the mid-market condominium segment the most. Two noteworthy trends have emerged in the past few years — the growing popularity of gated and guarded homes, and smaller, more affordable luxury high-rise units.
Consultants also caution that further interest rate hikes and the cooling measures may dampen the property market. From 2007 to the present, the property market has seen significant changes, none more significant than the growth in the landed homes segment. The global financial crisis in 2008 had minimal impact due to better regulation by the central bank and the domestic-driven property market. Luxury high-rise residences, which were performing well prior to 2008 with strong take-ups and rising capital values, were more effected by the crisis but are on the road to recovery.
Landed homes, however, held steady throughout the crisis and have shown tremendous growth since. Transaction volume and value hit record highs in 2010 with over 376,000 transactions valued at RM107.44 billion, of which RM10 billion was in the Klang Valley, which remains the most active market in the country. Michael Yam, president of the Real Estate and Housing Developers’ Association, said developers held back launches in 2008 during the financial crisis. Better market sentiments returned as the world economy began to recover, pushing up demand for housing.
“Due to the long lead time for construction, housing could not be supplied upon demand, resulting in rapidly rising home prices, particularly in urban areas where demand and costs, particularly land, are high,” he said, adding that the situation was exacerbated by rising oil and steel prices. “Based on the five major cost components that make up selling prices — cost of land, materials and labour, interest cost, approval process and profit margin — prices of properties, particularly landed homes, will continue to rise,” Yam said. Coupled with inflationary pressures and fundamental demand underpinned by the socio-demographics of our population, rising costs and prices are here to stay, he added.
Read on for the property consultants’ views on the performance and outlook of the Malaysian residential market.
Tang Chee Meng
COO, Henry Butcher Marketing
Snapshot of the residential market
The market peaked in 2H07, thanks to investors’ confidence streaming from the bullish stock market and investor-friendly measures. The exemption of real property gains tax (RPGT) in April 2007 attracted strong foreign investment, particularly in the high-end condo sector around Kuala Lumpur City Centre (KLCC), extending to Ampang Hilir, Bangsar, Damansara Heights and Mont’Kiara. It was the first time residential prices topped commercial office values.
The global economic meltdown softened the market after 3Q08 as foreign interest waned. Prices of KLCC condos dipped 20% to 30% off their peaks in 2008. The medium-cost segment however, remained stable. The market picked up in 2Q09 with strong demand for landed homes. Developers managed to maintain sales volumes but with lower profit margins. However, the luxury condo sector remained soft due to low foreign interest and the reintroduction of the 5% RPGT. The improvement in the residential market can be attributed to the introduction of attractive financing schemes, low down payments and the recovering Singapore market.
In 2010, total volume of property transactions jumped 11.5% compared with a 1% dip in 2009, and 36% higher than in 2005. The value of transactions increased 33% in 2010 against a drop of 8% in 2009, up 91% from that recorded in 2005. Demand for landed homes increased, registering significant price increases of 20% to 30% in certain locations. Attractive financing schemes and other incentives drove sales in the primary market. Escalating prices of landed homes led to concerns of a possible bubble resulting in the reintroduction of the 5% RPGT and a cap on the loan-to-value (LTV) ratio for the third property loan onwards.
While new condos in popular locations did well, the secondary market for larger luxury condos in KLCC remained sluggish. A preference for smaller units priced below RM2 million was noted among local investors.
Outlook
The residential market will see stable but slower growth than in 2010. Prices will stabilise and any increase will be gradual of about 5% to 10%, aided by cooling measures. Landed homes are expected to perform better than high-rises with rising interest in properties along the proposed mass rapid transit (MRT) route. Suburban areas and smaller towns are expected to benefit from the My First Home Scheme. In the high-end condo market, concerns of oversupply and slow rental market linger in KLCC and Mont’Kiara. Smaller units, more innovative concepts, designs and packaging are being introduced to stimulate interest.
Significant projects since 2007
• The Kuala Lumpur International Financial District covering 34.4ha at an estimated cost of RM 26 billion is touted as the new financial hub and will change the city skyline.
In 2010, total volume of property transactions jumped 11.5% compared with a 1% dip in 2009, and 36% higher than in 2005. The value of transactions increased 33% in 2010 against a drop of 8% in 2009, up 91% from that recorded in 2005. Demand for landed homes increased, registering significant price increases of 20% to 30% in certain locations. Attractive financing schemes and other incentives drove sales in the primary market. Escalating prices of landed homes led to concerns of a possible bubble resulting in the reintroduction of the 5% RPGT and a cap on the loan-to-value (LTV) ratio for the third property loan onwards.
While new condos in popular locations did well, the secondary market for larger luxury condos in KLCC remained sluggish. A preference for smaller units priced below RM2 million was noted among local investors.
Outlook
The residential market will see stable but slower growth than in 2010. Prices will stabilise and any increase will be gradual of about 5% to 10%, aided by cooling measures. Landed homes are expected to perform better than high-rises with rising interest in properties along the proposed mass rapid transit (MRT) route. Suburban areas and smaller towns are expected to benefit from the My First Home Scheme. In the high-end condo market, concerns of oversupply and slow rental market linger in KLCC and Mont’Kiara. Smaller units, more innovative concepts, designs and packaging are being introduced to stimulate interest.
Significant projects since 2007
• The Kuala Lumpur International Financial District covering 34.4ha at an estimated cost of RM 26 billion is touted as the new financial hub and will change the city skyline.
• Binjai on the Park in KLCC set the benchmark in luxury condo prices when one of its penthouses sold for RM38 million.
Foo Gee Jen
Managing director, C H Williams
Talhar & Wong Sdn Bhd
Snapshot of the residential market
There has been phenomenal growth from 2007, particularly in the Klang Valley, in terms of supply and capital values, especially for high-end housing. The trend gained momentum in tandem with growing affluence and a growing expatriate population in the urban centres.
Demand for high quality homes spurred better-designed world-class residential developments. The government’s efforts to maintain low interest rates, improvements in transport infrastructure and its master plan to create world-class cities further fuelled growth.
Outlook
A stable to low growth in prices is projected due to higher supply. High quality products in prime locations will continue to enjoy high demand.
Landed home prices will continue to rise as developers continue to innovate product features such as adding green and smart home features.
The trend is towards furnished serviced apartments with concierge and security services. Apartment sizes are also shrinking to make them affordable. It is still uncertain whether such a lifestyle shift will become a reality or whether such apartments will eventually turn into alternatives to long-stay hotel accommodation.
Significant projects since 2007
• Desa ParkCity — The self-contained 473-acre freehold township is expected to have about 7,280 homes serving a upper-middle class population of 35,000 upon its completion in 2014. Its most unique characteristic is that each residential precinct is a gated and guarded enclave. A recent launch, Casaman 2- and 3-storey terraced homes were reportedly sold out within five hours. The township has won several awards including the 2010 Fiabci Prix d’ Excellence Award for Best Residential (Low-rise) Neighbourhood for its Adiva neighborhood.
• Cyberjaya — From oil palm estates, this intelligent city today houses numerous commercial buildings, MSC Status offices and universities. It has attracted many big name developers recently, including Mah Sing, UEM Land, S P Setia and OSK Property. There are currently 2,833 residential units with over 5,000 units under construction.
• Sri Tanjung Pinang, Penang — Developed on reclaimed land by Eastern & Oriental Bhd, this project has transformed the surrounding area into an upmarket enclave. Spanning 980 acres, Phase 1 (240 acres) is almost fully developed with an estimated GDV of RM4 billion while Phase 2 which will begin soon has an estimated GDV of RM12 billion.
Managing director, C H Williams
Talhar & Wong Sdn Bhd
Snapshot of the residential market
There has been phenomenal growth from 2007, particularly in the Klang Valley, in terms of supply and capital values, especially for high-end housing. The trend gained momentum in tandem with growing affluence and a growing expatriate population in the urban centres.
Demand for high quality homes spurred better-designed world-class residential developments. The government’s efforts to maintain low interest rates, improvements in transport infrastructure and its master plan to create world-class cities further fuelled growth.
Outlook
A stable to low growth in prices is projected due to higher supply. High quality products in prime locations will continue to enjoy high demand.
Landed home prices will continue to rise as developers continue to innovate product features such as adding green and smart home features.
The trend is towards furnished serviced apartments with concierge and security services. Apartment sizes are also shrinking to make them affordable. It is still uncertain whether such a lifestyle shift will become a reality or whether such apartments will eventually turn into alternatives to long-stay hotel accommodation.
Significant projects since 2007
• Desa ParkCity — The self-contained 473-acre freehold township is expected to have about 7,280 homes serving a upper-middle class population of 35,000 upon its completion in 2014. Its most unique characteristic is that each residential precinct is a gated and guarded enclave. A recent launch, Casaman 2- and 3-storey terraced homes were reportedly sold out within five hours. The township has won several awards including the 2010 Fiabci Prix d’ Excellence Award for Best Residential (Low-rise) Neighbourhood for its Adiva neighborhood.
• Cyberjaya — From oil palm estates, this intelligent city today houses numerous commercial buildings, MSC Status offices and universities. It has attracted many big name developers recently, including Mah Sing, UEM Land, S P Setia and OSK Property. There are currently 2,833 residential units with over 5,000 units under construction.
• Sri Tanjung Pinang, Penang — Developed on reclaimed land by Eastern & Oriental Bhd, this project has transformed the surrounding area into an upmarket enclave. Spanning 980 acres, Phase 1 (240 acres) is almost fully developed with an estimated GDV of RM4 billion while Phase 2 which will begin soon has an estimated GDV of RM12 billion.
Saleha Yusoff
Head of research, Rahim & Co
Snapshot of the residential market
Malaysia’s All House Price Index (AHPI) (base year 2000=100) shows an increase of 17% from 125.9 in 2007 to 146.9 in 2010. The highest growth recorded was for terraced and semi-detached houses with an increase of 18% each. The highest increase in prices was recorded in Sabah with a 30% jump reflecting an annual growth rate of 9% during the 2007–2010 period. KL and Selangor’s HPI increased by 14% and 13% respectively, while Penang grew by 14%. This shows the residential market was not adversely affected by the global financial crisis as demand was (and is) driven mainly by the local market. Even for high-end condominiums in prime areas such as the city centre, the market is dominated by a growing number of local buyers.
Outlook
Developers of landed homes seem optimistic about the market as seen from the various launches of such homes. Prices for most newly launched projects start at RM280,000 or higher, making it less affordable for young home buyers. Prices are expected to continue rising at about 5% to 6%, especially in established areas.
Developers are also active in Johor, especially within Iskandar Malaysia as key projects such as Legoland Malaysia, Newcastle University Medical Malaysia and Chelsea Premium Outlet edge towards completion in 2012.
High-rise homes will continue to gain popularity among young home buyers. The AHPI for high-rise homes rose 12% from 121 (2007) to 135 (2010) with an annual growth rate of 4%. Prices are expected to rise, but at a slower rate compared to landed homes, due to high volume of supply, especially in the Klang Valley. Encouraging demand for high-rise residential is also seen in Penang with new launches recording good sales.
Significant projects since 2007
• Ken Bangsar — the luxury serviced residence in Bangsar is certified under the Green Building Index and Singapore’s Green Mark. Its developer Ken Holdings Bhd opted to transform rather than demolish the former uncompleted office building. About 70% of the original structure was re-used and other parts were recycled. A wind tunnel in the lobby helps cool the area while an innovative engineering system is also used to condition and recycle condensated water into an evaporative feature wall. The project was also awarded The Edge-PAM Green Excellence Award 2010, has also added value to the surrounding community.
• Sunsuria 7th Avenue, Setia Alam — this modern 2- and 3-storey semi-detached retail offices by Sunsuria Development Sdn Bhd has set a new standard within the neighbourhood commercial centre. Each unit comes with its own rooftop garden and a private lift.
Head of research, Rahim & Co
Snapshot of the residential market
Malaysia’s All House Price Index (AHPI) (base year 2000=100) shows an increase of 17% from 125.9 in 2007 to 146.9 in 2010. The highest growth recorded was for terraced and semi-detached houses with an increase of 18% each. The highest increase in prices was recorded in Sabah with a 30% jump reflecting an annual growth rate of 9% during the 2007–2010 period. KL and Selangor’s HPI increased by 14% and 13% respectively, while Penang grew by 14%. This shows the residential market was not adversely affected by the global financial crisis as demand was (and is) driven mainly by the local market. Even for high-end condominiums in prime areas such as the city centre, the market is dominated by a growing number of local buyers.
Outlook
Developers of landed homes seem optimistic about the market as seen from the various launches of such homes. Prices for most newly launched projects start at RM280,000 or higher, making it less affordable for young home buyers. Prices are expected to continue rising at about 5% to 6%, especially in established areas.
Developers are also active in Johor, especially within Iskandar Malaysia as key projects such as Legoland Malaysia, Newcastle University Medical Malaysia and Chelsea Premium Outlet edge towards completion in 2012.
High-rise homes will continue to gain popularity among young home buyers. The AHPI for high-rise homes rose 12% from 121 (2007) to 135 (2010) with an annual growth rate of 4%. Prices are expected to rise, but at a slower rate compared to landed homes, due to high volume of supply, especially in the Klang Valley. Encouraging demand for high-rise residential is also seen in Penang with new launches recording good sales.
Significant projects since 2007
• Ken Bangsar — the luxury serviced residence in Bangsar is certified under the Green Building Index and Singapore’s Green Mark. Its developer Ken Holdings Bhd opted to transform rather than demolish the former uncompleted office building. About 70% of the original structure was re-used and other parts were recycled. A wind tunnel in the lobby helps cool the area while an innovative engineering system is also used to condition and recycle condensated water into an evaporative feature wall. The project was also awarded The Edge-PAM Green Excellence Award 2010, has also added value to the surrounding community.
• Sunsuria 7th Avenue, Setia Alam — this modern 2- and 3-storey semi-detached retail offices by Sunsuria Development Sdn Bhd has set a new standard within the neighbourhood commercial centre. Each unit comes with its own rooftop garden and a private lift.
Vincent Ng
CEO, Kim Realty
Snapshot of the residential market
The market prior to 2007 was rather sluggish. Properties purchased four to five years earlier, even in many good areas, had generally realised a gain of only up to 10% in asset value. The exceptions were properties in Bangsar, Sri Hartamas, Taman Tun Dr Ismail and Bandar Utama.
The global financial crisis in 2008 affected buyers’ confidence all over the world. Malaysia had fewer foreclosures because our loans were better regulated. The post 2008 recovery has been amazing though the upbeat trend is not totally unprecedented. Similar trends were seen in the early 1980s and 90s.
Outlook
House prices will continue to rise regardless of interest rates. This trend will be sustained by the government’s Economic Transformation Programme to bolster the economy.
Significant projects since 2007
• Sentul, East And West; Sentul East d6 & d7 — The transformation of Brickfields as a backwater part of KL by YTL Corp into an upper middle-class enclave has been spectacular. Its most recent successful launch was The Capers where units are priced from RM695 psf, a price unheard of in the area two to three years ago.
• Bangsar South — this was formerly Kampung Kerinchi. Today, the UOA Development Bhd project is much sought after by MNCs, medium-sized corporations and MSC companies. Its success can be attributed to good planning, infrastructure and its proximity to Bangsar, Mid Valley and KLCC.
• Kota Damansara — This is one development in Petaling Jaya that has successfully removed the stigma of leasehold properties. Its properties are among the most sought after mainly because they are in gated communities. These properties were among the first in PJ to experience a surge in demand during the economic recovery, leading to rising prices. The whole area started growing when the infrastructures connecting Bandar Utama and Mutiara Damansara came up.
CEO, Kim Realty
Snapshot of the residential market
The market prior to 2007 was rather sluggish. Properties purchased four to five years earlier, even in many good areas, had generally realised a gain of only up to 10% in asset value. The exceptions were properties in Bangsar, Sri Hartamas, Taman Tun Dr Ismail and Bandar Utama.
The global financial crisis in 2008 affected buyers’ confidence all over the world. Malaysia had fewer foreclosures because our loans were better regulated. The post 2008 recovery has been amazing though the upbeat trend is not totally unprecedented. Similar trends were seen in the early 1980s and 90s.
Outlook
House prices will continue to rise regardless of interest rates. This trend will be sustained by the government’s Economic Transformation Programme to bolster the economy.
Significant projects since 2007
• Sentul, East And West; Sentul East d6 & d7 — The transformation of Brickfields as a backwater part of KL by YTL Corp into an upper middle-class enclave has been spectacular. Its most recent successful launch was The Capers where units are priced from RM695 psf, a price unheard of in the area two to three years ago.
• Bangsar South — this was formerly Kampung Kerinchi. Today, the UOA Development Bhd project is much sought after by MNCs, medium-sized corporations and MSC companies. Its success can be attributed to good planning, infrastructure and its proximity to Bangsar, Mid Valley and KLCC.
• Kota Damansara — This is one development in Petaling Jaya that has successfully removed the stigma of leasehold properties. Its properties are among the most sought after mainly because they are in gated communities. These properties were among the first in PJ to experience a surge in demand during the economic recovery, leading to rising prices. The whole area started growing when the infrastructures connecting Bandar Utama and Mutiara Damansara came up.
It struck gold when it was renamed Kota Damansara from its original Sungai Buloh. Everything in Kota Damansara now sells like hot cakes benefiting developers such as Sunway, Encorp Bhd, Mitraland Group and Sunsuria Development.
Source: The Edge Financial Daily, June 13, 2011
