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Saturday, June 18, 2011

Appetite for houses unabated

Prices of landed properties, especially in the hot spots of Klang Valley, are going through the roof.

Strong demand continues to push up already high prices, especially landed properties.

Future generations will have to get used to living in a box in the sky.

The past six months have seen a deluge of property advertisements in the Friday, Saturday and Sunday newspaper issues. There are eager buyers out there, still.

And this interest will probably continue until the end of this year, notwithstanding the growing worries in Europe and the US and the bubble-like scenario in China and Hong Kong.

When it comes to property investment, a buyer's first option will always be for landed units.

But as a former head of mortgage of a local bank lamented, of late, launches of landed properties have been few and far between. They are either very pricey or out of the way from the mainstream city life (or both). But despite the issue of price and location, landed units continue to be popular.

In April, the KL Kepong group launched the first phase of Bandar Seri Coalfields in Sungai Buloh, Selangor. About 40 units of 22 ft by 75 ft and 72 units of 24 ft by 75 ft double-storey housing priced from RM308,000 and RM348,000 respectively were put on sale. A total of 112 units were released into the market.

It was so popular that the remaining 107 and 56 units of the respective sizes were soon put up for sale at increased prices starting from RM328,000 and RM368,000 respectively, representing an increase of 6.5% and 5.7%.

Altogether, a total of 340 units were launched on two separate occasions in the first phase sale of this new township.

Over in Setia Alam, Shah Alam, one of Malaysia's largest developers, SP Setia Bhd, launched double storey cluster housing (30 ft by 55 ft) last Saturday, priced from RM568,000. A ballot was organised for the 116 units. Over in Klang, IOI Properties sold about half of its 128 units of freehold two-storey terrace houses in Bandar Puteri, Klang priced from RM468,800. This project was launched in April. The unsold ones are located close to the highway or junctions. Over in Desa ParkCity, despite a price tag of RM2.8mil, The Mansions by Perdana ParkCity Sdn Bhd proved to be highly popular. A ballot was also organised for this.

Although they were sold as terraced link houses, they were not of the same category as those launched in Sg Buloh and Shah Alam, as the ParkCity offerings have built-ups averaging from 5,000 to 6,000 sq ft. They have the space of semi-detached houses although they were sold as linked terrace housing located in a niche housing development.

A single feature linked all the above four launches; they are landed units and other than the Klang project, they were all sold in a jiffy, despite the high price tag and the fact that some of these properties are located in Sg Buloh.

When it comes to the sale of landed units, the strategy taken by developers today is different from that used several years ago.

Today, a small number of units are released, which gives the developer the opportunity to increase prices if the demand is good. Gone are the days when developers of townships launch 800 units of landed houses at one go with a single price structure.

KL Kepong's Bandar Seri Coalfields is a township of about 1,000 acres. This will take years to complete. SP Setia's Setia Alam is also a township of considerable size.

Over at ParkCity, at less than 500 acres, it is not a township but a small community that will have a population of about 7,000 in the future. However, other than using a different strategy in order to have better profit margins on the part of developer, there is also the need to look at quality as cost of construction increases. Buyers will have to look out for that.

There are a lot of things which house buyers do not see when they view a dressed-up' show unit.

These include the wiring, plumbing and what's inside the plastered walls. Because of the buoyant demand today, there is the temptation to cut corners on the part of the developers as they go for better profit margins. However, there are also developers, who, having made their name and created a brand, will provide quality, which they charge buyers for and this is fair.

From a consumer's point of view, it is better to be charged for a product or service of quality, than to have to pay for the lack of it later.

Once the price for landed units goes beyond the means of most, buyers will then consider high rise condominium units. Already, we are seeing quite a few very high end, high rise condominiums being promoted today. In Taman Tun Dr Ismail, Kuala Lumpur, a project will be launched soon, where a 1,500 sq ft box in the sky is expected to cost RM1.9mil; fully-furnished right down to the built-in microwave.

While all of us have seen the prices of landed units surge in the last 18 months, the time may have come for us to see prices go up for high rise condominium projects too.

A condominium project, with units averaging 2000 sq ft in Segambut Dalam, with high-tension cables splicing across half of the project and the NKVE at one end, were quicky sold at a price averaging half a million ringgit. The finishing and the sanitary and plumbing system were not of a high quality either and little can be said about the location.

Just because of the sharp demand for properties and as landed units in the Klang Valley become scarce, it is hoped that the quality of construction and materials used will not be compromised, both for landed and high rise residencies; especially, when the residency comes in a box in the sky.

Assistant news editor Thean Lee Cheng believes that quality workmanship and after-sales service are crucial if the property sector is to set new benchmarks.

By The Star (by Thean Lee Cheng)

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