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Date [ 2015-02-13, 05:16 ]

A survey of how the property market performed last year.

Coming up - the Cecil Central Residences

(Kuala Lumpur=Koreanpress) Nancy Joseph = Based on its own research, Knight Frank gives its study of how new condominiums fared in the capital in 2014.

Market Indications

Malaysia’s economy expanded strongly in the first quarter of 2014, posting an exceptional growth rate of 6.2% . The robust economic performance is driven by stronger expansion in domestic demand and a turnaround in net exports. Bank Negara Malaysia (BNM) expects the economy to maintain its growth momentum with GDP to range from 5% to 5.5% for the remaining quarters of the year.

Headline inflation edged up 0.4% to register at 3.4% in 1Q2014 mainly due to higher prices in the housing, energy-consumption and transport categories.

Although BNM has kept the Overnight Policy Rate (OPR) unchanged at 3% since May 2011, with strong domestic demand, ample liquidity in the financial system and low cost of borrowing leading to household debt reaching a record level of 86.8% of GDP at the end of 2013, there is strong indications that interest rates in Malaysia could rise by the second half of the year.

Supply & Demand

The cumulative supply of high end condominium in Kuala Lumpur stands at 36,222 units following the completion of eight notable projects offering an additional 1,659 units [includes projects that are physically completed but pending issuance of Certificate of Completion and Compliance (CCC)].

 Out of the eight completions, five are located in KL City and they are SOHO Suites @ KLCC, Six Ceylon, Suasana Bukit Ceylon, Laman Ceylon and VUE Residences in KL City. The remaining three projects are Dedaun and Damai206 @ Embassy Row in Ampang / U-Thant, and Richmond, Kiara 3 @ Mont’ Kiara in Mont’ Kiara.

Most of the newly completed projects such as SOHO Suites @ KLCC, Six Ceylon, Suasana Bukit Ceylon, VUE Residences and Richmond, Kiara 3 @ Mont’ Kiara have been well received with sales rates ranging from 97% to 100%. The developer of Laman Ceylon, with circa 85% sales, has reportedly revised their marketing strategy and is now offering full furnishing packages for the unsold semi-furnished units.

In the Ampang Hilir / U-Thant area, Dedaun reported 85% sales rate while few owners of the fully sold Damai206 @ Embassy Row are releasing their units for sale in the secondary market.

A high impending supply totalling some 2,884 units is expected to enter the market by the end of 2014. Ampang Hilir / U-Thant will account for circa 48% of the total upcoming supply, followed by KL City (33%), and Mont’ Kiara / Sri Hartamas (19%). Some of the notable projects slated for completion include Crest Jalan Sultan Ismail, 188 Suites and Setia Sky Residences (Celeste Tower) in KL City; 9 Madge, Madge Mansion, Nobleton Crest, The Elements @ Ampang (Tower 1) and D’ Suria Condominium in Ampang / U-Thant; One Kiara (Tower A) and The Icon Residence in Mont’ Kiara and The Signature in Sri Hartamas.

Compared to a total of some 16 project launches in the second half of last year, there were only nine notable previews and launches observed during this review period, reflecting developers’ concerns on the adverse impact arising from the cooling measures announced in October 2013.

The previews and launches include The Ritz-Carlton Residences Kuala Lumpur, Vortex Residence and Expressionz Professional Suites @ Tun Razak in KL City; KL Gateway Premium Residences (Tower 2) and Inwood Residences @ Pantai Sentral Park in Kerinchi / Bangsar South; DC Residency @ Damansara City in Damansara Heights; and 28 Dutamas (Tower A), TWY Mont’ Kiara and Residensi 22 (Block B) in Mont’ Kiara.

Following the completion of its successful projects in KL City, ViPod Residences and The Quadro Residences, developer, Monoland Sdn Bhd, held a preview for its latest project, Vortex Hotel Suites & Residence KLCC, in January 2014.

Located at Jalan Sultan Ismail, along the same stretch as Hard Rock Café, Concorde Hotel, Menara IMC and adjoining Menara Prudential, Vortex offers 248 units of residences priced from RM980 per sq ft up to RM1,190 per sq ft. Due to its attractive pricing, the project received overwhelming response with all available units reportedly taken up.

Expressionz Professional Suites @ Tun Razak by Exsim Group of Companies was launched in March 2014 at an average pricing of RM1,300 per sq ft. The project offers 447 serviced apartment units of various layouts - studio, dual-key and duplex units sized from 643 sq ft to 1,405 sq ft. As of May, it has reportedly achieved circa 65% sales.

Berjaya Corporation Bhd expects the take-up rate for its newly launched luxurious Ritz-Carlton Residences Kuala Lumpur to hit 60% by year-end. The upscale project, located at the intersection of Jalan Sultan Ismail and Jalan Ampang, consists of 287 suites with unit sizing ranging from 1,023 sq ft to 4,284 sq ft. Average selling price starts from RM2,500 per sq ft.

Notable projects targeted for launch later this year include Cecil Central Residence, Platinum Park Serviced Apartment and The Robertson (Tower 3) in KL City as well as Nova Pantai @ Pantai Dalam and Resonance @ South Bangsar.
Cecil Central Residence will be Hong Kong-based Cheuk Nang (Holdings) Ltd’s premier project in the heart of Kuala Lumpur.

Controlled by tycoon Cecil Chao, its unit, Martego Sdn Bhd, will develop upscale residences comprising three 50-storey blocks (total 832 units) with typical sizing from 569 sq ft to 2,499 sq ft. The freehold project is located off Lorong Perak, facing Menara Kuala Lumpur and KLCC Park. Knight Frank Malaysia is the exclusive marketing agent for the project.

Other upcoming integrated projects that are set to alter Kuala Lumpur’s skyline include the RM3.5 billion mixed use “Oxley Towers” at Jalan Ampang that will comprise two 6-star hotels, luxury serviced apartments, niche retail mall and customised offices. Another biggie is KSK Group’s RM4 billion Jalan Conlay project that will feature three towers (a 60-storey to house the 5-star hotel cum serviced apartments and two towers of 50 and 55-storey for luxury condominiums) and a 200,000 sq ft retail podium.

The indicative pricing for the luxury serviced apartments and condominiums in these two projects range from RM2,500 per sq ft to RM3,000 per sq ft. Meanwhile, the former site of Lai Meng Primary School at Jalan Ampang is proposed for a 60-storey twin towers project. One of the proposed towers will accommodate a mix of serviced apartments, hotel and offices, while the other tower will house Grade A office.

Prices & Rentals

Cooling measures introduced by the Government, have dampened market activities, both primary and secondary. There were noticeably less previews and launches in the first half of the year with many developers pulling back as buyers adopt the “wait-and-see” approach. Despite lower volume of transactions, prices continued to hold firm in the secondary market. In the primary market, however, sales performance for new launches were mixed depending on the location, product and pricing amongst other key factors.

Early this year, Mulpha Land Berhad disposed a 5-storey low-rise apartment block known as Raintree Residence at Jalan Wickham, off Jalan Ampang Hilir to the Government of the Islamic Republic of Iran for a total cash consideration of RM34.30 million (or RM1,100 per sq ft on net floor area). The property comprises 12 apartment units with floor areas ranging from 2,045 sq ft to 3,735 sq ft.

In May, Amphil Corporation Sdn Bhd, the developer of the on-going Rimbun @ Embassy Row, officially launched its triplex penthouse measuring 18,000 sq ft for sale at RM25 million (or circa RM1,390 per sq ft). The selling prices for its typical units range from RM1,100 per sq ft.

Although there were significant completions totalling some 1,507 units in KL City, asking prices continued to hold firm while rents were marginally down in selected less prominent schemes. In Bangsar, asking prices were marginally higher during the review period while rents continued to hold steady.

With no significant completions noted in the localities of Ampang Hilir / U-Thant, Damansara Heights and Mont’ Kiara, asking prices and rents generally remained stable.

Going forward, with a high supply pipeline of existing and incoming projects, the rental market is expected to face further pressure amid weak occupational demand in selected locations and heighten competition between unit owners. Yields will continue to be compressed in line with the lagging rental market.

Meanwhile, the debut of more branded residences into the Kuala Lumpur market appears to have had a positive effect on the pricing of new high end condominium projects.

Outlook

With the cooling measures implemented still in place, the outlook for the high end condominium is expected to remain challenging ahead of potential interest rate hike.

The high end residential segment is expected to experience a temporary slowdown in demand as up-graders and investors may opt to delay big-ticket purchase in anticipation of higher financing cost and cost of living. Key factors such as location, pricing and marketing strategies, availability of financial-related packages (e.g. discounts, free legal fees etc.), developer’s reputation and development concept in terms of product, quality, facilities / amenities and services will play crucial roles in the success of upcoming high end residential launches.

Meanwhile, the Government, had on May 15th, enforced an initiative to curb speculative activity by the so-called ‘Real Estate Investors Club’ who practises collective purchase of real estate for subsequent sale at a higher price for easy profit.

Developers are now required to register the name of buyers of more than four houses at one time with the Urban Wellbeing, Housing and Local Government Ministry.

The high level of existing supply coupled with the impending entry of some 2,884 units is expected to exert pressure on both rental and secondary sales market, particularly in locations where there are weak occupational demand and significant project completions in the second half of 2014.

The focus of the residential market in the short to medium term will likely be on the affordable, mid-range products and township developments. Well-conceived projects with potential access to public transport links such as the on-going Light Rail Transit (LRT) Extension and the Klang Valley Mass Rapid Transit (MRT) lines are expected to be in demand.

The latest offering by YTL Land & Development saw 650 units of its Midfields 2 project (total: 792 units) snapped up during a weekend.

Competitively priced from below RM500 per sq ft, the recent confirmation of the high-speed rail (HSR) project from Kuala Lumpur to Singapore with the terminal located at Bandar Malaysia in Sungai Besi set to be completed by 2020, greatly adds to the attractiveness of  the Midfields 2 address.

The lacklustre market performance may receive a boost in 2H2014 ahead of the implementation of the goods and services tax (GST) in April 2015 with demand expected to pick up.

Moving forward, the rejuvenation of prime tracts in KL City evident by the high number of on-going and upcoming development projects will further transform the landscape and skyline of the city as it moves closer to fulfilling its vision of becoming ‘A World-Class City’. In the Economist Intelligence Unit (EIU) 2013 Liveability Ranking of 140 cities, the capital city of Malaysia, ranked 78th, is the second most liveable city in  South-East Asia, after Singapore.

abc@koreanpress.net

 
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