Snapshot of the residential market
The market began to feel the pinch in 2008 when buyers adopted a wait-and-see attitude during the global financial crisis. Developers also took a cautious approach.
During the recession in 2009, transaction volumes registered a negative growth of 2.4%. Several prominent developers such as S P Setia offered attractive financing packages to stimulate sales.
Backed by improvements in economy, the low interest rate regime and attractive financing packages, the market recorded a 7.2% increase in transaction volume and 21% increase in value in 2010.
The improvement attracted speculators especially in urban centres. In November 2010, the central bank imposed a LTV ratio of 70% to the third house loan to moderate speculative activity.
While affordable houses continue to dominate sales, demand for high-end houses of above RM500,000 rose from 2008 to 2010 in new prime residential townships in the Klang Valley. Another notable trend is the increasing development of smaller sized high-rise residential units.
Outlook
Prices of landed homes in the Klang Valley are expected to continue rising, albeit at a slower pace. The trend is backed by demand from young first time home buyers and rising construction cost as supply of vacant land becomes increasingly scarce.
However, the price increase is unlikely to be as drastic as 2010 considering higher interest rates and the measures taken to curb speculative activity. Inflation is also expected to dampen consumer confidence and may delay house buyers’ decisions.
The scarcity of land and the expected higher prices for new landed homes in the Klang Valley may drive house buyers to more affordable high-rise residences. Thus prices for condos are expected to remain stable or increase within a reasonable percentage.
1. Desa Park City
Since its first launch of strata-titled terraces at RM550,000 a unit nine years ago, prices have increased three-fold to surpass RM1 million in the secondary market, setting new benchmarks in the Klang Valley.
It is the first to introduce strata-terraced developments and the first complete strip mall. Home buyers are drawn to its New Urbanism living concept, with meticulous town planning and high security services.
2. Bangsar South
Since the project began, the transaction value of surrounding land had surged from around RM53 psf in 2005 to RM280 psf in 2010. Prices for its condominium, The Park Residences, have increased from RM320 psf in 2008 to RM550 psf today. Prices for its offices have also jumped to RM780 psf today. Phase 1 of The Horizon, comprising 14 blocks of 10- and 11-storey boutique offices with an average gross floor area of 55,000 sq ft, has set an unprecedented concept for office building developments in Malaysia.
3. KL Sentral
Among the main buildings completed since 2007 in the 72-acre integrated development are 1 Sentral, which houses PricewaterhouseCoopers, MRCB and General Electric, and the UEM Group’s headquarters at Mercu UEM. The upcoming Nu Sentral Shopping Centre is expected to further transform Brickfields into a shopping attraction in KL.The transportation hub is also home to KL Hilton Hotel and Le Meridien Hotel. They will be joined by St Regis Hotel in 2014.
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