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Monday, September 22, 2008

Residential market continues to face challenges

The market for residential properties has softened since the beginning of this year and is likely to continue into 2009, market experts say.

The potentially negative influence on the sector is supply, said real estate valuer Regroup Associates Sdn Bhd executive chairman Christopher Boyd.

In a recent survey undertaken by Regroup, it showed that there is an existing supply of 19,183 condominium units in Kuala Lumpur, with 13,902 units more under construction.

The new projects launched were Gaya Bangsar, Twins @ Damansara Heights, Regalia @ Sultan Ismail, 9Madge, NorthShore Gardens, Sunway Vivaldi and Panorama in the City Centre and Mont Kiara/Sri Hartamas.

The average occupancy rate for established condominiums in the city centre, Ampang Hilir, Mont Kiara, Bangsar, Kenny Hills and Damansara Heights was about 80 to 85 per cent.

"Strong upmarket areas such as Damansara and Kenny Hills have limited new supply as approval for high-rise condominiums in these areas is seldom given by the planning authorities. Investors should look for quality projects here as they are extremely lettable," Boyd told Business Times.

Boyd also said there will be a gradual appreciation of values in properties in Kuala Lumpur, spurred by a higher level of inflation, and because developers will not be able to restrain prices as production cost is rising.

Demand from foreign investors will also increase in years to come, he added.

"We have seen buyers this year from South Korea, Singapore, Hong Kong and the Middle East. While a liberal policy on foreign ownership brings a far wider market to our doorstep and encourages more and better quality development to meet international standards, it exposes the development industry to changes in the global market sentiment," Boyd said.

For IJM Land Bhd managing director Datuk Soam Heng Choon, he believes that the outlook for the residential market remains strong.

"If buyers like a product in a certain location, they will go for it. Demand for landed properties is still better than high-rise condominiums," he said.

He said medium- to high-end properties priced from RM400,000 still have a strong market going, but sales of houses below RM400,000 are affected as buyers with a household income of less then RM5,000 hold back on buying.

LEONG: The medium-to high-end segment has a pool of buyers who are more resillent to inflation

Mah Sing Group Bhd managing director and chief executive Datuk Seri Leong Hoy Kum said while the outlook is challenging, residential projects by branded developers, especially for landed properties, are still doing well.

Leong said investors looking for capital appreciation and buy-to-stay would generally look at landed residential properties as condominiums are more for rental yield.

"There are still transactions, albeit at a lower pace, as the medium- to high-end segment has a pool of buyers who are more resilient to inflation," he said.

There are also foreign buyers who are still picking up the units, although not in the quantum of about a year ago.

He said the mid- to high-end residential projects are more resilient to inflation and weak sentiments, and are seeing better sales.

By New Straits Times (by Sharen Kaur)

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