market view kuala lumpur residential q4 2011

8/2/2019 Market View Kuala Lumpur Residential Q4 2011

http://slidepdf.com/reader/full/market-view-kuala-lumpur-residential-q4-2011 1/4© 2011, CBRE Group Inc.

Kuala Lumpur ResidentialQ4 2011 www.cbre.com.my

CB RICHARD ELLIS (MALAYSIA) SDN BHD

Condominiums

The total supply ofcondominiums and servicedresidences priced at or aboveRM350 psf in Kuala Lumpur asof end-2011 is about 37,200units. We would term 24% ofthese units as being luxury (prices of RM800psf and above).

Average capital values forselected projects in the KLCCarea are about RM966psf, about29.3% higher than the averagetransactions price for KualaLumpur as a whole.

Average asking rents havedeclined in both KLCC andMont’Kiara over the past year. A continuation of this trendprobably would put pressure onthe capital values of secondary market, which have so farremained stable.

Overall Housing

As of end-2011, the totalexisting housing stock in theKlang Valley registered about1.72 million units. Newcompletions were 39,400 unitsin 2011.

Serviced apartments,condominiums and apartmentsaccount for 21.5% of the totalexisting housing stock in theKlang Valley.

JPPH data shows that newhousing starts rose for the firsttime in seven years. 2011 startsare marginally higher than thelevel seen in 2009 and 2010,and still just 40% of 2007 starts.

Quarterly Highlights Bank Negara Malaysia (BNM), the country’s central bank, maintained the Overnight Policy Rate at 3.00% to end 2011. As part of the Monetary Policy Statements (11 November

2011), BNM reported an improvement in the domestic economy during 3Q2011,

primarily due to stronger domestic demand. Export performance also improved, reflecting

firm regional demand and the normalisation of trade flows after a period of supply chain

disruptions. Going forward, domestic demand is expected be the primary anchor for

economic growth. The major government initiatives announced during 2010-11 are also

expected to gather steam, and there is the prospect of increased public sector spending

and investment activity ahead of national elections, to be held later this year or early next

year. Employment conditions are also expected to remain stable.

Effective 1 January 2012, BNM has revised the lending guidelines, leading to morestringent guidelines on loan approvals. The maximum allowable debt service ratio for a

loan applicant will be based on net income (after deduction of tax, and contribution to

Employees Provident Fund) instead of gross income, to better reflect funds available to the

applicant for loan repayment. We view this as a sensible measure, but are concerned that

this could lead to slower launches and take-up of more affordable properties. There is

also uncertainty regarding how banks will interpret these guidelines in the short-term.

Several new projects were launched / previewed in Kuala Lumpur during the review

quarter, including The Sentral Residences at KL Sentral (average price RM1,100psf),

Rimbun Condominium at Jalan Ampang Hilir (average price RM1,100psf), The Residence

Suites of M-City at Jalan Ampang (average price RM1,000psf), and the G Residence atDesa Pandan (average price RM600psf). We are still seeing strong interest in new

launches, especially those priced at under RM 1 million per unit, for example the 474 units

at G Residence which was over 80% taken-up.

Two new developments, Mirage Residence (102 units) and The Face Serviced Apartments

(733 units), in the KLCC area were also soft-launched. Priced from RM1,200psf to

RM1,600psf, Mirage Residence offers units with sizes ranging from 850sf to 3,100sf, with

an average size of 1,400sf. The Face Serviced Apartments is being offered for sale from

RM1,350psf with unit sizes ranging from 850sf to 1,400sf. Take-up at these projects has

been reported to be as much as 70%.

In October 2011, it was reported that Mah Sing Group Berhad secured the sale of 96

units of its serviced residences in Icon Residence Mont'Kiara for a total of RM220.8 million

(RM1,200 psf). The purchaser was a mainland Chinese corporation. The Icon Residence

Mont'Kiara comprises 260 units in three towers, housing between two to six units per floor.

With the bulk sale, the take-up of the project has now exceeded 60%.


http://slidepdf.com/reader/full/market-view-kuala-lumpur-residential-q4-2011 2/4

M ar k et Vi ewK u al aL um p

ur R e s i d ent i al

F o ur t h

Q u ar t er 2 0 1 1

© 2011, CBRE Group Inc.

About 75.6% of total residential units in the Klang

Valley are located in Selangor, with the remaining

24.1% located in Kuala Lumpur. Putrajaya, the

country’s administrative capital, accounts for just

under 4,500 units which are primarily for the

housing of civil servants.

Since end-2008, total residential supply in Klang

Valley has grown by 8.8% (approximately 118,200units), while that in Selangor and Kuala Lumpur has

grown by 9.2% (approximately 92,200 units) and

7.6% (approximately 25,400 units), respectively.

Supply by Location

Total Supply

Incoming Supply, New Completions & New Starts

As of end 2011, a total of 177,317 units were

classified as incoming supply (defined as units for

which construction permits have been approved,

whether or not construction has begun). The

breakdown of these units by location is very similar

to that of existing units in the Klang Valley.

At the same time, 167,367 units are deemed to be

under construction, implying that construction work

has begun on 94.4% of units at projects with

construction permits. Of this amount, a total of

128,259 units or 76.6% are located within

Selangor.

It should be noted that new housing starts in 2011

outnumbered the total for 2009 and 2010, but not

significantly.

Total existing supply of residential properties in

Klang Valley stood at 1.72 million units as of end-

2011, equal to an annual growth rate of 1.4% from

2010.

Landed residential properties i.e. terraced houses,cluster houses, semi-detached, and bungalows

accounted for about 746,300 or approximately

43.4% of total supply. Serviced apartments and

condominiums were about 369,700 units or 21.5%

of the total residential accommodation.

2008 2011

P=Preliminary

Source: Department of Valuation, Ministry of Finance

P=Preliminary Source: Department of Valuation, Ministry of Finance

Overall Housing

Existing Supply of Residential Properties (All Types) in

Klang Valley

0.880.93

1.05

1.151.23

1.341.42

1.531.60

1.641.70 1.72

11.60%

4.8%

13.3%

9.9%

6.7%

8.8%

6.1%

7.7%

4.6%

2.7%3.1%

1.4%

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011p

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

AnnualGrowthRate(%)

Source: Department of Valuation, Ministry of Finance

Selangor

75.5%

Kuala Lumpur

24.3%

W.P Putrajaya

0.2%

W.P Putrajaya

0.3%

Kuala Lumpur

24.1%

Selangor

75.6%

Breakdown of Residential Supply in

Klang Valley by Location

Total Incoming Supply, New Completions & New Starts

in Klang Valley

2 6 2 . 3

2 7 3 . 7

2 6 6 . 9

2 5 5 . 2

2 1 3 . 6

1 9 3 . 4

1 8 0 . 0

1 6 1 . 5

1 7 7 . 3

1 1 2 . 5

9 1 . 2

8 0 . 3

7 2 . 9 9

2 . 4

6 2 . 4

3 0 . 1

4 1 . 2

3 9 . 4

7 6 . 4

6 5 . 6

6 4 . 0

6 1 . 8

6 1 . 7

4 1 . 6

2 4 . 6

2 2 . 7

2 4 . 8

0.0

50.0

100.0

150.0

200.0

250.0

300.0

2003 2004 2005 2006 2007 2008 2009 2010 2011p

Total Incoming Supply

New Completions

New Starts



M ar k et Vi ewK u al aL um p

ur R e s i d ent i al

F o ur t h

Q u ar t er 2 0 1 1

© 2011, CBRE Group Inc.

Of the nearly 37,200 condominiums and serviced

residences in Kuala Lumpur valued at or above

RM350 psf, about 24% are considered ‘luxury’ (valued

at RM800 psf and above).

The remainder of the supply of units is split almost

evenly between mid-range (RM350-499 psf) and high-

end (RM500-799 psf).

The high-end subsale market is in some ways less

active than the market for new launches, partly due to

the attractive incentives offered by developers at new

launches. On a y-o-y comparison, prices of high-end

condominiums have increased slightly in the KLCC,

Bangsar and Mont’Kiara areas, with the increase

ranging between 0.80% to 2.47% since 4Q 2010.

More recently, we have seen a decline in capital

values for some properties in both KLCC and

Mont’Kiara of anywhere between 1-3% q-o-q. So far,

the number of transactions at such prices has been

limited, and this trend will have to be monitored over

the next few months.

Total Supply

Capital Values

Asking Rental Rates

Condominium

Source: CBRE Research



Average asking rental rates at luxury properties in

question declined slightly during 4Q2011 to RM3.42

psf. This marks a 1.6% q-o-q and 1.4% y-o-y

decrease.

Average rents in KLCC were reported to be

approximately RM3.94psf per month, with Bangsar at

RM3.25psf per month and Mont’Kiara at RM3.08psf

per month.

The weak leasing market for larger residential units,

especially of the type commonly seen in KLCC and

Mont’Kiara, is partly to blame for this decline in asking

rental rates.

Total Existing Condominiums Supply by Grade in

Kuala Lumpur

RM800psf & Above

24%

RM500psf - RM799psf

43%

RM350psf - RM499psf

33%

Average Asking Rental Rates of Luxury Condominiums in

Kuala Lumpur

3.94

3.253.08

2.50

3.00

3.50

4.00

4.50

5.00

5.50

2004 2005 2006 2007 2008 2009 2010 2011

RM psf per month

KLCC

Bangsar

Mont Kiara

Average Capital Values of Luxury Condominiums in

Kuala Lumpur

966

714

560

350

450

550

650

750

850

950

1,050

2004 2005 2006 2007 2008 2009 2010 2011

RM psf

KLCC

Bangsar

Mont Kiara



MarketView Kuala Lumpur Residential

For more informationregarding the MarketView,please contact

Nabeel Hussain Vice PresidentResearch & Consultancy CB Richard Ellis (Malaysia) Sdn Bhd#9-1, Level 9 Menara Milenium

Jalan DamanlelaBukit Damansara, Kuala Lumpur50490 Malaysia

T 603 2092 5955 (Ext. 173)F 603 2092 5966E [email protected]

CBRE Residential Services

Chris BoydExecutive ChairmanCB Richard Ellis (Malaysia) Sdn Bhd#9-1, Level 9 Menara MileniumJalan DamanlelaBukit Damansara, Kuala Lumpur50490 Malaysia

T 603 2092 5955 (Ext. 149)F 603 2092 5966E [email protected]

© Copyright 2011 CBRE Statistics contained herein may represent a different data set thanthat used to generate National Vacancy and Availability Index statistics published by CBRECorporate Communications Department or CBRE research and Econometric Forecastingunit, Torto Wheaton Research. Information herein has been obtained from sources believedreliable. While we do not doubt its accuracy, we have not verified it and make no guarantee,warranty or representation about it. It is your responsibility to independently confirm itsaccuracy and completeness. Any projections, opinions, assumptions or estimates used arefor example only and do not represent the current or future performance of the market. Thisinformation is designed exclusively for use by CBRE clients, and cannot be reproducedwithout prior written permission of CBRE.(333510P) (VE(1)0232)

CBRE Residential Services

Outlook

Going forward, we expect that capital values for condominiums in most areas will

stabilize, although there may be further declines in some of the older projects

around the KLCC area. KLCC prices have now reached a level where there is likely

to be more interest from local investors. Attractive financing packages andcontinuing low borrowing costs (with effective lending rate of between 4.20% -

4.40%) should continue to support developer sales, although take-up is likely to

slow down if the current global economic uncertainty persists, especially in light of

the recent tightening of credit by banks.

We expect developers to continue to focus on offering more affordable products in

KL city fringe areas and suburban areas; the strategy of developing smaller units to

offset some of the effects of higher psf development costs is expected to continue.

During 4Q2011, there was a total of 1,574 high-end condominium units

completed within five developments. 1,033 of these units are located within the

downtown area. Combined with as many as 1,400 units expected to be completed

in KLCC and surrounding areas during 2012, this will place downward pressure

on the rental market, especially for larger, older units in the KLCC area.

CBRE Malaysia is part of CBRE, Inc. (NYSE:CBG), a Fortune 500 and S&P 500

company headquartered in Los Angeles and the world’s largest commercial real

estate services firm (in terms of 2009 revenue). The Company has approximately

33,000 employees and serves real estate owners, investors and occupiers through

more than 420 offices worldwide.

CBRE Residential Services has the capabilities to assist in all residential property

needs, from land agency, to investment sales, to valuation and management. This

includes professional advice for purchasers based on their specific requirements,

along with a broad range of project marketing services for developers of luxury residential projects, such as design consultancy, market positioning advice, project

marketing consultancy services, and overseas marketing. We are also able to

assist tenants in finding rental properties to fit their specifications.

Our residential services for multinational corporations include securing selected

properties and providing ongoing advice on market trends, housing budgets and

expatriate housing policies.

CBRE Malaysia MarketViews

• Office

• Retail

• Hospitality

• Residential

market view kuala lumpur residential q4 2011

Documents