THERE is hope for recovery in the high-end condominium market after the recent rebound in the country’s economy, coupled with the strengthening of the ringgit.
Knight Frank Malaysia managing director Sarkunan Subramaniam said despite the overall subdued market in the first half of the year, with developers scaling back on new property launches amid weak demand, the situation would continue to improve thanks to the stable employment market and other positive developments.
“Malaysia remains an attractive investment destination in the region, with its stable property market and relatively low entry prices that continue to offer reasonable returns,” he said.
The country’s economy rebounded in the first quarter of the year, with gross domestic product (GDP) growth expanding 5.6 per cent, driven mainly by higher private expenditure.
For the second quarter, growth was stronger at 5.8 per cent.
Due to the strong performance, the government will revise higher the growth outlook for this year than the initial target of 4.3 to 4.8 per cent.
To remain accommodative to economic activity and to support domestic demand, Bank Negara Malaysia has kept its Overnight Policy Rate (OPR) at three per cent.
The ratio of approvals to applications in the first quarter of this year for residential property purchases was lower, at 40.4 per cent, versus 44.3 per cent last year.
Meanwhile, the first quarter saw a marginal increase in the total outstanding/non-performing loans in the housing sector to RM5.54 billion versus RM5.41 billion in the fourth quarter of last year.
Knight Frank Malaysia recently launched its latest research report, “Real Estate Highlights for 1st Half of 2017”, which revealed that the high-end condominium market in Kuala Lumpur remained subdued with less market activity, as potential buyers and investors continued to adopt a “wait- and-see” approach.
Kuala Lumpur recorded lower volume and value of transactions in the condominium/apartment segment, with 1,247 transacted units valued at RM975.88 million in the first quarter of the year, 12.2 per cent and 5.9 per cent lower than the previous quarter.
The cumulative supply of high-end condominiums/residences stood at 47,380 units in the first half, following the completion of three projects contributing 1,333 units.
By the second half of the year, another eight projects, totalling 2,979 units, are scheduled for completion, five of which comprise hotel-branded/managed projects.
With potential purchasers and investors waiting on the sidelines, developers continue to tweak their marketing strategies to sustain earnings through “stock clearing” of completed and ongoing projects.
The report also showed that there were noticeably fewer launches of high-end condominiums/residences during the period under review.
On outlook, the report mentioned that the popularity of dual-key units, offering additional rental income, and smaller-sized units continued as affordability remained a key issue in the domestic housing market.
Developers, meanwhile, are seizing opportunities in the soft market to increase their landbank in strategic Klang Valley locations, such as along the rail transportation routes for transit-oriented developments and affordable housing projects.