Sunday 21 Jul 2024
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This article first appeared in City & Country, The Edge Malaysia Weekly on April 22, 2024 - April 28, 2024

The Klang Valley residential property market saw more completions but slower transaction activities on a quarter-on-quarter (q-o-q) basis in 4Q2023, according to Savills Malaysia director of research and consultancy Fong Kean Hwa, in presenting The Edge Malaysia | Savills Klang Valley Residential Property Monitor 4Q2023.

“Overall, the Klang Valley experienced an increase in the number of new residential properties completed in 4Q2023. The residential property market is expected to gain momentum in 2024 with further new completions,” he says.

In Kuala Lumpur, there were 21,811 newly completed units in 4Q2023, a 19% increase compared with 18,284 in 3Q2023. Selangor saw a 33% increase in new completions during the quarter at 30,112 compared with 22,615 in 3Q2023.

In terms of transaction activities, Kuala Lumpur had 4,223 residential units change hands in the fourth quarter, declining 3.5% from 4,376 transacted in 3Q2023. The collective value of these transactions also experienced a 6.8% drop, reaching RM3,891.77 million in 4Q2023 compared with RM4,173.60 million in the previous quarter.

In contrast, Selangor recorded 12,641 transacted units worth RM7,971.80 million in 4Q2023, compared with 12,396 transacted units worth RM7,742.38 million in 3Q2023.

Comparing the transaction activities of 2022 and 2023, Fong says the property market in Kuala Lumpur and Selangor improved by 1.4% last year, with 60,736 units transacted worth RM42,382.83 million, compared with 59,910 units valued at RM41,427.03 million in 2022. The transacted units include serviced apartments and SoHo units.

Fong: Overall, the Klang Valley experienced an increase in the number of new residential properties completed in 4Q2023. The residential property market is expected to gain momentum in 2024 with further new completions. (Photo by Savills)

“This result topped the total transaction volume in 2019, or pre-Covid-19, indicating that the broader property market is intensely stable,” he says.

In his outlook, Fong says the economy grew 3% in 4Q2023, making a full-year gross domestic product growth of 3.7% in 2023, driven by heightened domestic demand, better job market conditions and increased investment activity in the commodities and services sectors.

“The economy’s improvement has resulted in an improvement in the real estate market in general. In 4Q2022, there were 35,235 overhang residential units, including serviced apartments and SoHo, in [Kuala Lumpur and Selangor], which was reduced by [more than half] to 14,949 units in 4Q2023.”

Loan applications and approval rates for residential purposes increased by 12.87% and 11.52% respectively in 4Q2023 compared with the same period in the preceding year, with the implication of the stable overnight policy rate at 3%, he says. “The improved loan approval rate indicates that property developers’ sales forecasts should improve.”

The residential market will benefit from the stamp duty exemption for first-time homebuyers, which is an extension of Budget 2023, notes Fong. “First-time homebuyers who qualify for a property purchase priced at RM500,000 or less would receive a 100% stamp duty exemption until 2025, while those who spend more than RM500,001 will not receive the entire stamp duty exemption.”

In addition, a RM10 fixed stamp duty fee will replace the previous variable rate for real estate transfer activities in 2024. 

“The government seeks to implement a flat-rate stamp duty of 4% on memoranda of transfer for property acquisitions by foreign individuals and companies, with the exemption of permanent residents, as part of an effort to manage land and property prices in the real estate sector. This will largely benefit the residential market,” he adds.

Fong has observed developers becoming more innovative with their property launches. He cites The Connaught One in Cheras by UEM Sunrise Bhd as an example of a transit-oriented development that offers customisable layouts, allowing buyers to adjust partition walls according to their needs.

He also anticipates increased investment from expatriates in Malaysia due to the more relaxed requirements for the Malaysia My Second Home (MM2H) programme with the introduction of three tiers: silver, gold and platinum.

“The silver tier requires a minimum fixed deposit of RM500,000 for five years and the option to withdraw up to 50% of the cash after a year for purchasing homes worth RM750,000, healthcare or tourism activities while high-net-worth individuals can apply for the platinum category with a RM5 million deposit, making them eligible for permanent residency in Malaysia. The age limit for MM2H applications has been reduced to 30 years and the required days in Malaysia per year have also been reduced to 60 days.

“These changes are expected to impact foreign buyers’ property acquisition activities in Malaysia, although the Ministry of Tourism, Arts and Culture has yet to release the final version of the MM2H application fees,” he says.

The optimisation of land for mixed-use development in Bandar Malaysia will further add vibrancy to the Klang Valley, he adds. “As outlined in Budget 2024, Bandar Malaysia is a key project for the unity government.”

High-rise residential

In Kuala Lumpur, the KLCC, Bangsar and Mont’Kiara markets remain challenging on a q-o-q basis with a positive note seen in terms of rental performance.

On a year-on-year (y-o-y) comparison, average prices of the 2-bedroom units sampled dropped by -2.1% in KLCC and -2.5% in Bangsar, while Mont’Kiara saw a slight 0.9% rise in average price.

Fong says Kuala Lumpur remains a popular choice among homebuyers, as reflected in several high-rise project launches during the quarter.

Exsim Group launched two projects in Bukit Bintang. Branniganz Suites comprises 759 serviced apartments with layouts ranging from studio to 2-bedroom units measuring 344 to 678 sq ft. Selling prices range from RM747,000 to RM1.36 million. As for Kyliez Suites, the 37-storey mixed-use development offers 346 serviced apartment and office suites, with layouts ranging from studio to 2-bedroom units sized at 323 to 657 sq ft. Selling prices range from RM748,000 to RM1.43 million.

Milla Residence Wangsa Maju was soft launched by Beverly Group. It comprises 1,406 units measuring 657 to 1,302 sq ft. The project offers 2- to 4-bedroom units with selling prices ranging from RM420,000 to RM600,000.

He says the return of tourists to Malaysia has supported the demand for short-term stay properties, noting that Malaysia recorded the highest number of tourist arrivals in Southeast Asia last year. “This acts as an opportunity for developers to launch smaller units that target investors who plan to be involved in short-term stay investment in the future. We observe that more such developments are being launched in the KL City area.”

He also expects the new opening of malls in 4Q2023, namely Pavilion Damansara Heights and The Exchange TRX, to spark more residential developments. “The opening of Pavilion Damansara Heights and The Exchange TRX will lead to more residential projects in their vicinity. These quality malls in strategic locations are expected to attract increased foot traffic, making the surrounding areas more appealing for residential investments.”

In Selangor, average prices of the 3-storey high-rise units sampled trended lower on a q-o-q basis but rental yields improved.

On a y-o-y basis, the average prices in Bandar Sunway increased by 0.5% while those in Subang Jaya, Petaling Jaya and Shah Alam dropped by -2%, -1.2% and -1.9% respectively.

Some new launches during the quarter were located in Puchong. Land & General Bhd launched The Wyn Residences, offering 1,546 serviced apartments with two to three bedrooms with 700 to 850 sq ft in built-ups at a launch price starting at RM486,000.

Avantro Residences @ Bandar Kinrara by Chin Hin Group Property Bhd offers 842 units, of which 208 are Servis Apartment Mampu Milik (SAMM) with 1+1 bedroom measuring 550 sq ft. The remaining 634 units have built-ups ranging from 872 to 1,206 sq ft. This freehold serviced apartment project was launched with prices ranging from RM826,000 to RM1.16 million.

Glomac Bhd unveiled the first phase of Loop City @ Puchong during the period. Loop Residences offers 980 units with 1+1 to three bedrooms ranging in size from 450 to 750 sq ft. The units are priced from RM230,000 to RM660,000.

Fong observes that developers are incorporating new initiatives to make their offerings attractive to potential homebuyers. An example is UEM Sunrise’s introduction of green characteristics in its upcoming project in KAIA Heights Equine, which include low-carbon solutions such as EV charging points, electric forecourts and solar features.

“We anticipate this will enhance property values as the demand for these amenities grows due to their enhanced attractiveness. In addition, banks offer better interest rates for residential development with green features through green financing options.”

Double-storey terraced homes

The 2-storey terraced houses sampled in the Kuala Lumpur markets of Taman Tun Dr Ismail (TTDI), Bangsar, OUG and Cheras showed a mixed performance during the review period.

On a y-o-y basis, average prices in TTDI and OUG increased by 3.9% and 6.5% to RM1.52 million and RM900,000 respectively, whereas Bangsar’s Lucky Garden and Taman Midah in Cheras saw their average prices fall by -2.1% and -1.3%.

“In Lucky Garden, the average price of the 2-storey properties decreased to RM1.63 million. This has resulted in rental yields of 2.4%, which have remained constant since 3Q2023. However, the reduction in transaction price is attributed to the condition of the property rather than a reflection of the fundamentals of the Bangsar area itself,” Fong explains.

During the quarter, the gross rental yield at Taman Midah, which increased to 2.8%, was the highest among the sampled properties in Kuala Lumpur.

Similarly in Selangor, the average prices of the 2-storey homes sampled were also mixed.

Positive movements on a y-o-y comparison were recorded in Petaling Jaya’s SS2, Klang’s Bandar Bukit Raja and Bandar Bukit Tinggi at 9%, 1.1% and 0.7% respectively.

He says, “The West Coast Expressway [opened in November 2023] from Bandar Bukit Raja to Assam Java has enhanced property values in tandem with infrastructure growth in Klang.”

Areas with average y-o-y prices that held steady during the review quarter were Bandar Utama in Petaling Jaya, Putra Heights in Subang and Kota Kemuning in Shah Alam, while those with lower y-o-y prices were Bandar Setia Alam in Shah Alam by -1.8% and Bandar Kinrara and Bandar Bukit Puchong in Puchong, both by -2.9% during the review period.

“The Puchong market is anticipating more property launches and land acquisitions by prominent developers such as Selangor Dredging Bhd, which has further secured land in Puchong for a residential development comprising 550 units of 2- and 3-storey terraced houses. This indicates demand for residential properties in the area,” he says.

Some of the new launches observed during the quarter were in Klang. S P Setia Bhd launched Laelia III, offering 83 units of 2-storey terraced houses with built-ups ranging from 1,850 to 2,060 sq ft at selling prices from RM838,000 to RM1.2 million.

The developer also launched the final phase of its commercial development in Setia Bayuemas — Bayu Avenue, comprising 16 units of 2-storey shopoffices that are scheduled to be completed in 2026. “The shopoffice development acts as the catalyst for the existing and upcoming residential projects in the vicinity and will attract more potential buyers,” he says.

Double-storey semidees

Semi-detached houses sampled in the Selangor markets generally saw positive performance in both average price trends and monthly rents during the quarter.

Areas that experienced a y-o-y increase in average price were SS3 in Petaling Jaya by 0.6%, Bandar Kinrara in Puchong by 14.7%, Bandar Setia Alam and Bandar Tropicana Aman in Shah Alam by 7.8% and 4.3% respectively and Glenmarie Cove in Klang by 4.5%.

“Bandar Kinrara stands out with the highest average price among the selected submarkets, attributing to its strategic location accessible via Bukit Jalil Highway,” Fong highlights.

Areas that saw their average price fall during the quarter were Bandar Parkland in Klang by -1.5% and Setia Ecohill in Semenyih by -4.8%.

The semidee data samples for Seri Kembangan and Cyberjaya markets that were in the previous quarter’s monitor have been taken out starting from this quarter as they have been comparatively less active.

Meanwhile, the 29.8km Setiawangsa-Pantai Motorway that opened in 3Q2023, connecting Taman Melati and Klang Gates, has addressed prevalent traffic issues and improved the efficiency of the road network in the corresponding areas, Fong says. “The motorway is expected to enhance the locale with improved infrastructure connectivity in Greater Kuala Lumpur.”

Overall, he says that the y-o-y performance of rental yields in the selected sub-markets showed cautious optimism with most findings indicating positive and stable trends in the Klang Valley residential market.

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