Market View Kuala Lumpur Residential Q4 2011
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Transcript of Market View Kuala Lumpur Residential Q4 2011
8/2/2019 Market View Kuala Lumpur Residential Q4 2011
http://slidepdf.com/reader/full/market-view-kuala-lumpur-residential-q4-2011 1/4© 2011, CBRE Group Inc.
Kuala Lumpur ResidentialQ4 2011 www.cbre.com.my
CB RICHARD ELLIS (MALAYSIA) SDN BHD
Condominiums
The total supply ofcondominiums and servicedresidences priced at or aboveRM350 psf in Kuala Lumpur asof end-2011 is about 37,200units. We would term 24% ofthese units as being luxury (prices of RM800psf and above).
Average capital values forselected projects in the KLCCarea are about RM966psf, about29.3% higher than the averagetransactions price for KualaLumpur as a whole.
Average asking rents havedeclined in both KLCC andMont’Kiara over the past year. A continuation of this trendprobably would put pressure onthe capital values of secondary market, which have so farremained stable.
Overall Housing
As of end-2011, the totalexisting housing stock in theKlang Valley registered about1.72 million units. Newcompletions were 39,400 unitsin 2011.
Serviced apartments,condominiums and apartmentsaccount for 21.5% of the totalexisting housing stock in theKlang Valley.
JPPH data shows that newhousing starts rose for the firsttime in seven years. 2011 startsare marginally higher than thelevel seen in 2009 and 2010,and still just 40% of 2007 starts.
Quarterly Highlights Bank Negara Malaysia (BNM), the country’s central bank, maintained the Overnight Policy Rate at 3.00% to end 2011. As part of the Monetary Policy Statements (11 November
2011), BNM reported an improvement in the domestic economy during 3Q2011,
primarily due to stronger domestic demand. Export performance also improved, reflecting
firm regional demand and the normalisation of trade flows after a period of supply chain
disruptions. Going forward, domestic demand is expected be the primary anchor for
economic growth. The major government initiatives announced during 2010-11 are also
expected to gather steam, and there is the prospect of increased public sector spending
and investment activity ahead of national elections, to be held later this year or early next
year. Employment conditions are also expected to remain stable.
Effective 1 January 2012, BNM has revised the lending guidelines, leading to morestringent guidelines on loan approvals. The maximum allowable debt service ratio for a
loan applicant will be based on net income (after deduction of tax, and contribution to
Employees Provident Fund) instead of gross income, to better reflect funds available to the
applicant for loan repayment. We view this as a sensible measure, but are concerned that
this could lead to slower launches and take-up of more affordable properties. There is
also uncertainty regarding how banks will interpret these guidelines in the short-term.
Several new projects were launched / previewed in Kuala Lumpur during the review
quarter, including The Sentral Residences at KL Sentral (average price RM1,100psf),
Rimbun Condominium at Jalan Ampang Hilir (average price RM1,100psf), The Residence
Suites of M-City at Jalan Ampang (average price RM1,000psf), and the G Residence atDesa Pandan (average price RM600psf). We are still seeing strong interest in new
launches, especially those priced at under RM 1 million per unit, for example the 474 units
at G Residence which was over 80% taken-up.
Two new developments, Mirage Residence (102 units) and The Face Serviced Apartments
(733 units), in the KLCC area were also soft-launched. Priced from RM1,200psf to
RM1,600psf, Mirage Residence offers units with sizes ranging from 850sf to 3,100sf, with
an average size of 1,400sf. The Face Serviced Apartments is being offered for sale from
RM1,350psf with unit sizes ranging from 850sf to 1,400sf. Take-up at these projects has
been reported to be as much as 70%.
In October 2011, it was reported that Mah Sing Group Berhad secured the sale of 96
units of its serviced residences in Icon Residence Mont'Kiara for a total of RM220.8 million
(RM1,200 psf). The purchaser was a mainland Chinese corporation. The Icon Residence
Mont'Kiara comprises 260 units in three towers, housing between two to six units per floor.
With the bulk sale, the take-up of the project has now exceeded 60%.
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M ar k et Vi ewK u al aL um p
ur R e s i d ent i al
F o ur t h
Q u ar t er 2 0 1 1 Page 2
© 2011, CBRE Group Inc.
About 75.6% of total residential units in the Klang
Valley are located in Selangor, with the remaining
24.1% located in Kuala Lumpur. Putrajaya, the
country’s administrative capital, accounts for just
under 4,500 units which are primarily for the
housing of civil servants.
Since end-2008, total residential supply in Klang
Valley has grown by 8.8% (approximately 118,200units), while that in Selangor and Kuala Lumpur has
grown by 9.2% (approximately 92,200 units) and
7.6% (approximately 25,400 units), respectively.
Supply by Location
Total Supply
Incoming Supply, New Completions & New Starts
As of end 2011, a total of 177,317 units were
classified as incoming supply (defined as units for
which construction permits have been approved,
whether or not construction has begun). The
breakdown of these units by location is very similar
to that of existing units in the Klang Valley.
At the same time, 167,367 units are deemed to be
under construction, implying that construction work
has begun on 94.4% of units at projects with
construction permits. Of this amount, a total of
128,259 units or 76.6% are located within
Selangor.
It should be noted that new housing starts in 2011
outnumbered the total for 2009 and 2010, but not
significantly.
Total existing supply of residential properties in
Klang Valley stood at 1.72 million units as of end-
2011, equal to an annual growth rate of 1.4% from
2010.
Landed residential properties i.e. terraced houses,cluster houses, semi-detached, and bungalows
accounted for about 746,300 or approximately
43.4% of total supply. Serviced apartments and
condominiums were about 369,700 units or 21.5%
of the total residential accommodation.
2008 2011
P=Preliminary
Source: Department of Valuation, Ministry of Finance
P=Preliminary Source: Department of Valuation, Ministry of Finance
Overall Housing
Existing Supply of Residential Properties (All Types) in
Klang Valley
0.880.93
1.05
1.151.23
1.341.42
1.531.60
1.641.70 1.72
11.60%
4.8%
13.3%
9.9%
6.7%
8.8%
6.1%
7.7%
4.6%
2.7%3.1%
1.4%
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011p
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
AnnualGrowthRate(%)
Source: Department of Valuation, Ministry of Finance
Selangor
75.5%
Kuala Lumpur
24.3%
W.P Putrajaya
0.2%
W.P Putrajaya
0.3%
Kuala Lumpur
24.1%
Selangor
75.6%
Breakdown of Residential Supply in
Klang Valley by Location
Total Incoming Supply, New Completions & New Starts
in Klang Valley
2 6 2 . 3
2 7 3 . 7
2 6 6 . 9
2 5 5 . 2
2 1 3 . 6
1 9 3 . 4
1 8 0 . 0
1 6 1 . 5
1 7 7 . 3
1 1 2 . 5
9 1 . 2
8 0 . 3
7 2 . 9 9
2 . 4
6 2 . 4
3 0 . 1
4 1 . 2
3 9 . 4
7 6 . 4
6 5 . 6
6 4 . 0
6 1 . 8
6 1 . 7
4 1 . 6
2 4 . 6
2 2 . 7
2 4 . 8
0.0
50.0
100.0
150.0
200.0
250.0
300.0
2003 2004 2005 2006 2007 2008 2009 2010 2011p
Total Incoming Supply
New Completions
New Starts
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M ar k et Vi ewK u al aL um p
ur R e s i d ent i al
F o ur t h
Q u ar t er 2 0 1 1 Page 3
© 2011, CBRE Group Inc.
Of the nearly 37,200 condominiums and serviced
residences in Kuala Lumpur valued at or above
RM350 psf, about 24% are considered ‘luxury’ (valued
at RM800 psf and above).
The remainder of the supply of units is split almost
evenly between mid-range (RM350-499 psf) and high-
end (RM500-799 psf).
The high-end subsale market is in some ways less
active than the market for new launches, partly due to
the attractive incentives offered by developers at new
launches. On a y-o-y comparison, prices of high-end
condominiums have increased slightly in the KLCC,
Bangsar and Mont’Kiara areas, with the increase
ranging between 0.80% to 2.47% since 4Q 2010.
More recently, we have seen a decline in capital
values for some properties in both KLCC and
Mont’Kiara of anywhere between 1-3% q-o-q. So far,
the number of transactions at such prices has been
limited, and this trend will have to be monitored over
the next few months.
Total Supply
Capital Values
Asking Rental Rates
Condominium
Source: CBRE Research
Source: CBRE Research
Source: CBRE Research
Average asking rental rates at luxury properties in
question declined slightly during 4Q2011 to RM3.42
psf. This marks a 1.6% q-o-q and 1.4% y-o-y
decrease.
Average rents in KLCC were reported to be
approximately RM3.94psf per month, with Bangsar at
RM3.25psf per month and Mont’Kiara at RM3.08psf
per month.
The weak leasing market for larger residential units,
especially of the type commonly seen in KLCC and
Mont’Kiara, is partly to blame for this decline in asking
rental rates.
Total Existing Condominiums Supply by Grade in
Kuala Lumpur
RM800psf & Above
24%
RM500psf - RM799psf
43%
RM350psf - RM499psf
33%
Average Asking Rental Rates of Luxury Condominiums in
Kuala Lumpur
3.94
3.253.08
2.50
3.00
3.50
4.00
4.50
5.00
5.50
2004 2005 2006 2007 2008 2009 2010 2011
RM psf per month
KLCC
Bangsar
Mont Kiara
Average Capital Values of Luxury Condominiums in
Kuala Lumpur
966
714
560
350
450
550
650
750
850
950
1,050
2004 2005 2006 2007 2008 2009 2010 2011
RM psf
KLCC
Bangsar
Mont Kiara
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MarketView Kuala Lumpur Residential
For more informationregarding the MarketView,please contact
Nabeel Hussain Vice PresidentResearch & Consultancy CB Richard Ellis (Malaysia) Sdn Bhd#9-1, Level 9 Menara Milenium
Jalan DamanlelaBukit Damansara, Kuala Lumpur50490 Malaysia
T 603 2092 5955 (Ext. 173)F 603 2092 5966E [email protected]
CBRE Residential Services
Chris BoydExecutive ChairmanCB Richard Ellis (Malaysia) Sdn Bhd#9-1, Level 9 Menara MileniumJalan DamanlelaBukit Damansara, Kuala Lumpur50490 Malaysia
T 603 2092 5955 (Ext. 149)F 603 2092 5966E [email protected]
© Copyright 2011 CBRE Statistics contained herein may represent a different data set thanthat used to generate National Vacancy and Availability Index statistics published by CBRECorporate Communications Department or CBRE research and Econometric Forecastingunit, Torto Wheaton Research. Information herein has been obtained from sources believedreliable. While we do not doubt its accuracy, we have not verified it and make no guarantee,warranty or representation about it. It is your responsibility to independently confirm itsaccuracy and completeness. Any projections, opinions, assumptions or estimates used arefor example only and do not represent the current or future performance of the market. Thisinformation is designed exclusively for use by CBRE clients, and cannot be reproducedwithout prior written permission of CBRE.(333510P) (VE(1)0232)
CBRE Residential Services
Outlook
Going forward, we expect that capital values for condominiums in most areas will
stabilize, although there may be further declines in some of the older projects
around the KLCC area. KLCC prices have now reached a level where there is likely
to be more interest from local investors. Attractive financing packages andcontinuing low borrowing costs (with effective lending rate of between 4.20% -
4.40%) should continue to support developer sales, although take-up is likely to
slow down if the current global economic uncertainty persists, especially in light of
the recent tightening of credit by banks.
We expect developers to continue to focus on offering more affordable products in
KL city fringe areas and suburban areas; the strategy of developing smaller units to
offset some of the effects of higher psf development costs is expected to continue.
During 4Q2011, there was a total of 1,574 high-end condominium units
completed within five developments. 1,033 of these units are located within the
downtown area. Combined with as many as 1,400 units expected to be completed
in KLCC and surrounding areas during 2012, this will place downward pressure
on the rental market, especially for larger, older units in the KLCC area.
CBRE Malaysia is part of CBRE, Inc. (NYSE:CBG), a Fortune 500 and S&P 500
company headquartered in Los Angeles and the world’s largest commercial real
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CBRE Residential Services has the capabilities to assist in all residential property
needs, from land agency, to investment sales, to valuation and management. This
includes professional advice for purchasers based on their specific requirements,
along with a broad range of project marketing services for developers of luxury residential projects, such as design consultancy, market positioning advice, project
marketing consultancy services, and overseas marketing. We are also able to
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Our residential services for multinational corporations include securing selected
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