The edge | Savills Klang Valley High-Rise Residential Property Monitor (2Q2022): Undersale housing market continues to consolidate, new projects still preferred

The Klang Valley housing market remained sluggish in the second quarter of this year but demand picked up, Savills associate director of research and consulting Fong Kean Hwa said during the presentation. The edge | Savills Klang Valley High Rise Residential Property Monitor for 2Q2022.

“House prices on the undersale market continued to consolidate during the quarter under review. We have seen an increase in transactional activity in key markets such as Mont’Kiara, with homebuyers and investors looking for bargains. We have also seen opportunistic buying in places such as Kuala Lumpur City Center (KLCC), Bangsar and Petaling Jaya,” he adds.

Fong observes that first-time buyers still favor new projects, as evidenced by the sales performance of new launches. “Most newer developments are high-density and offer compact units up to four bedrooms under 1,000 square feet. As a result, developers can keep sale prices competitive, targeting small families and young couples. “

Meanwhile, completion of ongoing projects remained limited due to construction delays. “We expect new completions to be pushed back to 2023. In the meantime, developers are offering rebates/incentives to offload unsold units from these projects,” he says.

Fong adds that market challenges remain, due to rising interest rates and inflation. “While the current policy rate remains favorable for those who do not borrow too much, rising interest rates will continue to reduce the borrowing capacity of buyers. Slowing demand, coupled with looming supply and continued pressure on the cost of living, will slow house price growth.

“We expect the real estate market to remain on a sideways trend in the short term, pending more incentives. The recent stimulus package announced by the government was the i-Miliki, which allows first-time buyers to benefit a 100% exemption from stamp duty for loan agreements and MOT (memorandum of transfer) for properties priced below RM500,000 as well as a 50% rebate for properties priced is over RM500,000 and up to RM1 million. The effective date of this incentive will be from June 1, 2022 to the end of 2023.”

Fong: While the current policy rate remains favorable for those who do not borrow too much, rising interest rates will continue to reduce the borrowing capacity of buyers. Slowing demand, coupled with looming supply and continued pressure on the cost of living, will slow house price growth. (Photo by Savills)

In Kuala Lumpur, Fong observed positive changes in capital values ​​in terms of ringgit psf during the quarter under review for a selection of sampled 2-bedroom units in Bangsar and Mont’Kiara, with quarterly growth (qoq) 0.3% and 1.6% respectively. On a year-over-year basis, capital values ​​in Bangsar remained stagnant while those in Mont’Kiara edged up 0.9%.

On the other hand, KLCC continued to face headwinds, he said, with capital values ​​down 0.3% year-on-year and 4.6% year-on-year.

The average price gap between capital values ​​and asking prices at KLCC and Bangsar narrowed to 11% and 6% respectively during the quarter, while at Mont’Kiara the price gap remained at 10%.

In Selangor, the average capital psf value of 2 and 3 bedroom units in the sample remained relatively stable in 2Q2022 compared to the previous quarter.

Asking prices for properties in the sample remained relatively firm, and the average price gap between capital values ​​and asking prices remained at 2% in Petaling Jaya and 4% in Bandar Sunway. In contrast, Subang Jaya had a slightly wider price gap of 9%, says Fong.

Some positive changes in Kuala Lumpur

On the KLCC market, capital values ​​of sampled properties averaged RM1,064 psf in 2Q2022, down 0.3% yoy and 4.6% yoy. The asking price for 2-bedroom units fell 3.6% year-on-year and 0.3% year-on-year, indicating that the undersale market in the KLCC area remained challenging.

At Bangsar, capital values ​​increased by 0.3% quarter-on-quarter on average to RM893 psf during the reporting period and remained relatively stable compared to the previous quarter. Likewise, the average asking price remained unchanged qoq at RM944 psf.

Ongoing projects in Bangsar are Residensi 38 by UDA Holdings Bhd, Bangsar Hill Park by Bangsar Hill Park Development Sdn Bhd, One Eleven Menerung by BRDB Developments Sdn Bhd and Alfa Bangsar by City Motors Group.

Residensi 38 Bangsar is a leasehold development scheduled for completion in 2Q2024. Priced at around RM1,070 psf, the units will have builds ranging from 580 to 1,442 square feet.

Also a leasehold project, Bangsar Hill Park will offer units with builds ranging from 917 to 1,478 square feet and priced at RM845 to RM1,000 psf. The project is expected to be completed in 2025.

One Eleven Menerung is a freehold development. The 23-storey building is located next to One Menerung and will feature 111 units, with builds ranging from 1,001 to 3,714 square feet and priced at RM1,800 psf, or RM1.8 million.

As for Alfa Bangsar, the freehold serviced apartment project will consist of 178 units, with builds ranging from 570 to 997 square feet and prices ranging from RM963,000 to RM1.684 million. The project is expected to be completed in 3Q2024.

At Mont’Kiara, the average capital value of the sampled units increased slightly by 1.6% qoq over the period considered to reach RM704 psf. According to Fong, market activity saw an improvement in 2Q2022 with more deals closed.

Current projects in Mont’Kiara include Allevia and Residensi Astrea, both developed by UEM Sunrise Bhd. To be completed this year, the latter will offer units with builds ranging from 1,364 to 1,859 square feet and prices starting at RM850 psf. The first, which will be completed in 2025, will have units ranging from 1,700 to 2,600 square feet and prices ranging from RM800 to RM900 psf.

Capital values ​​in Selangor remain mostly subdued

In Subang Jaya, the average capital value of the sampled units decreased by 6.1% YoY, but increased by 0.4% YoY to reach RM506 psf in 2Q2022. The average asking price again hovered above RM550 psf in the quarter under review.

“While we expected the Subang Jaya sub-sale market to remain challenging in the near term, we have noticed growing buying interest in this area. Its freehold land status and amenity-rich location, including the rail transit system, are still its selling points,” says Fong.

New projects in Subang Jaya include Aurora @ Subang Jaya City Center (SJCC) by Sime Darby Property Bhd, Dorsett Place Waterfront by Mayland Valiant Sdn Bhd, Southplace Residences @ Tropicana Metropark by Tropicana Corp Bhd and Alira @ Tropicana Metropark by MCT Bhd.

Units at Aurora@SJCC, slated for completion in 2023, are priced at RM740 psf, while those at Dorsett Place Subang Jaya, with builds ranging from 400 to 1,515 sqft, are priced at RM740 psf. about RM800 psf.

Southplace Residences @ Tropicana Metropark will feature 656 units, with builds ranging from 500 to 700 square feet and priced at RM780 psf. This project is expected to be completed in 2024.

Phase 1 of Alira @ Tropicana Metropark comprises 492 units, with builds ranging from 695 to 998 square feet and priced at RM600 to RM700 psf. According to Fong, the project would be sold at more than 85% and phase 2 is open for sale.

At Bandar Sunway, the average capital value of sampled units remained unchanged at RM575 psf but fell 2.1% year-on-year. “Although the undersell market in this area is still dormant, asking prices stabilized in the quarter under review,” he says.

New developments at Bandar Sunway include Union Suites by Symphony Life and Greenfield Residence by Cicet Asia Development Sdn Bhd.

In Petaling Jaya, the average capital value of the sampled units remained unchanged quarter-on-quarter but recorded a 1.3% year-on-year decline. The asking price also remained unchanged during the quarter under review.

Fong notes that the gap between capital values ​​and asking prices in Petaling Jaya has remained slim, indicating a buyer’s market in the amenity-rich location. “We also observed some units listed for sale below average market value.”

New launches in Petaling Jaya include Sunway D’Hill Residences by Sunway PKNS Sdn Bhd in Kota Damansara, Myara Park by Puncakdana Group in Ara Damansara, Mahogany Residences by Asian Pac Holdings Bhd in Kota Damansara, Stellar Damansara Jaya by OCR Group Bhd, Helix2 @ PJ South by Eupe Corp Bhd and Dwitara Residences @ Surya PJ South also by Asian Pac Holdings.

According to Fong, Stellar Damansara Jaya offers 88 units, with builds of 2,000 square feet and priced at RM750 to RM850 psf, while Helix2 targets first-time buyers with more compact unit sizes and sale prices from of RM310,000. Selling prices at Dwitara Residences start from RM471 psf.

Other ongoing projects at Petaling Jaya include Tropicana Miyu by Tropicana Temokin Sdn Bhd in Section 17; Megah Rise by PPB Group Bhd in SS24, or Taman Megah; The Arcuz by Exsim Group, Sunway Serene by Sunway Property and Panorama Residences by LLC Properties Sdn Bhd in Kelana Jaya; Le Mate by OCR Group Bhd in Damansara Jaya; Seapark Residences, also known as Ruby Seapark, by Midas De Sdn Bhd in Section 21; and Central Park Damansara by Exsim Group in Damansara Perdana.

Central Park Damansara has opened six phases for sale. These are D’Quince residences with 1,310 units, D’Vervain residences with 1,066 units, D’Cosmos residences with 402 units, D’Erica residences with 1,143 units, D’Clover residences with 593 units and D’Terra residences with 593 units.

Edward N. Arrington