THE year 2017 appeared to be a busy year for property developers in Kuala Lumpur as there was a marked increase in launch activity compared to 2016. All in all, there were 43 new projects launched last year compared with 32 in 2016 — an increase of 34 per cent. With limited and expensive landbank in the city, all these new developments — in 2016 and 2017 — are understandably of strata properties.
The 43 launches translated to an addition of 31,788 units to Kuala Lumpur’s residential property pool, up from the 23,805 units added in 2016 — a 33 per cent increase. Serviced apartments and residences were the developments of choice for property developers in Kuala Lumpur, with 21 developments (out of 43) in 2017 and 20 (out of 32) in 2016. Condominiums followed suit, with 17 projects, apartments or flats (three) and small office-type projects (two).
August and September appeared to be the most active months last year, with six launches in September and five in August, closely matching that of March 2016. However, the best performing month for both years is October, with seven launches. Based on our data, 2017 saw consistent activity, with at least two launches per month.
In terms of unit sizes, we note that those with built-up areas of between 801 and 1,000 sq ft and 1,001 and 1,200 sq ft were the most popular configuration, as 27 of the 43 projects in 2017 featured units of these sizes. This is then followed by the smaller 601-800 sq ft range, with 24 projects offering such units. This is a slight departure from 2016. Even smaller units (below 600 sq ft) got a bigger share of the pie — 2016 only saw one project offering this size compared with five projects last year.
Overall, 2017 projects were of higher prices — 21 projects (49 per cent) offered units priced between RM801,000 and RM1 million and another 21 had units exceeding RM1 million. This is followed by 20 projects with units priced between RM401,000 and RM600,000 and 18 projects with units between RM601,000 and RM800,000. There were 11 projects which offered units priced below RM400,000. A similar trend was recorded in 2016, where there were more projects (20 of 32) with prices exceeding RM1 million.
The core pricing bracket for new launches in Kuala Lumpur remained at RM500 to RM750 per sq ft (psf), with 17 projects (33 per cent) having units within this price range, echoing that of 2016 (14 of 32 projects, or 37 per cent). This is followed by the below RM500 psf tier and the RM750-RM1,000 psf range, with 11 projects each.
There were only four projects (about eight per cent) offering units exceeding RM1,500 psf. This contrasted with 2016, where there were 12 projects with prices exceeding the mark.
Last year, geographically the attention had moved from dense hotspots, like the city centre and Mont Kiara, and focused on areas such as Kepong with seven developments, in addition to three in 2016. Other areas of interest include Bukit Jalil and Cheras.
Established areas like KL Sentral and Wangsa Maju also saw some movements in 2017 with two launches each, while a trend of steady developments was seen, judging from the number of single development launches in various townships and localities in Kuala Lumpur (Sentul, Bangsar South, Taman Desa and Desa ParkCity, among others).
Based on our data, Taman Desa is the most affordable location for new developments in Kuala Lumpur with a price range of RM270 to RM300 psf. This is followed by Salak Selatan (one project, RM350 to RM400 psf) and Setapak (one project, RM370 to RM400 psf). Projects in Kepong — seven altogether — are priced between RM370 and RM850 psf. These projects are well within reach of young working urbanites or families looking for a home that offers convenient access to the capital.
Developments priced at the higher end of the spectrum are located at well-established and well-connected areas — Jalan Sultan Ismail (one project, RM1,400 to RM1,600 psf), KL Sentral (two projects, RM1,200 to RM1,400 psf) and Sri Hartamas (one project, RM1,100 to RM1,600 psf).
The year 2017 seems to suggest an increase sense of urgency among developers, seen from the increased number of new launches despite the softer market sentiment. The developers might be worried about further slowdown in the market and were pressed to quickly launch their projects. Nevertheless, recognising the lower demand for higher-priced properties, the developers had shifted their attention to projects with smaller-sized and cheaper units.
As pointed out by recent statistics released by National Property Information Centre, the new launches have resulted in an increase in the stock of unsold houses in Kuala Lumpur. Although this reflects the overall weaker market condition, the success of some of the launched projects seems to suggest that the property sector is not in any danger of an imminent collapse.
Story Courtesy of Henry Butcher Malaysia