MALAYSIAN PROPERTY MARKET BOUNCING BACK.

Kuala Lumpur at a glance.

Prices of landed houses in some popular areas have appreciated by 10-30% over the last six to eight months, reports UMA SHANKARI from The Business Times:

MALAYSIA’S economic recovery has fuelled a resurgence in the residential property market in Kuala Lumpur as well as the lesser-known investment destinations of Penang and Johor. The year started off on a positive note for Malaysia, with the economy registering a robust growth of 10 per cent in the first quarter – the fastest in a decade.

In the nation’s capital Kuala Lumpur, developers’ and buyers’ confidence have been renewed with the economic recovery. There has been revived interest in the high-end condominium market as reflected in the fairly successful launches in H2 2009 and H1 2010, with more developers undertaking re-branding and repositioning exercises of previously deferred projects.

‘The high-end condominium market has bottomed and with recovery setting in, further improvement is expected by the end of the year or early next year,’ said Knight Frank in its Q2 report on the Malaysian property market. ‘Most developers have changed their game plan from prudently deferring their planned projects earlier to actively updating and revamping their proposals, with several launches planned in the next six months.’

A number of new condominiums and service residences are scheduled to launch over the rest of the year. Data from another property firm, CB Richard Ellis (CBRE), shows that the Kuala Lumpur luxury residential market performed steadily during Q2 of 2010 with prices for secondary transactions edging up 0.7 per cent quarter-on- quarter to RM704 per square foot (psf).

A number of projects which had their official launches during Q2 sold well, including Kiaramas Danai Tower 1 (136 units, about 70 per cent sold), Seri Ampang Hilir (40 units, about 85 per cent sold) and Verve Suite’s Vox Tower (250 units, more than 75 per cent sold).

In addition, Vox Tower set a new benchmark price for the Mont Kiara area, with a reported average selling price of RM1,250 psf. And the most significant sale during Q2 2010 was that of a penthouse at The Binjai On The Park development in Kuala Lumpur City Centre (KLCC), which went for RM38 million (S$16.3 million).

The 42nd storey unit has an area of 14,300 sq ft and the price works out to about RM2,660 psf. That makes it one of the most expensive homes to have been sold in Malaysia in recent years, and possibly the country’s largest ever condominium transaction.

Observed Knight Frank: ‘Demand is predicted to grow gradually in selected markets and locations, particularly for projects by reputable developers with marginal price appreciation expected in newly completed projects while the rental market is expected to remain competitive in view of the high impending supply coming onstream within the next three years.’

Penang

Penang continues to be a property hotspot with developers from both the island and Klang Valley on the acquisition trail to increase their landbanks on the island. In particular, the housing market in Penang is expected to remain fairly resilient with the landed housing sector continuing to attract strong interest.

But the high-end condominium market is not expected to be as strong in view of the mediocre occupancy rates at many completed projects, analysts said.

Knight Frank’s data showed that prices of units in high-end completed condominiums and those nearing completion within the prime areas of Tanjung Bungah and Pulau Tikus have generally remained unchanged at H2 2009 level, ranging from RM380 psf to RM600 psf. Asking monthly rentals of fully furnished units have also remained stable within the range of RM6,000 per unit to RM13,000 per unit.

However, achieved rentals – especially for the higher- priced units – are likely to be lower in view of increasing competition from the impending new supply entering the market, the property firm noted.

Johor

Boosted by the development momentum of Iskandar Malaysia and the positive impact of the 10th Malaysia Plan, the property market in Johor is expected to be more active for the rest of this year and 2011.

In particular, developers on both sides of the Causeway were excited by the joint statement by the prime ministers of Malaysia and Singapore in May that Khazanah Nasional will form a 50:50 joint venture company with Singapore’s Temasek Holdings to develop a ‘wellness’ township on a 500-acre site in Iskandar Malaysia.

And under the 10th Malaysia Plan tabled in Parliament in June, the federal government will form a facilitating fund under which funds will be allocated to Johor for various projects.

Among the main projects outlined were the RM1.8 billion Johor Baru city transformation plan, the RM8 billion double tracking rail project from Gemas to Johor Baru and the Bus Rapid Transit System in Iskandar Malaysia.

Analysts said that the high-end residential market in Johor Baru should benefit from the expected investment inflows. Looking ahead, there are concerns over whether the booming housing market will lead to an asset bubble and if there is a need for more tightening measures to curb speculative buying and ensure the market stays sustainable. Prices of landed houses in some popular areas like Klang Valley, Penang, and Johor have appreciated by 10 per cent to 30 per cent over the last six to eight months, reports said.

But for the Kuala Lumpur luxury residential market, incoming supply is likely to curb capital appreciation, at least in the short term. ‘Capital values are expected to remain stable in the short term while rentals may come under downward pressure due to large supply and high vacancy,’ said Jones Lang LaSalle (JLL) in its Q2 report on Kuala Lumpur’s luxury residential market.

But JLL added that Kuala Lumpur’s luxury condominium market is expected to perform well over the next 12 months as it rides on a surge in supply and demand picks up as the economy strengthens.

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