More projects in the pipeline

Bandar Raya Development Bhd's high-end project, The Troika in the KLCC area

The Malaysian property market fared well last year with many new developments reporting good take-up rates despite the looming shadow of further spikes in crude oil prices.

As usual, the centre of activities was in the Klang Valley where developers are grabbing a piece of the action in the very hot KLCC area, where prices have spiralled beyond RM2,000 per sq ft.

This “KLCC fever” appears to be buoyed by rising foreign interest in our high-end condominiums which are cheaper than similar properties in Hong Kong, China, Singapore, Japan and even Vietnam.

As the momentum to build more condominiums and serviced apartments in the KLCC area picks up, prices have ballooned to unbelievable levels.

The main perception, especially by foreigners, is that the KLCC address is the most prestigious in Malaysia; and if any price record is to be broken, this is the place.

Developers are still upbeat on the prospects of the high-end property market this year, and this can be seen by the many new launches at the end of last year and this year.

Recently there have been several pieces of good news to welcome in the New Year.

One of them was the en bloc sale of Bandar Raya Developments Bhd’s (BRDB) Office Tower 2 at its CapSquare development in Kuala Lumpur to Union Investment Real Estate Aktiengesellschaft (UIRE) for RM439.3mil.

Barely a week later, it was reported that YNH Property Bhd was finalising the sale of the proposed 45-storey iconic Menara YNH at Jalan Sultan Ismail in Kuala Lumpur for RM1.5bil.

It is understood that investors from Australia, Singapore and a Middle Eastern country might form a consortium to purchase the building that is scheduled for completion in 2012.

Menara YNH, located on three acres next to the Shangri-La Hotel, will have an office block and a retail centre.

According to industry sources, several more such en bloc acquisitions are on the cards. In fact, a major en bloc sale of a yet-to-be-built 50-storey office tower in the KLCC area will be announced tomorrow.

This high confidence level in the Malaysian economy and the property market will encourage our developers to launch more developments this year.

Meanwhile, the recent news report of work commencing on the RM2.7bil Lido Boulevard waterfront project within the Iskandar Development Region (IDR) after the Chinese New Year has provided fresh impetus for investors and local developers to zoom into the IDR.

Good sales continue to spill over to this year.

For example, YTL Land & Development Bhd’s latest edition of boutique offices, d6, achieved a remarkable 90% sale in just one day of weekend preview recently.

YTL Land executive director Datuk Yeoh Seok Kian said businesses these days realised that of equal importance to having a reputable address was being associated with a new genre of offices that have their own unique offerings.

What about talks of a possible economic downturn as a result of high oil prices and recession in the United States?

I have observed a few things that may serve as a “shield” as far as our property market is concerned.

Our property developers are more careful and savvy these days compared to before the 1997 crash.

They no longer buy huge parcels of land and do not borrow heavily.

Most of them develop niche products that have real demand and are high in value but more manageable. The days of single mega developments undertaken by single developers are almost extinct.

Yes, there is a RM4bil integrated mega development to be launched soon in Kuala Lumpur, but it is in a very prime location and being undertaken by a very reputable developer, unlike far-flung mega projects in secondary locations a decade ago.

Even if there is a major economic slowdown, most developers have the holding power to ride out the storm and re-launch their projects.

In addition, more and more developers are going abroad to seek out new projects partly as an alternative income stream but also as a hedge against any downturn.

Of course, if there is widespread unemployment, high inflation (especially an increase in the prices of building materials) and slackening demand, everyone will be hurt one way or another.

However, the impact may not be as acute as before.

As one CEO told me, with China and India as the emerging economic powerhouse and the weakening US dollar, there will be less impact from any fallout in the US economy.

By The Star (by S.C.Cheah)