Tough market for condos in Klang Valley
PETALING JAYA: The market for condominiums in the Klang Valley is expected to be more challenging over the next two years, due mainly to the large incoming supply scheduled for completion this year and in 2017. -Tough market for condos in Klang Valley
Henry Butcher Real Estate Sdn Bhd chief operating officer Tan Chee Meng said the demand for non-landed properties is expected to be weaker than that for landed properties.
This would also be compounded by the fact that the tight credit situation would continue to affect sales.
“Transaction volume is expected to decline further,” he said at the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the private sector, Malaysia seminar recently.
He added that while residential property prices would soften, they, however, were not expected to dip significantly.
“The market will be challenging in the first six months of 2016 but could pick up in the second half, provided the country’s economy is not adversely affected by any external shocks.
“As the next general election has to be held before August 2018, the market could see stronger improvements from the second half of 2017, on the basis that the ruling government will boost the economy and offer more goodies in the run-up to the elections.”
CH Williams Talhar & Wong (WTW) in its Property Market Report 2016 concurred that the condominiums market in the Klang Valley was expected to be more challenging in the next two years.
“The infrastructure developments such as MRT SSP Line and East Klang Valley Expressway are likely to spur more condominiums developments in the prime as well as suburban areas.
“However, developers are advised to maintain a cautious stand. The rental market is expected to be a tenant’s market with more units coming onstream this year.”
Citing the Real Estate and Housing Developers Association’s industry survey for the first half of 2015, Tan said sales of high-rise properties dwindled 9% during the period compared with 2014.
“Only 4,373 or 40% were sold out of the 10,877 units launched, of which 10,550 were residential units. Apartment and condominium sales were dismal, with only 779 (18%) of the 4,259 units launched being sold.
“The number of unsold units rose 14% to 78% in the first half of 2015 from 64% in the same period in 2014.”
WTW said 8,374 units of condominiums and serviced residences were launched in 2015.
“The second quarter of 2015 saw more new launches especially in the Embassy Row (Ampang Hilir/U-Thant) and the Golden Triangle. The majority of the new launches were serviced residences (69%), with small built-up areas and targeted at young working professionals or expatriates.”
WTW added that while transaction activities in the luxury condominiums market was less active in 2015, the average transacted prices rose.
“Luxury condominiums in the Golden Triangle were transacted at RM1,500 per sq ft on average, whereas secondary areas remained firm at RM920 per sq ft on average.
“The average occupancy rate for condominiums and serviced residences developments remained at between 77% and 80% in Golden Triangle and the secondary area, it was between 60% and 65%.”
In light of the challenging outlook for the high-rise sector over the next couple of years, Tan said he expected a weak rental market for high-end condos and apartments.
“The will likely be an increase in non-performing loans and a more active auction market. Developers’ margins will be cut by higher marketing costs and additional incentives offered to buyers. We believe they (developers) will focus on smaller-sized units to lower absolute selling prices.”