Malaysia's real estate remains a preferred investment choice

Strong sales seen
PETALING JAYA: Despite the overall gloom and doom in the global economy, a glut of condominiums and cooling measures by Bank Negara
to deter speculation in the overall property market, the general
observations on the ground indicate strong sales for certain segments
of this market.
This underscores the fact that real estate continues to be a preferred investment choice in the current economic climate.
The latest report by Knight Frank Real estate highlights 1st half 2012
said there were five completions in the first six months of this year,
bringing the total cumulative supply in Kuala Lumpur to 29,882 units.
Another
five developments are expected to be completed in the second half this
year. This will bring the cumulative supply to 31,163 units. These
numbers cover the high-end condominium market priced RM500 per sq ft
and above.

[You must be registered and logged in to see this image.] These
new completions, coupled with existing supply and weak occupancy rates,
are expected to put further pressure on the rental market.
The
report also noted that smaller sized apartments and SoHo units were
becoming a mainstay in the Kuala Lumpur condominium scene and the
dual-key concept was steadily gaining acceptance and popularity among
developers and purchasers.
These two over-riding trends in the high-rise residential sub-segment help add product diversity, it said.
Dual-key
units comprise a studio apartment unit attached to an otherwise
standard condominium unit. Such units come with two separate doors with
one leading to the studio unit, and the other to the adjoining unit,
bonded with a common foyer.
While there were multiple SoHo
developments being launched, three dual-key concept residences entered
the market and all three recorded good take-up rates, the report said.
The
recent increase in the number of new launches offering smaller units in
established locations and popular suburbs is driven by the scarcity of
land and high land costs, as well as pressure for developers to keep
end-pricing affordable. Although the units are small, on a per sq ft
basis, the price will be higher than the larger units.
As for
pricing, in the primary market as when buyers buy directly from the
developers, the high-end condominium sector saw a slight drop in
average asking prices in the city while the fringe and suburban areas
generally demonstrated a stable trend.
Similarly, there was a
notable decline in transacted prices in the city's secondary market
where buyers buy directly from owners instead of from developers.
Projects located on the fringes of the city, however, saw more sales
and leasing activities.
DTZ Research report for Kuala Lumpur Q2 2012: Resilience across all sectors said the overall residential market was “stable with average capital and rental values experiencing marginal increases.”
“The
outlook is, however, more cautious as sentiment is clouded by both
internal and external issues, including those of a political nature,”
the DTZ report said, adding that the market was expected to experience
a period of slower growth going forward.
In the office segment market, the market was relatively stable despite a spike in new supply.
Menara Felda will be the new corporate headquarters of Felda Land Development Authority which has just listed Felda Global Ventures Holdings in one the of biggest initial public offerings internationally for the year.
Menara
Darusalam, a mixed development, will house the new Grand Hyatt Hotel.
With several recently completed office buildings in the vicinity such
as Menara Worldwide and Menara Prestige still filling up spaces, the
new additions will add pressure on rents, DTZ report said.
Prime
office rental rates remain stable and resilient at the moment,
averaging RM6.23 per sq ft per month, while top tier offices are
commanding about RM7.90 per sq ft per month, the report said.
“With
a substantial pipeline of supply completing in the second half of this
year and next year, rents are forecast to fall,” the report said.
Knight
Frank said the cumulative supply of office space in the city stood at
47 million sq ft and will increase to 48.6 million sq ft with the
completion of three new offices by the end of this year. The supply in
the city fringes today stands at about 17.5 million sq ft. Some 4.1
million sq ft will be added to the fringes by the end of next year.