The Malaysian economy maintained its growth momentum by expanding 5.6% in the first quarter of 2015 (4Q2014: 5.7%), supported by private sector expenditure. The country achieved its growth target of 6.0% in 2014 (2013: 4.7%).
The labour market conditions, remained stable, with unemployment rate recorded at 3.1% in 1Q2015 (2014: 2.9%).
Bank Negara Malaysia kept the Overnight Policy Rate (OPR) unchanged at 3.25% at its recent Monetary Policy Committee (MPC) meeting in May in an effort to support economic growth and domestic consumption.
Supply & Demand
With the completion of seven notable projects contributing an additional 1,296 units [includes projects that are physically completed but pending issuance of Certificate of Completion and Compliance (CCC)], the cumulative supply of high end condominiums in Kuala Lumpur stands at 39,610 units. Approximately 45% (582 units) of the new completions are located in the Ampang Hilir / U Thant area, followed by some 26% (335 units) in the locality of KL City; 16% (204 units) from the locality of KL Sentral / Pantai / Damansara Heights area; and 14% (175 units) from the Mont’ Kiara / Sri Hartamas locality.
The three completions in Ampang Hilir / U-Thant are Rimbun Embassy Row, G Residence and Madge Mansion. There is only one project completion in KL City which is The Horizon Residence. The remaining completions comprise two in Mont’ Kiara / Sri Hartamas (The Icon Residences Tower C and Signature) and one in the locality of KL Sentral / Pantai / Damansara Heights (Saville Bangsar @The Park Block A).
By the second half of 2015, a total of some 3,725 units from 13 projects are expected to come on-stream. The KL City locality will account for circa 35% (1,310 units) of the new supply; followed by Mont’ Kiara / Sri Hartamas with 34% (1,256 units); KL Sentral / Pantai / Damansara Heights with 20% (734 units); and the remaining 11% (425 units) from the locality of Ampang Hilir / U-Thant.
Notable projects slated for completion in KL City include Face Platinum Suites, Le Nouvel, Mirage Residences as well as the delayed project of Crest Jalan Sultan Ismail. Other projects include M City, Damai 88 and A Residency D’Suria in Ampang / U-Thant; The Residences at The St. Regis Kuala Lumpur, Saville Bangsar @ The Park Block B, and DC Residency in KL Sentral / Pantai / Damansara Heights; and Concerto North Kiara, Verdana North Kiara and One Kiara Tower A in the locality of Mont’ Kiara / Sri Hartamas.
Compared to the preceding half of last year, there were noticeably more previews and launches despite the cautious market sentiment amid tighter lending guidelines and weaker economic environment. The previews and launches include The Manor, The Grid, Pavilion Suites and Tropicana The Residences in KL City; Astoria Ampang and Picasso Residence in Ampang Hilir / U-Thant; Hermitage, Residensi Sefina and Arte in Mont’ Kiara and Secoya Residence in KL Sentral / Pantai / Damansara Heights.
Tropicana The Residences, touted by developer, Tropicana Corp Bhd as its most prestigious project to date, was unveiled on 21 March in a spectacular regional launch across six countries, namely Malaysia (Kuala Lumpur), Singapore, Indonesia, Hong Kong, Taiwan and China (Chengdu and Shanghai).
The Residences, comprising 353 units of luxury serviced apartments spread across 55 storeys, will sit atop the 24-storey W Hotel. The units with built-up areas of 710 sq ft to 1,604 sq ft in layouts of one, two and three-bedroom, are priced at RM2,500 per sq ft on average. Owners at The Residences will enjoy three types of residential services offered by Tropicana, namely concierge, housekeeping and a home care programme.
The Pavilion group is setting a new benchmark in luxury couture living, with pricing from RM3,000 per sq ft. Its latest project along Jalan Bukit Bintang, Pavilion Suites – by exclusive invitation – offers 383 units of one and two-bedroom serviced residences (built-ups from 704 sq ft to 1,254 sq ft) as well as 450,000 sq ft of retail space spread over a 51-storey tower. The Manor Kuala Lumpur at Persiaran Stonor, opened for preview in April. The project by Desaria Property Sdn Bhd features 212 units with sizing from 2,426 sq ft to 3,768 sq ft, priced from RM1,250 per sq ft. To be managed by Alorie Hotels & Resorts, residents will enjoy hotel-like services. On 28 March, Premier De Muara officially launched Picasso Residence.
Located off Jalan Ampang, the project comprises two 38-storey towers with 270 and 202 residential units respectively. The target market for the units, available in four layouts of 1,013 sq ft, 1,375 sq ft, 1,668 sq ft and 2,407 sq ft, are young working adults and families. Priced from RM1.09 million to RM 2.83 million, the project has reportedly achieved circa 60% sales rate to date. The 245-unit Residensi Sefina at Mont’ Kiara was launched by UEM Sunrise in mid–May. The units with built-up areas from 1,333 sq ft to 1,771 sq ft are priced at RM800 per sq ft on average. Notable projects planned for launch in 2H2015 include Star Residences Tower 2, Aria KLCC, Stonor 3 and an unnamed joint-venture (JV) project between Eastern & Oriental and Mitsui Fudosan inKL City; Agile Mont’ Kiara in Mont’ Kiara / Sri Hartamas; and Ridge Embassy Rowand D’Rapport Residences in Ampang Hilir / U-Thant. Agile Mont’ Kiara, a freehold condominium project located off Jalan Duta Kiara on a 10-acre site, will offer 813 units spread over 11 blocks of low, medium and high rise buildings. The partly furnished units come in 3-bedroom, 3+1-bedroom (dual-key) and 4-bedroom configurations with typical built-up areas ranging from 1,156 sq ft to 2,136 sq ft. The project will feature an environment deck atop the car park podium, a sky club and supporting commercial shops. Knight Frank Malaysia is the exclusive marketing agent for the project.
Prices & Rentals
During the review period, the asking prices and rentals in KL City remained flat. With a high supply pipeline of existing and incoming projects, the high end residential segment in the city will continue to face stiff competition, both in the terms of primary / secondary sales and rental market. In the Ampang Hilir / U-Thant area, both sub-sale and rental markets generally remained stable. However, asking rents in Mont’ Kiara / Sri Hartamas weakened although asking prices remained fairly stable.
The demand for high end condominiums in the Bangsar locality continue to hold firm due to limited new supply and the popularity of the neighbourhood. Likewise, in the locality of Damansara Heights, prices continued to sustain.
The Kuala Lumpur rental market continues to favour tenants with gross yields for high end condominiums averaging between 4% and 5%.
The cooling measures introduced by Bank Negara Malaysia to curb excessive speculation in the property market have continued to see its intended effects, evident from the latest statistics by the National Property Information Centre (NAPIC). In the first quarter of 2015, the volume of transactions in the condominium / apartment segment in Kuala Lumpur dipped 18.9% to 1,694, from 2,088 in the preceding quarter (4Q2014). Year-on-year (y-o-y), the volume declined by 9.1% (1Q2014: 1,864 transactions). Although there were expectations that home buyers would rush in to purchase properties before the implementation of goods and services tax (GST), data from NAPIC showed otherwise. In Kuala Lumpur, the volume of residential transactions declined sharply by 21.2% in 1Q2015 when compared to the previous quarter, likely attributed to the cautious economic and market sentiment coupled with stringent lending guidelines.
In the high end condominium segment, there is growing evidence of softening demand as buyers turn cautious amid an impending supply of some 3,725 units expected to come on-stream by the second half of 2015. Developers with large land banks continue to focus on the affordable and mass housing segment to drive sales while those with niche high end residential products are reviewing their pricing and marketing strategies as well as widening their target catchment by marketing overseas. Kuala Lumpur ranked seventh in Asia- Pacific and second in Southeast Asia after Singapore for the most sustainable city to live in the inaugural Sustainable Cities Index 2015 by Arcadis. The index indicated that Kuala Lumpur performed best in terms of low property prices and good work-life balance. Moving forward, the on-going and upcoming infrastructure works that include the Light Rail Transit (LRT) extension, Mass Rail Transit (MRT) lines and the High Speed Rail (HSR) link between Malaysia and Singapore coupled with the rapid residential developments in the inner city will help to transform Kuala Lumpur into a sustainable and liveable city.