Monday 22 Apr 2024
main news image

This article first appeared in City & Country, The Edge Malaysia Weekly on March 23, 2020 - March 29, 2020

Although the Home Ownership Campaign 2019 (HOC) cleared some 31,000 residential units from the primary market, the market is expected to remain dependent on various initiatives to spur home ownership among 

Malaysians, says Savills Malaysia director of research and consultancy Amy Wong, in presenting The Edge/Savills Klang Valley High-Rise Residential Monitor for 4Q2019.

In an uncertain economy, competition will continue among recently launched developments and any further launches, she says. “Perhaps another incentive programme could be introduced to stimulate market activity.”

Wong says various incentives — such as rebates, discounts, omission of legal fees and instrument of transfer fees — are still being offered by developers to boost sales, making such initiatives an important consideration for buyers amid a wide choice of project launches.

Last year, Greater KL’s overall residential market saw an uptick in activity, with more transactions recorded than in 2018. Both the volume and value of residential property transactions in Greater KL were higher in the first nine months of 2019 (9M2019) than in the same period of 2018, according to data from the National Property Information Centre. Transaction volume rose 10.7% year on year to 37,151 in 9M2019, while transaction value increased 4.5% y-o-y to RM20.7 billion in 9M2019.

The existing supply of residential units — including commercial-titled dwellings such as serviced apartments and SoHo units — in Greater KL surpassed two million units as at 3Q2019, Wong says. Of the total, over 750,000 units, or 44%, are high-rise residential properties.

“This proportion will only grow bigger, given that the growth of high-rise residential supply outpaced that of landed properties. Hence, the property overhang remains a hot topic as the ever-increasing number of high-rise residential units is still a major concern at the national level and existing stock will take years to clear,” Wong says.

As at 3Q2019, there were 12,430 overhang properties worth RM10.11 billion in Greater KL, giving it the second highest number after Johor. Condominiums, serviced apartments and SoHo units constitute 80.7% of Greater KL’s total overhang, she says.

In the secondary market, 2019 was a slow year for KL’s prime areas of KLCC, Bangsar and Mont’Kiara.

“The overall transaction volume for high-rise residential properties in these areas was down by at least half compared with 2018. Conversely, the primary market performed very well last year,” she says, adding that average take-up rates of incoming projects in these areas increased by 25% to 30% during the calendar year.

In the capital, high-rise residential property prices in KLCC, Mont’Kiara and Bangsar remained relatively stable in 2019, although marginal drops were observed. “In terms of average prices, our analysis of selected samplings of 2-bedroom units in these areas have shown single-digit drops in percentage of 0.2% to 3.7% year on year,” she says.

In Selangor, the secondary market in Subang Jaya, Bandar Sunway and Petaling Jaya was also quiet last year. “Early transaction volume in 2019 was half of that in 2018. Despite an uptick in transactions spotted in 4Q2019, the trace amount recorded did not pull up the capital value by much,” says Wong.

Take-ups increased at a steady pace in Selangor’s primary market during the quarter under review, driven by the HOC, which ended last year.

However, capital values saw a marginal decrease during the review period for Bandar Sunway and Petaling Jaya, but showed a slight increase, 0.5% y-o-y, for Subang Jaya.

Fewer secondary market transactions across KL’s prime areas

Last year, on KLCC’s secondary market, the transaction volume for selected 2-bedroom units sampled fell 26%, compared with 2018, and only a few transactions were recorded during 4Q2019 at similar price levels to the past few quarters.

Average prices in KLCC, based on the sampled units, stood at RM1,160 psf in 4Q2019, similar to RM1,170 in 3Q2019. This represents a 0.5% drop on a quarter-on-quarter basis.

The asking prices of the sampled units have remained flattish at RM1,280 psf during the period under review, compared with RM1,270 in 3Q2019.

In 4Q2019, a new project, Conlay, opened for preview in KLCC’s primary market. The development, which comprises 491 units of serviced apartments with indicative selling prices of RM1.4 million and above, is expected to be launched in 2Q2020.

The KLCC market also saw an increase in the average take-up rate for incoming projects during the period under review, at 63% from 51% in 3Q2019.

In Bangsar, secondary market activity was sluggish last year with the number of transactions halving from the previous year, according to data by the Valuation and Property Services Department (JPPH).

“Despite limited evidence of transactions, the capital value of high-rise residential properties in the area is expected to hold firm as high premiums are attached to prime locations like Bangsar,” says Wong.

Based on the units sampled in Bangsar, 2-bedroom units with built-ups of 900 to 1,200 sq ft were priced on average at RM920 psf in 4Q2019.

“Interestingly, while property values in other prime areas have stagnated since the softening of the market from its peak in 2011/12, property values in Bangsar have shown some appreciation,” she says.

In Bangsar, asking prices of the sampled units are, on average, RM1,040 psf, about 13% above the capital value.

The Mont’Kiara market was more active last year compared with the other prime areas of KLCC and Bangsar. Nonetheless, it still saw 28% fewer secondary transactions compared with 2018, based on the sampled 2-bedroom units.

Capital values of high-rise residential properties in Mont’Kiara are expected to remain flat. An 800 to 1,200 sq ft 2-bedroom unit was priced on average at RM650 psf during the period under review, similar to price levels in 3Q2019.

As for asking prices, those of selected samples in Mont’Kiara were on average RM710 psf, up 1.7% from RM700 in 3Q2019.

In 4Q2019, the average take-up rate for incoming projects in Mont’Kiara edged towards 80%. “This is a remarkable improvement compared with [4Q2018], when the average take-up rate was only about 50%. Apparently, high-rise residential projects in Mont’Kiara have benefited greatly from the HOC,” Wong remarks.

Increased take-up rates across Selangor, driven by HOC

In Subang Jaya, the secondary market last year projected a similar quietness as in 2018, with fewer transactions. Based on the selected samples, 14 transactions were recorded in Subang Jaya last year, compared with 17 in 2018.

Capital values in Subang Jaya did not grow much y-o-y, recording a marginal rise to RM554 psf in 2019 from RM551 in 2018.

“The stagnation was also reflected on a q-o-q basis, whereby the average transacted price for all the 3-bedroom units sampled remained unchanged at RM552 psf from 3Q2019 up to the review period,” Wong says.

As for asking prices, owners have continued to list their Subang Jaya properties at an average price of RM607 psf in the quarter under review, 10% higher than the average transacted value.

A notable launch during the quarter was Aurora@SJCC, which will add 234 new units to the Subang Jaya market. The launch saw a take-up rate of 40%.

Similarly, capital values at Bandar Sunway last year have remained nearly unchanged since 2018. The 3-bedroom properties sampled, with built-ups of 1,300 and 1,600 sq ft, were priced on average at RM602 psf in 2019. Transaction volume in the area fell by more than half last year compared with the previous year.

Asking prices in Bandar Sunway have remained flattish at RM630 psf — a 5% increase compared to the actual capital value of the samples.

In Petaling Jaya, secondary market transactions fell 60% last year compared with the preceding year. There were 29 transactions in the area last year compared with 73 in 2018, based on the samples.

“Moving from the silent secondary market in 3Q2019, movement resumed in 4Q2019 as reflected by JPPH’s sales data, with a total of 11 transactions in Petaling Jaya,” says Wong.

High-rise residential properties in Petaling Jaya still offer a higher capital value than Subang Jaya and Bandar Sunway, even though prices have remained flat since early 2019, says Wong.

Capital values in the area fluctuated between RM631 and RM635 psf and fell 2% y-o-y during the review period.

Meanwhile, Five Stones Condominium recorded transactions during the review quarter that contributed to an increase in the property’s capital value at RM749 psf, whereas the rest of the transactions showed otherwise, notes Wong.

Asking prices in Petaling Jaya averaged RM667 psf last year, 5.3% higher than the average transacted value.

According to Wong, take-up rates in the area also showed a steady improvement, at 65% in the fourth quarter of last year compared with 62% in the preceding quarter, driven by the HOC.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.

      Text Size