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Tuesday, March 3, 2009

KLCC condominium prices may fall 30%

KUALA LUMPUR: Prices of condominiums in the luxury Kuala Lumpur City Centre (KLCC) enclave could fall as much as 30% as waning demand erodes sellers' bargaining power to dictate prices, according to real estate consultancy Rahim & Co Chartered Surveyors Sdn Bhd.

This comes against the backdrop of a real estate sector downcycle in the country amid a global economic slowdown which has curbed demand for local real estate among local and foreign buyers.

"I think the worst scenario would be a 25% to 30% decline for KLCC condominiums. Fortunately, at least for now, property prices in Malaysia have not dropped at the pace seen in London, Hong Kong and Singapore," Rahim & Co executive chairman Datuk Abdul Rahim Rahman told reporters at a real estate seminar organised by the firm here on March 3.

The KLCC enclave where the iconic Petronas Twin Towers sits has been a popular real estate spot for foreign buyers in recent years when asking prices had reached RM2,000 per sq ft.

Across the globe, real estate prices at places like London, Hong Kong and Singapore had fallen some 45% across the board, according to the real estate expert who founded Rahim & Co in 1976.

Existing macro dynamics are expected to weigh on Malaysian property prices. This is against a backdrop of rising unemployment and tighter financing policies which could erode consumers' purchasing power.

Waning demand aside, massive supply of properties from aggressive launches in previous years is also expected to contribute to the ongoing downcycle in the local sector.

Based on OSK Research Sdn Bhd's estimates, more than 5,000 units of luxury condominiums are expected to hit the Klang Valley market this year.The number is, however, expected to ease to about 2,000 units the following year.

Existing supply and demand forces in the home property sector are expected to translate into lower rental yields, hence limited capital appreciation and falling real estate prices.

Such a backdrop could prompt investors and speculators to exit the market, and keep end-users on the sidelines, therefore, further curbing demand for real estate, and fuelling the decline in property prices, according to OSK.

By The EDGE Malaysia (by Chong Jin Hun)


Anonymous said...

Observation fr a Real Estate person who's actively working in the KLCC area:
1. Most transactions done in the past few months has bee in the range of 20-30% down.
2. Buyers mostly are endusers for own occupation who's looking for good deals. The current market situation has given strong bargaining power to the buyer.
3. Its an exciting shopping time for the buyer. However not many fire sales going on.
4. Most local owners have very good holding power.

... Just my humble reporting

Anonymous said...

Whoever have cash on hand is the king having a strong bargaining power.