SKYROCKETING PRICES: Prices of high-end condos in the KLCC area continues to scale new heights. Could it breach the RM5,000 per sq ft mark?

New record

Amidst the slower property market, a segment of the market namely, the high-end luxury condos or super penthouses has continued to defy market expectations with prices hitting the roof. The market was abuzz with news last week that two units of 11,900 sq ft penthouses at Four Seasons Place in the KLCC (Kuala Lumpur City Centre) area were being booked at a new record price of RM37 million per unit which works out to a stunning RM3,026 per sq ft. The previous record was held by the Binjai On The Park at RM2,900 per sq ft which were also super penthouses in the KLCC area.

These eye-catching figures beg the question – are these one-off, isolated cases or will prices of luxury condos, especially in the KLCC area, continue to go through the roof? Gavin Tee, Founder and President of SwhengTee International Real Estate Investors Club forecasted in 2011 during one of his property seminars that prices of luxury condos in Kuala Lumpur might hit RM5,000 per sq ft by 2016. Commenting on last week’s Four Seasons Place transaction, he is the least bit surprised by this phenomenon and continues to hold on to his belief that prices of luxury condos in KLCC area will rise even further.

Breaching RM5,000 psf?

According to Tee, Greater KL is set to become an international property hotspot by 2015 and prices will definitely heat up in a couple of years’ time. “What I said in early 2011 still stands. I believe that with the expected booming of the overall property market in Greater KL in a few years’ time, condominium prices in KL will likely hit record prices by 2015. I had predicted prices of premium condos to breach the RM5,000 per sq ft mark by 2016 but it could reach that price level much earlier, or even go beyond that if the property market really takes off.”

Touching on the inevitable subject of the coming general election and its potential impact on the property market, Tee remains optimistic by pointing out that although the property market in KL has slowed down a bit recently, prices of exclusive projects such as the Four Seasons Place are still picking up. “2013 is election year. I think it will take a bit of time for the Malaysian economy to move into gear post-election, probably up to six months. Nevertheless, a lot of infrastructural projects such as the MRT (Mass Rapid Transit) are already being executed while blueprints for big projects such as the TRX (Tun Razak Exchange) are in the pipeline. Many major foreign investors are waiting to come in by the end of the year while waiting for the new government to settle in with their new teams, cabinets and policies, ” continues Tee.

Tourism factor

To a certain extent, Tee says that this period of settling-in by the new government, regardless of which party wins, will also slow the pace of the property market somewhat in the short-term but he points out at another factor – the growth of the tourism industry - that supports his firm belief that prices of luxury condos will continue its upward trend in the long run.

“Malaysia’s tourism is one of the fastest growing industries in the country. In fact, if you consider some of the high-end serviced apartments in major tourist attractions like Pangkor Island or Cameron Highlands, rental rates for some of these serviced apartments or hotels have increased a lot in the past few years and are continuing to rise. Rentals can go up to RM1,000 per night, or even higher during peak season. So, if you calculate based on an estimate of 6 per cent rental yield, translated into real terms, some of these apartments may already have hit RM5,000 per sq ft,” explains Tee.

Premium brand

See Kok Loong, Director of Metro Homes Sdn Bhd agrees with some of Tee’s assessment of the high-end condominium market. “I think it’s a fantastic development and especially with a renowned brand like Four Seasons Place, it can only be a good thing because it gives a certain aura or cachet to the local property market. The property owner is also assured of high quality and standards associated with a premium brand,” says See.

The realtor adds that some of the market factors driving the prices of these luxury condos are inflation, the MRT and other future infrastructural projects such as the proposed High- Speed Rail (HSR) link between Kuala Lumpur and Singapore. See says that prices of luxury condos, as shown in last week’s Four Seasons Place transaction, would highly likely continue to rise although he is less certain than Tee as to whether it might reach the RM5,000 per sq ft mark.

“It will be difficult to reach RM5,000 per sq ft level but the price would probably hover around RM3,000 to RM4,000 per sq ft, mainly due to the rising construction costs and shortage of land at prime locations.”

According to See, he does not see the bubble bursting on the prices of these luxury condos any time soon because “they are premium, branded products and are usually sold to high net-worth clients with long-term holding power. With the increasing globalisation of the economy, we should be attracting more investors and property buyers from other parts of the world like Hong Kong and Singapore. Only by doing this would we be able to sustain prices at these levels,” observes See.

Mismatch in rental?

Nevertheless, there are those who prefer to temper expectations that are bound to rise with these recent developments and are cautious about the spiralling prices of high-end condos which they opine is not a good general gauge or reflection of the overall property market.

Ishmael Ho, Director of Ho Chin Soon Research comments that the sale of the penthouses at such ‘astronomical figures’ is not a surprise because in terms of value, the KLCC area is currently where many high-end property purchases are concentrated. But will prices move even further upwards? “I don’t know. Value is always relative in that sense. The main question is who are the people setting such prices? People who are buying in these areas are not your average purchasers - they are cash-rich. They can buy and hold. Whether it will set a benchmark or not, I don’t know,” says Ho.

Datuk Ng Seing Liong, Managing Director of Kota Kelang Development Sdn Bhd also echoes these sentiments. “To me, whether the prices will increase or not will depend on whether there will be rentals to match these kinds of prices. I always look at yields and returns as they are fundamentally important. If there are no returns, it will be difficult to sustain these price levels,” Ng says, adding that the property market in KLCC is very speculative. - Additional reporting by Khairie Hisyam Aliman

Read more: FOCUS: RM5,000 per sq ft for a KLCC penthouse? - RED - New Straits Times http://www.nst.com.my/red/focus-rm5-000-per-sq-ft-for-a-klcc-penthouse-1.258477#ixzz2QxypL9eW

Home prices to rise 10-15%

By Farah Wahida:

Prices of residential properties in Malaysia are expected to increase between 10 percent and 15 percent this year, said C H Williams Talhar and Wong Sdn Bhd (WTW), a real estate service firm.

According to WTW’s Managing Director Foo Gee Jen, sales of new housing projects will be sustained this year thanks to robust demand for residential properties.

“Areas of high demand will be close to the high-level infrastructure projects such as Mass Rapid Transit (MRT), Light Rail Transit (LRT) and Komuter train lines,” he told the media during the launch of the WTW‘s Property Market Report 2013 yesterday.

“A big volume correction will be seen this year. House prices will remain generally flat but prices could face upward pressure from rising materials prices and other cost-push factors,” Foo said.

At the same time, landed residential segment is predicted to remain resilient with stable growth. However, developer could launch fewer units with higher prices, in an effort to sustain profit margins and test consumer reaction.

“In tandem with that, they are putting in more eco-friendly and green building features as an added value to the projects,” noted Foo.

“We have seen developers veering away from high-end niche developments and switching to more mid-range products in tandem with the government's PR1MA scheme.”

Meanwhile, the outlook for the mass-market residential segment is very positive.

“We can expect units in this segment to continue to find a ready market.  High-end residential properties continue to sell well in the major cities of Johor Baharu, Kuala Lumpur, Kota Kinabalu and Penang.”

“We can expect with the seemingly strong demand, prices may be pushed upwards,” Foo added.

Malaysian fashion icon buys RM4.4m mansion

By Farah Wahida:

Datuk Jimmy Choo, a fashion designer who created shoes for the UK’s royalty and superstars, has recently purchased a RM4.4million townhouse in his home state of Penang, reported The Star.

“This is the first property I have purchased here since I left for Britain as a child. I’m buying a townhouse as my Penang residence.”

“Now that I will have a home in Penang again, I intend to invite all my superstar friends to visit my hometown,” he exclaimed enthusiastically.

Located near Pulau Tikus’ market, the four-storey townhouse is one of the 20 exclusive units offered at The Yeangs Sdn Bhd’s palatial project. Dubbed as the Y Cantonments, the development is expected to be completed by 2015.

Choo’s six-bedroom mansion will come with a rooftop garden and a private elevator made from glass, while the master bedroom will occupy the entire third floor. The townhouse, which has an area of nearly 2,000 sq ft, will also feature a plunge pool as well as an open-air shower and deck.

According to Choo, he chose Y Cantonments due to the project’s sustainable design.

“I am attracted to the eco-friendly elements in the architecture such as the rainwater harvesting system and low energy design,” said Choo, adding that he is on the lookout for several other properties in the state.

Moreover, “Penang has the potential to grow into a world-class economic and education centre,” he added.

Dijaya eyes new RM6.8b township in Selangor

By Farah Wahida:

Property developer Dijaya Corp Bhd eyes to launch a new RM6.8billion township in Canal City, Selangor, reported The Sun Daily.
In line with this, Dijaya’s unit Sapphire Index Sdn Bhd, yesterday entered into a deal with Permodalan Negeri Selangor Bhd (PNSB), to acquire 11 parcels or 1,172 acres of land for RM1.3 billion. The acquisition will likely be completed in Q3.

Datuk Dickson Tan, Group Managing Director at Dijaya, said that “with strong prospects for capital appreciation due to excellent accessibility, this project can potentially generate a GDV of up to RM20 billion when fully completed over its 15- to 20-year targeted development timeframe.”

To be funded by internal funds and bank borrowings, the acquisition and development will “serve to further strengthen Dijaya's presence in the three key growth regions of Malaysia, namely Johor, Greater Kuala Lumpur and Penang,” noted Tan.

The planned township will include landed homes, serviced apartments, condominiums, corporate office towers, shop offices, private hospitals, international schools and shopping malls.

Aside from that, there will also be continuous vehicular free bike trails and jogging paths, central linear parks and lakes, children's playgrounds, kindergartens, community clubhouses and sports centres.

“It will become a key destination for people seeking a wholesome and balanced lifestyle,” added Tan.

Meanwhile, Dijaya Group CEO Datuk Yau Kok Seng noted that the acquisition is significant “for the group as large tracts of land in the Klang Valley with immediate development potential are fast becoming scarce.”

“The land neighbours established townships including Putra Heights, Kota Kemuning and also the up and coming Bandar Rimbayu which caters to middle and upper class income earners.”

Kota Kinabalu property prices up and now match KL’s

Wednesday March 27, 2013

PETALING JAYA: Property prices in Kota Kinabalu (KK) have now matched those in Kuala Lumpur and Penang.

According to HwangDBS Vickers Research, there is strength seen in KK with new condo launches hitting RM600-RM900 per sq ft and some breaching the RM1,000 per sq ft mark.

The research house which recently conducted a site visit there noted that the peak pricing in the secondary market was RM1,400-RM1,800 per sq ft.

It said in a client note that demand was driven by strong monies made from the plantation sector despite softer crude palm oil prices, improving household income and to a certain extent non-locals.

“The value of property transactions in Sabah had more than doubled over eight years to a record RM4.4bil in 2011 (3% of Malaysia's total).

“Transaction volume has also surpassed 10,000 per annum since 2008, with 2011 chalking an average transacted price of RM429,000 (about 34% higher than Malaysia's average of RM319,000),” the research house added.

Other factors which have contributed to the increase include continued rising urbanisation as greater KK hosts 20% of Sabah's total population of 3.1 million people.

HwangDBS also noted that despite the rise, rental yields were still “relatively attractive” at 4%-5% for terrace houses and 5%-6% for condos.

“Launches in greater KK also saw healthy take-ups, for example the Lido Four Seasons Residences in Penampang (leasehold; 90% take-up; average selling prices (ASP): RM360per sq ft), Taman Rimba phase 2 terrace houses in Bandar Sierra, Menggatal (56% at RM400,000 per unit), and Loft C at KK Times Square phase 2 in town (50% with ASP at RM900 per sq ft),” it said.

The research firm also noted that there was a new trend where condos were becoming more popular with their variety of facilities and because they were more affordable than landed properties which had appreciated significantly in the secondary market.

Big rise in office space supply

By THEAN LEE CHENG
leecheng@thestar.com.my

It has surpassed 100 million sq ft in Klang Valley but situation remains manageable

KUALA LUMPUR: The supply of office space in the Klang Valley has surpassed 100 million sq ft, making it the largest stock among the neighbouring South-East Asian metropolitan centres, according to property consultants at Jones Lang Wootton (JLW).

Senior vice-president and head of research David Jarnell said the situation remained manageable where supply of office property was concerned but that there could be consolidation of rental levels for the rest of the year.

“There will not be a drastic re-adjustment of rentals although some landlords are offering incentives to prospective tenants in the form of longer rent-free periods while some are not. With the large amount of supply, tenants have a wide range of choices,” he said.

JLW defines office stock as purpose-built, self-contained buildings which are generally five storeys and above.

Jarnell said that in South-East Asia, greater Bangkok had the second-highest office stock, totalling 87.85 million sq ft, followed by the Special Capital Region of Jakarta with 65.66 million sq ft. Singapore, meanwhile, had an office stock slightly less than Jakarta at 64.01 million sq ft.

JLW executive director Malathi Thevendran said the annual supply delivered into the market in 2012 was the second largest (since the turn of the millennium) after 2009. A total of 6.74 million sq ft came into the market last year compared with 7.26 million sq ft in 2009.

The Bangsar/Pantai locality saw the highest growth supply, with a compounded annual growth rate of 29% (1998 to 2012), primarily contributed by the continuing KL Sentral development. The Bangsar/Pantai locality had a total office supply of 11.52 million sq ft as at end-2012.

Another 2.85 million sq ft would be added to the locality this year. The contributors include Menara CIMB (609,000 sq ft), where JLW is the managing agent, and 1 Sentrum (440,000 sq ft), where JLW is the exclusive leasing agent.

Jarnell said the recent trend of strong supply growth came about as a result of the strong and sustainable economic expansion, a growing services sector, good demand for corporate office space and wider-reaching infrastructure and public transportation.

According to Malathi, the trend in supply has been no different than in the 1990s when the gross domestic product was at 7.3% to 9.7% from 1989 to 1997, resulting in high levels of office construction, which peaked in 1998 when the annual supply was at 8.28 million sq ft.

Over the next three years, the Klang Valley development pipeline would comprise a substantial 18 million sq ft of office space.

Jarnell reckoned that better monitoring of developers' intentions by a regulatory body to govern and direct future supply would help ease the growing competition.

Said Malathi, “Developers of office buildings should be fully aware of what they could be up against and act prudently at the master planning stage, particularly the large-scale projects which would need to be phased over many years before they are fully built.”

Intrinsically, assessing the demand drivers is one of the key factors in ensuring sustainable occupancy rates.

Film exposes anomalous land deals in Sarawak

By Farah Wahida:

A short film released by international NGO Global Witness documents the shady land deals in Sarawak, associating the state’s Chief Minister Tan Sri Abdul Taib Mahmud and his relatives.

Posing as potential plantation buyers, the NGO’s investigative team discovered how Taib’s cousins and several other intermediaries have acquired thousands of hectares of forest land.

“This film proves for the first time what has long been suspected — that the small elite around Chief Minister Taib are systematically abusing the region’s people and natural resources to line their own pockets,” said Tom Picken, Forest Team Leader at Global Witness.

Specifically, the captured conversation of sisters Norlia and Fatimah Abdul Rahman — first cousins of the incumbent Chief Minister — revealed that the siblings are the owners of 5,000 hectares of land given to them by Taib for a nominal sum, and which they were planning to sell under their company, Ample Agro.

“Ample Agro belongs to my family, but my sisters, the four elder ones are in the company. The Land and Survey Department, they are the ones who issue this licence... Of course it’s from the CM’s directive but I can speak to the CM very easily,” said Fatimah.

“And you think he’ll agree?” asked the cover team.

“Yeah, he was the one who gave us the land. He’s my cousin [laughs]. His mother and my father are sisters and brothers, siblings. He’s my cousin so it’s quite easy,” claimed Fatimah.

Notably, this is not the first time that Sarawak’s government had been accused of profiting from the state’s natural resources. Bloomberg reported in 2009 on hundreds of legal cases lodged by Sarawak’s indigenous Dayak people, alleging seizures of their land without proper compensation.

The rapid destruction of the state’s virgin rainforests also attracted similar international attention. Based on a report from The Economist, Sarawak “has lost more than 90 percent of its ‘primary’ forests to logging, and has the fastest rate of deforestation in Asia.”