By IZZAT RATNA / Pic By AFIF ABD HALIM
Property buyers who were banking to ip their above RM1 million condominiums for a handsome profit may have to hold on to their assets longer as the market recovery is not expected in the short term.
Such high-end condominium units were favourites among property speculators. But, the market slowdown and excessive construction had seen the properties in this bracket tumbling in value.
Property consulting firm Firdaus and Associates Property Professionals Sdn Bhd MD Firdaus Musa said some owners of these high-end units are already feeling the pressure and would dispose their assets lower than the market value.
“Assets priced above the RM1 million bracket are selling for less than when initially purchased four to five years ago. It is now between 5% and 20% lower in value, despite the traditional 20% appreciation when a unit is completed.
“They may sell at a break-even level, or slightly lower, to cut their losses as the holding power for such assets are further dampened by the high holding costs, mainly on maintenance,” he told The Malaysian Reserve.
According to CBRE-WTW Asia-Pacific Real Estate Market Outlook 2017 report, luxury condominiums in the Golden Triangle area were transacted at an average of RM1,280 per 0.09 sq m, whereas in secondary areas, price rose around 5% to RM945 per 0.09 sq m.
In terms of price structure, 86% of existing condominiums are in the RM700- RM1,000 per 0.09 sq m range. Upscale condominiums (RM1,001-RM1,500 per 0.09 sq m) are expected to witness the biggest growth, averaging 4,000 units annually and accounting for 23% of the total condominiums by 2019.
Property speculators traditionally invest in high-end condominiums and sell them after completion for a good, profit, more often 20% higher than the buying price. Such 20% or more return for a three-year investment is considered good, especially for big players. These speculators, besides rising demand from foreigners, have pushed the prices for such units.
Firdaus said some high-end condominium owners are also facing difficulties to service their mortgages.
“Those who have stronger financial positions would hold on to their units in anticipation for the market to eventually pick up,” he said.
To manage the slump, some owners are listing their property on Airbnb to mitigate the losses. “Service apartment for daily renting, especially located near the central business district such as Jalan Sultan Ismail in Kuala Lumpur (KL) and other areas within the proximity, are seeing good responses,” Firdaus said.
Knight Frank’s Malaysia Real Estate Highlights Report for the first half of 2017 showed asking rentals for areas like KL City, Damansara Heights, Bangsar and Mont’ Kiara remain under pressure.
However, Firdaus said that non-landed development priced below the RM1 million bracket and landed residential development priced below RM1.5 million in the Klang Valley remain resilient and stable.
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