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Monday, September 15, 2008

Property consultants offer mixed views

Property consultants have mixed views on the high-end property segment amid the current tougher economic environment.

Regroup Associates Sdn Bhd Christopher Boyd is cautious. “Generally the residential market in the Klang Valley has been weak this year, and will probably remain so for the next 12 months,” he told Starbiz.

Christopher Boyd

“At the top end of the condominium market (priced at RM350 per sq ft or higher), we see a general oversupply with 19,183 completed units and 13,902 under construction.

“The greatest number of existing units and future supply is in the city centre including the Golden Triangle area,” he said.

However, despite a very competitive market, Boyd said there was still turnover.

“Investors looking for upward price correction should focus on areas such as Damansara Heights and Kenny Hills where there are very few high rise approvals and only a trickle of new condominium projects.

“These are extremely popular and old established residential areas where occupational demand has always been strong and lettability should not be a problem,” Boyd said.

“Over the next one year, prices will probably plateau in most areas for mid-upper products. Beyond that, it would not be surprising to see moderate gains as a result of cost push inflation, occupational demand, ready availability of end finance and a return of investor confidence,” he added.

Boyd said developers would inevitably scale back in an uncertain market. “Some of the strategies they could employ include free furnishing, better payment terms and enhanced finishes for clients,” he said

Alternatively, they could also embark on road shows in new markets such as Britain and Russia.

Boyd advises investors to look for good value in the areas of Damansara Heights, Kenny Hills, Bukit Pantai, Bangsar and Ukay Heights. “A view to the Twin Towers enhances value!,” he said.

According to VPC Alliance (KL) Sdn Bhd managing director James Wong, current demand for Klang Valley high-end properties remained robust due to limited supply and easy access to financing.

James Wong

“If Bank Negara decides to increase the base lending rate (BLR) to curb inflation, then this may put a slight damper to demand, otherwise, we think demand will continue to remain strong for some time,” Wong said.

Currently, interest rates for housing loans are 0% to 2% below the BLR which is about 6%.

‘While there is an overhang in the mass housing market, supply in the high-end segment is limited owing to very niche development styles,” Wong said.

The “hot” areas in the Klang Valley included the established developments of Desa Park City, Kuala Lumpur City Centre (KLCC), Bangsar and Mont’ Kiara, he added.

KGV-Lambert Smith Hampton Sdn Bhd director Anthony Chua is not as optimistic as Wong. “From having a bullish outlook earlier on, we have turned cautious given the slow down in the economy.

“We think there is now less excitement in the market and believe that property investors have been spooked by the recent events and are adopting a wait and see attitude,” he said.

However, Chua opines that prices of high-end property will continue to hold at current levels, especially in “hot” areas such as KLCC and Mont’ Kiara.

“The KLCC area continues to be on the radar of investors while Mont Kiara is catching up with it in terms of price,” he said.

City Valuers & Consultants Sdn Bhd general manager C. Y. Lim said the demand for high-end landed properties such as detached, semi-detached and wide frontage terraced villas was steady in the high demand areas of KL and PJ.

“These units are now being priced on the same basis, in terms of price per sq foot, as condominiums. Due to the greater demand compared with supply, their prices will continue to rise,” Lim said.

For condominiums, supply has already matched demand and thus the price would consolidate and might even move lower with the exception of the “very best” units, he said.

“This trend will continue until the economy starts to boom again and more expatriates come to KL,” Lim added.

By The Star

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