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Saturday, October 24, 2009

Better days ahead for condo market

Artist’s impression of 11 Mont’Kiara. The project will be completed in 2011.

The mere mention of Mont’Kiara easily strikes a chord among many Klang Valley folks and property investors as it is a vibrant neighbourhood and is one of the favourite property hotspots in the country.

There are currently close to 10,000 completed condominiums in Mont’Kiara, its neighbouring areas in Sri Hartamas and the newer Dutamas area. Another 6,000 units are expected to come on stream in the next couple of years.

Although transactions almost halted early this year following the global financial crisis, sentiment is gradually recovering since the middle of this year, with more transactions concluded in the secondary market.

Overall, the market had fared quite well although average prices of high-end condominiums in Mont’Kiara have dropped by 10% to 15%. Thanks to the buyers’ tenacity and the more flexible repayment terms offered by financial institutions, there was no fire sale reported so far.

Knight Frank Research, in its latest Real Estate Highlights, says although the market for high-end condominiums is still soft, prices seem to have bottomed out especially for suburban condominiums.

The market is starting to show some signs of recovery as more buying activities are seen in the second half of the year.

However, the report points out that despite the renewed interest, the downside of the sector lies in the incoming supply of new condominiums which will be completed in the second half this year and in 2010.

According to Zerin Properties chief executive officer Previndran Singhe, the asking prices for the older residences range from RM400 to RM650 per sq ft, while the newer projects have price tags from RM450 to RM750 per sq ft.

Rental rates are holding out quite well with the older developments enjoying yields of between 7% and 10% last year.

Previndran says the higher entry cost for the newer projects will push yields down to around 6% this year.

“Prior to this bout of global crisis, most properties in Mont’Kiara have seen substantial increases in prices, averaging gains of at least 50% for most of the completed developments. Moving ahead, we expect prices of apartments to hold,” he adds.

Although there is a short term over-supply issue, Previndran says the situation is expected to reverse as the attractiveness of Mont’Kiara picks up again among investors given its superb amenities, international schools and business activities.

The number of hits in the company’s website,, has picked up from about 3,500 a month early this year to about 8,000 to 9,000 hits a month now. On the ongoing projects, he says projects under construction are still on schedule and some, including MK10, Gateway and Ceriaan Kiara, are almost completed. The launch of some of the planned developments including MK28 and 163 Kiara have been pushed to next year.

“Some of the projects are highly anticipated as there are investors and owner occupiers still looking for newer properties to invest in Mont’Kiara. The bigger units are always in demand by owner occupiers while lower range units are popular among investors,” explains Previndran.

Echoing his positive sentiments, Sunrise Bhd senior manager for branding and community development Anne Tong says the company is seeing a strong return of buying interest for its projects in recent months, notably for 11 Mont’Kiara and the Mont’Kiara Residence bungalows.

“In a space of seven months since March, we have chalked up property sales of RM309mil from just these two projects, of which RM239.3mil have been sales and purchased agreement (SPA)-signed. We also booked in SPA-signed sales of RM31.5mil from the balance of other existing projects such as Mont’Kiara Meridin and Solaris Dutamas,” she adds.

Tong says the company’s projects have average occupancy rate of 80% to 90% for the older projects and 50% to 60% for the newly completed ones.

“This means that more and more people are calling Mont’Kiara home. We are positioning Mont’Kiara as the preferred place to stay in Kuala Lumpur, and differentiating the Sunrise Mont’Kiara community further within the area,” she adds.

Sunrise has widened its product range to suit all market segments – from small units of under 1,000 sq ft for singles and couples, to larger units of 3,500 sq ft for bigger or extended families.

Previndran says Mont’Kiara will continue to be an obvious property hotspot as it has gained the critical mass to continue to prosper.

“Adding to that is the limited supply of land that puts a natural limit on future supply,” he points out.

On some of the “vogue” products that should be considered by developers, he cites projects with more green elements, well designed layouts, strong management, good finishes and security. They should have varying sizes from 600 sq ft to 2000 sq ft.

“As for commercial products, products that will do well include proper service apartments and hotels, and smaller office suites with corporate designs,” he adds.

By The Star

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