This article first appeared in City & Country, The Edge Malaysia Weekly on June 24, 2024 - June 30, 2024

The Klang Valley residential property market saw more new completions and transactions recorded during the first quarter this year than in 1Q2023, says Savills Malaysia director of research and consultancy Fong Kean Hwa in presenting The Edge Malaysia | Savills Klang Valley Residential Property Monitor 1Q2024. “We expect the residential property market to gain momentum in 2024, with more new completions,” he says.

In total, there were 7,791 units of new completions recorded compared with 7,231 units in 1Q2023. New completions in Kuala Lumpur increased by 22% in 1Q2024 at 3,366 units compared with 2,755 units in 1Q2023. In Selangor, however, new completions decreased by 1% to 4,425 units during the review period compared with 4,476 units in 1Q2023.

In terms of transactions, KL saw 3,954 residential units change hands, compared with 2,955 units in 1Q2023. The collective value of these transactions also experienced a significant rise, reaching RM3.79 billion in 1Q2024 compared with RM2.7 billion in 1Q2023.

Similarly, Selangor recorded 11,859 transacted units worth RM7.23 billion in 1Q2024, witnessing an 18% increase in transaction volume compared with 10,056 units worth RM6.08 billion in 1Q2023.

In general, residential properties continue to dominate property market activity, notes Fong. “At the beginning of 2024, the Klang Valley’s residential sector showed remarkable growth. The positive outlook is attributable to an increase in transaction activity, signalling better trust and confidence among purchasers in acquiring properties.”

He adds that this factor has contributed to the drastic reduction in overhang units in both KL and Selangor. The number of overhang units shrank from 10,059 in 1Q2023 to 8,342 in 1Q2024 in KL, and from 8,989 to 5,901 in Selangor.

In terms of outlook, Fong expects the country’s economy to improve as it continues to be driven by strong household spending, steady employment growth and better investment activities in recent quarters. “The forecast is also backed by an increase in external demand, driven by a recovery in global commerce and the tech upcycle,” he says. The Malaysian economy grew 4.2% in 1Q2024 compared with 2.9% in 4Q2023.

Fong notes that the terms of loan applications and approval rate for residential purposes decreased by 4% and 6% year on year respectively in 1Q2024.

Meanwhile, demand for short-term stays in Malaysia, supported by the return of tourists to the country, offers developers an opportunity to develop small units targeted at investors, he says. “The hospitality market is witnessing a dynamic resurgence of tourism arrivals, with 20.14 million arrivals recorded in 2023 compared with 10.07 million in 2022, a twofold increase. This rise is contributed by the weaker ringgit.”

In addition, the government’s Visa Liberalisation Plan, which started on Dec 1, 2023, and will run until Dec 31, 2024, for tourists from China and India may further boost the tourism sector in upcoming quarters, he adds.

Fong says the recent sales and services tax (SST) hike from 6% to 8% effective from March 1, 2024, will affect the property industry. “Developers will be pricing in the hike in their new launches; thus, we anticipate higher launch prices.”

The government’s revamp of the Malaysia My Second Home (MM2H) programme is expected to affect property prices and reduce the overhang in the high-end residential segment. “The programme is expected to attract more foreign investors in the residential property segment. As at January 2024, the highest number of active MM2H visa pass holders was from China, with an overall increase in visa applications in the country.”

Another factor that Fong foresees will affect property values is major infrastructure projects, such as MRT 3 and the possible revival of the KL Singapore High-Speed Rail (HSR). “The advent of MRT and LRT a few years ago has accelerated the growth of transit-oriented developments in the residential property sector,” he says.

The price trend in selected high-rise residential submarkets in KL — KLCC, Bangsar and Mont’Kiara — remained challenging, whereas rental performance saw positive movements in general.

The average price of 2-bedroom units sampled fell 2% in KLCC and 2.7% in Mont’Kiara, while Bangsar saw a 3.6% increase y-o-y. In terms of rentals, Bangsar and Mont’Kiara saw average monthly rents increase 6.7% and 1.9% respectively, while KLCC recorded no change.

Project launches in KL in 1Q2024 include Kingswoodz serviced apartment by Exsim Group in Bukit Jalil; The Ashwood condominium by Paramount Property Development Sdn Bhd in U-Thant; Kerjaya Papyrus @ North Kiara condominium by Prospek Group Bhd (KL:KERJAYA) in Dutamas; and Tuju Residence mixed-use development by Distinctive World Sdn Bhd on Jalan Kuching.

Kingswoodz offers 1,558 units over three towers with built-ups from 474 to 904 sq ft and 1- to 3-bedroom layouts. Selling prices range from RM380,000 to RM680,000 and the project is slated to be completed by 2028.

The Ashwood, which was pre-launched in March, features 302 condominium units, 40 two-storey duplex units and 12 three- and four-storey villas. Selling prices range from RM1.64 million to RM4.30 million and the project is expected to be completed in 2029.

Papyrus @ North Kiara comprises 454 four- to five-bedroom units ranging from RM1.04 million to RM4.5 million. The project is slated for completion by 2028.

Tuju Residence offers 932 units with 1- to 4-bedroom layouts with built-ups from 710 to 1,442 sq ft. Selling prices range from RM411,600 to RM863,000 and the project is slated for completion by 2027.

Fong points out that the opening of new malls in KL will have a positive spillover to the surrounding residential neighbourhoods. “Malls slated for completion this year include Warisan Merdeka Mall, 168 Park Selayang and Pavilion Damansara Heights Phase 2. They are going to spur new residential development in KL.”

In Selangor, the average prices and rents of 3-bedroom high-rise residential units remained soft in most of the selected submarkets, but rental yields improved.

On a y-o-y basis, the average price in Bandar Sunway dropped 1.2% while average rents improved by 2.9%, resulting in a rental yield of 4.9%.

Similarly, Subang Jaya witnessed a drop in average price by 3% y-o-y but average rents rose 1.8%, leading to a gross rental return of 4.6%.

Petaling Jaya saw an increase in average price by 0.9% while rents fell 2.9%, resulting in a rental yield of 3.8%.

A new launch in Petaling Jaya during the quarter was NewUrban @ PJ South by Ibraco Bhd (KL:IBRACO). The serviced apartment project comprises 922 units with built-ups ranging between 553 and 1,000 sq ft. Selling prices are from RM270,000 to RM831,000 and the project is anticipated to be completed in 2027.

In Shah Alam, the average price fell 3.4% y-o-y while rents remained stagnant, contributing to a rise in rental yields to 4.3%. “Shah Alam is witnessing considerable real estate demand, as many developers are developing new projects to capitalise on Klang’s new royal city status.”

Fong adds that the ongoing i-City development by I-Bhd (KL:IBHD) will improve property prices and rents in the area in the near future. “i-City’s latest partnership with CelcomDigi aims to accelerate Shah Alam’s digital growth into a smart city. i-City has thrived because of its ‘50-steps’ marketing approach. The developer will launch Phase 2 of its serviced apartments, BeCentral, just 50 steps from Double-Tree by Hilton i-City, Central i-City Mall, Mercu Maybank and the City of Digital Lights.”

The 2-storey terraced houses sampled in the KL submarkets of Taman Tun Dr Ismail (TTDI), Bangsar, OUG and Cheras showed a mixed trend.

With its plethora of homegrown businesses and accessibility, TTDI saw its average price rise 1.3% y-o-y. Monthly rents fell 3.1% y-o-y, however, with lower yields of 2.4% during the quarter.

In Bangsar’s Lucky Garden, the average price of 2-storey terraced houses fell 0.3% y-o-y but rental yields stayed the same at 2.3%. “Even so, the slight reduction in transacted price is attributed to the condition of the property, such as its age, facilities offered, and [whether it’s for rent or stay], instead of the overall fundamentals of the Bangsar area itself,” says Fong.

As for OUG, the properties sampled in the area experienced a 5.9% and 2.6% y-o-y increase in average price and rent respectively, with rental yields of 2.6%.

In Taman Midah, the average price rose 3.3% y-o-y, but rents declined 2.8%. Although rental yields are lower at 2.7%, they are still the highest among the KL 2-storey landed submarkets.

“Cheras is a mature region with proximity to KLCC and easy accessibility via the Sri Petaling LRT line and Cheras-Kajang Highway. Along with the Sungai Buloh-Kajang MRT line and highways like the SUKE, all these have boosted property demand in Cheras,” says Fong.

In Selangor, 2-storey terraced houses in Petaling Jaya’s SS2 and Bandar Utama saw their average price rise 4.4% and 5.9% y-o-y respectively. Average monthly rents remained the same in SS2 but rose 4% in Bandar Utama, with yields of 2.3% and 2.4% respectively.

“The higher rental rate attained in Bandar Utama is attributed to a growing preference for larger units, and driven mainly by factors such as the area’s maturity, accessibility, lifestyle and demand for fully furnished products,” says Fong.

In Puchong, landed properties are favoured by homebuyers. Average prices of two-storey terraced houses in Bandar Kinrara and Bandar Bukit Puchong rose 2.9% and 0.7% y-o-y respectively. Monthly rents fell by 2.4% and 2.9% respectively, with yields at 3.3% and 2.8%.

A recent launch in Bandar Kinrara is S P Setia Bhd’s (KL:SPSETIA) Irama Villa IV. The freehold 2-storey terraced house development offers 38 units with built-ups from 2,414 to 2,927 sq ft and layouts of four to five bedrooms. The launch price is between RM1.7 million to RM3.05 million and the development is expected to be completed by 2026.

In Putra Heights, Subang Jaya, the average price and monthly rent increased 2.8% and 3.1% y-o-y respectively, leading to improved yields of 2.7%.

In Shah Alam, average prices in Bandar Setia Alam and Kota Kemuning rose 3.1% and 1% y-o-y respectively. Rents fell 3.1% and 2.9% respectively, with yields of 2.5% and 2.8%.

In Klang, average prices in Bandar Bukit Raja and Bandar Bukit Tinggi fell 3.1% and 1.5% y-o-y respectively. Average monthly rents in Bandar Bukit Raja fell 5.9% y-o-y but remained the same in Bandar Bukit Tinggi, with gross rental yields at 3% and 2.7% respectively. According to Fong, the drop in average prices and rents in both areas was due to limited transactions in the period.

The semi-detached houses sampled in the Selangor submarkets have seen positive performance in both price and rent.

SS3 in Petaling Jaya showed an upward trend in average prices, rising 5.4% y-o-y. Average monthly rents remained stable at a 2.1% yield.

Bandar Kinrara in Puchong, which Fong says is “a booming semidee market”, saw positive trends with average prices and rents rising 4% and 4.9% y-o-y, leading to a stable rental yield of 2.6%.

Bandar Setia Alam in Shah Alam saw a notable increase in average prices of 3.9% y-o-y. Rental yields fell to 2.7%, however, as average monthly rents remained stable.

Bandar Tropicana Aman in Shah Alam saw average prices appreciate 4.3%. Average monthly rents also rose by 2.9%, with a rental yield of 2.8%.

Klang’s Glenmarie Cove and Bandar Parkland witnessed y-o-y improvements in prices and rents, resulting in generally positive yields in the quarter.

Glenmarie Cove experienced a price surge of 5% while rents increased 3%, but rental yields dropped slightly by 0.1% to 3.9%.

In Bandar Parkland, average prices remained constant y-o-y while average monthly rents rose 3.8%, resulting in positive rental yields of 2.5%.

“LRT3, which is built to improve connectivity for people travelling between Bandar Utama and Klang, has surpassed 91% completion and is on track to begin operations by March 1, 2025. This enhances the prices and rental rates of existing and upcoming residential projects in the vicinity,” says Fong.

In Semenyih, Setia Ecohill observed a 4.8% drop in average prices. Average monthly rents were stable, with an improved rental yield of 2.2%.

Overall, while the y-o-y performance of both landed and high-rise properties in selected areas of the Klang Valley during the quarter under review was mixed, with most findings indicating positive and stable trends, says Fong.

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