His view on the real estates market in Malaysia: extracted from THEEDGE FINANCIALDAILY 13th June 2011:
Snapshot of the residential market
This market segment is the most active property sub-sector both in transaction volume and value. In 2010, residential transactions accounted for 60.2% and 47.1% of the country’s total volume (376,583 transactions) and value of transactions (RM107.44 billion) respectively.
The high-end condo market in Kuala Lumpur, which performed strongly in 2007, was dented by the global financial meltdown in 2H08. However, there was no widespread “fire sales” though selected developments reported sharp declines of about 20% from their peak in 2008.
The high-end condo market has also bottomed and stabilised since and the near term outlook remains cautiously optimistic.
In the landed homes segment, the trend is towards boutique projects within gated and guarded communities. Recently, the launch of The Mansions @ ParkCity Heights, a 19.6-acre gated and guarded development comprising 127 units of 2½ to 3½-storey parkhomes reportedly achieved 86% take-up during its priority sales launch despite the hefty pricing from RM2.7 million to RM7.5 million.
Outlook
Landed homes growth in the next 12 months is expected to be more subdued due to rising borrowing cost with anticipated further hikes in the near term, coupled with the LTV ratio for the third loan. However, landed home prices in established locations and popular suburbs are expected to continue rising at a slower pace of 5% to 10%.
Similarly, high-rise residences in selected parts of KL City and its fringes are expected to perform well. Smaller-sized high-end units are gaining interest due to their affordable pricing.
Medium high-end condos in established and new growth areas with good accessibility, particularly along the proposed new MRT route may see more capital appreciation. They become more attractive as prices of landed properties in popular areas skyrocket. In 1H11, there has been a slight increase in average asking prices while demand remains relatively low due to limited tenants.
The outlook is cautious in the near term but competitively priced projects in good locations by reputable developers will continue to attract buyers.
Significant projects since 2007
1. The Intermark
Developed by MGPA Asia Fund II, it involved the redevelopment of the former Empire Tower, City Square, Crown Princess Hotel and Plaza Ampang into an integrated first class asset with a prime A office building and a 4-star 540-room Doubletree Hotel which opened in August 2010.
The development of a new international green Prime A 39-storey office building named Integra Tower (NLA 736,000 sq ft) with LEED accreditation is expected to be completed by end-2012. The Intermark was recently recognised as a MSC Malaysia Cybercentre.
2. Bangunan Lestari Kumpulan EMkay
Is the first LEED Gold certified building in Malaysia. Located in Cyberjaya and developed by the Emkay Group, the five-storey office building is occupied by Shell. Green features include use of materials with a high recycled content, energy saving equipment, storm-water management and high-efficiency bathroom fixtures.
3. Bangsar South
Completed and ongoing components include The Horizon Phase 1 boutique offices with MSC status, Phase 2 with Green Building Index accreditation and the Park Residences.
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