THE Greater Kuala Lumpur residential property market is poised for some consolidation after recording breathtaking growth in terms of price hikes and transaction volume over the last three years, property consultants observe.
CBRE’s latest Greater Kuala Lumpur MarketView says a period of stabilisation is in order, with the period of significant growth in capital values seen since 2009 being replaced by an era of more gradual increases.
“The rapid growth in Kuala Lumpur and its suburbs has resulted in a scarcity in development land that drove up capital values for many areas in Selangor.
“About 75.7% of all residential units in Greater KL are located in Selangor, with the remaining 24% and 0.3% in Kuala Lumpur and Putrajaya respectively. Putrajaya, the country’s administrative capital, accounted for just over 4,740 units which are primarily for housing of civil servants,” the report adds.
New residential developments are being located further and further away from the city centre, with an increasing level of development seen in the southern portion of Greater KL, forming a growth corridor linking the city with Putrajaya/Cyberjaya and down to KLIA.
The CBRE report points out that previously overlooked areas, including Semenyih, are poised to see a marked increase in development activities in the near future.
As of quarter two (2Q) 2013, 196,092 units were classified as incoming supply, defined as units for which construction permits have been approved (whether or not construction has begun). Of this, 186,581 units were deemed to be under construction, implying that construction work has begun on 95.1% of the units with construction permits.
Total existing supply of residential properties stood at about 1.77 million units as at end-2Q 2013, with landed units accounting for 43.5% of total stock, non-landed properties made up 34.9% and low-cost housing was at 21.6%.
It notes that supply growth since end-2012 has been minimal at less than 1%, part of a wider slowdown in supply increase since 2006 that contributed to a rise in capital values in many areas of Greater KL since 2009.
Although the number of new starts has rebounded since 2011, it remained below levels seen during 2003 to 2007.
DTZ Nawawi Tie Leung executive director Brian Koh says that going forward, a slower but more sustainable growth in terms of new launches and take-up rate can be expected.
Koh says that in the last quarter of 2013, the things to look out for in the property market include a potential hike in bank interest rates as Bank Negara is expected to introduce further measures to rein in household debts. Higher borrowing rates may also affect mortgage loan rates that may mean higher borrowing cost to housebuyers.
“Buying interest from foreign buyers, especially from Singapore, Hong Kong, China and Japan could cushion the softer domestic demand going forward,” Koh observes.
Meanwhile, Knight Frank’s First Half 2013 Real Estate Highlights says while prices have flattened over the past 12 months as a result of government cooling measures, more activities are expected post-election as additional cooling measures implemented in competing Asian markets such as Singapore, Hong Kong and China, may lead to greater interest in the Kuala Lumpur, Penang and Iskandar Malaysia property markets.
“Malaysia is an attractive alternative investment destination due to its stable property market and relative housing affordability that offers reasonable returns in terms of capital appreciation/rental income.
“New launches featuring a good mix of unit sizing, particularly those located near high-level infrastructure projects, are expected to attract strong take-up as they appeal to a wider market of buyers and investors,” the Knight Frank report says.
In the luxurious condominium sector, CBRE estimates 6,484 units to be completed in Kuala Lumpur during the second half of 2013.
Of the 42,979 units of high-rise development (condominiums and serviced residences) in Kuala Lumpur valued at or above RM500 per sq ft (psf), it says about 35% are considered to be “luxury” (valued at RM800 psf and above).
Knight Frank says that with prices of high-end condominiums expected to remain flat for the remainder of this year, investors and purchasers will have the choice of opting for more bargain condominiums in the city and its immediate neighbourhood of Ampang Hilir/ U-Thant as the price per sq ft narrows between city and suburban living.
