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Saturday, August 4, 2012

ETP drives demand for luxury condominiums

Luxurious condominiums (as seen in the background) enhance the surrounding of Desa Sri Hartamas while pulling up the property prices in this neighbourhood.

The various initiatives announced under the Economic Transformation Programme (ETP) is said to be attracting investment opportunities into the country and in turn, boosting the demand for luxury condominiums in Malaysia.

Just ask Johor-based property developer BCB Bhd, which has seen good response for its luxury condominium development, Concerto Kiara @ Mont Kiara.

Tan: ‘We are also targeting those local buyers that have gone abroad.’

“We launched it in early July and about 80% of our first phase have already been snapped up,” group managing director Datuk Robert Tan Seng Leong tells StarBizweek.

Concerto Kiara is also sought for investment purposes.

According to him, Concerto Kiara @ Mont Kiara comprises 440 units of luxury condominiums with a gross development value of RM580mil and will be built in three phases. The first phase will comprise some 166 units.

“Currently, the first phase is still under construction and should be completed within the next three to four years,” said Tan, adding that the price of the units start from around RM630 per sq ft.

The size of the units range from 1,580 sq ft to around 1,900 sq ft.

“We are targeting both local and foreign buyers,” said Tan. He says some of local buyers were from as far as Johor.

“We are also targeting those local buyers that have gone abroad for a while and who are looking for that similar (overseas) lifestyle here in Malaysia. This group of people can afford our properties,” he says.

According to the Property Market Report 2012 by C.H. Williams Talhar & Wong, the demand for luxury condominium properties in the Klang Valley has continued to increase.

“The influential force that is creating demand for properties in the Klang Valley is the ETP initiated by the Government to transform Malaysia into a high income economy by the year 2020.

“Encouraged by the Government through liberalisation and tax incentives, more foreign companies are expected to invest in the country and consequently, increase the entry of more expatriates and demand for up-market residences.

“This will create demand for condominium properties especially in the up-market sector.”

The report went on to note that with these expectations, several developers have introduced newer designs and innovative concepts in their latest projects.

Meanwhile, asked if Concerto Kiara @ Mont Kiara is expensive, Tan says: “Many also buy it for investment purposes. They are worried that the price will escalate further in the future.”

He also says having luxury condominiums would be in line with the Government's Greater Kuala Lumpur/Klang Valley National Key Economic Area (NKEA) 2020.

According to reports, the Greater Kuala Lumpur/Klang Valley NKEA 2020 targets are to be in the top 20 most livable cities list and the top 20 in economic growth.

The goals under this NKEA are to be realised through the implementation of nine Entry Point Projects (EPPs) and the two business opportunities. These include improving the city's attractiveness to foreign multinational companies (MNCs) and foreign talent, putting in place an efficient public transport system and enhancing the ambience of the city by improving its physical environment through various initiatives.

Intensive efforts are ongoing to upgrade the water quality of Kuala Lumpur's main rivers and beautifying and developing its surroundings via the River of Life EPP, going green through the planting of more trees in the city, developing iconic places within the city and providing comfortable walkways for the pedestrians.

There are also plans to enhance solid waste management and sewerage services for the metropolis, as well as efforts to improve housing opportunities and to vitalise Putrajaya.

It is envisaged that initiatives under the Greater Kuala Lumpur/Klang Valley NKEA would contribute RM190bil in gross national income over the next 10 years and create over 300,000 jobs.

An analyst from a local bank-backed brokerage noted that the property sector was a “safer heaven” as far as investments are concerned.

“I foresee more foreign investors putting their money in our local property market, in light of the various initiatives announced by the Government to make Kuala Lumpur more vibrant and liveable.

“Also, Malaysian property prices are cheaper compared with other countries around the world,” she says, adding that she also expects to see more local investors taking their money out of the local stock market and putting it into the local property market.

According to C.H. Williams Talhar & Wong's Property Market Report 2012, there were 22,877 luxury condominiums and serviced apartment units in the Klang Valley as at end-2011. It noted that over 50% of the new developments completed last year were located within the Mont Kiara/Sri Hartamas area.

It said that the average occupancy rate for the condominium market remained stable at about 68%.

“Occupancy for condominium had declined to 69.5% from 70.3% in 2010, while serviced residences recorded a slight improvement of 67.1% from 66.8% in 2010.

“In addition, latest launches comprised smaller and more affordable unit sizes of 500 sq ft to 1,000 sq ft with selling prices ranging from RM850 per sq ft to RM2,000 per sq ft in the KLCC area, RM700 per sq ft to RM1,200 per sq ft in Mont Kiara/Sri Hartamas and Kenny Hills areas.”

In terms of outlook, the report states that luxury condominium developments will face a threat from the large incoming supply in the future.

“Developers are also marketing actively to foreign investors as the prices for luxury condominiums in Kuala Lumpur are still considered relatively cheap as compared with other countries such as Hong Kong and Singapore.

“In addition, the pro-active measures from the Government, efforts to promote the Malaysia My Second Home as well as the lifting of Foreign Investment Committee's approval in purchasing the properties by foreigners will boost the luxury condominium sector.”

The report added that occupancy rates and condominium rentals will be on a downtrend as new units enter the rental market at a faster rate than the slower projected demand from working expatriate professionals entering Malaysia.

“Buyers are still actively looking for condominium properties for investments in the KLCC and Mont Kiara areas but are now have more leeway for negotiation of prices.”

By The Star

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