By FARA AISYAH / Pic By TMR
The high-end residential market will continue to be on the decline as more expensive properties enter the market and investors choose to be on the sideline instead of putting their money into such luxurious assets.
Nawawi Tie Leung Property Consultants Sdn Bhd said the overhang of residential properties priced above RM1 million in Kuala Lumpur alone jumped by 10.7% in the second quarter of 2018 (2Q18) compared to the previous quarter.
The overall sales of such high-end residential projects also continued to decline, weighing more on the prospect of such properties.
The situation is expected to worsen as four high-end residential projects in the city centre with a total of 1,177 units were completed in 3Q18. These include the Four Seasons Private Residences (240 units), Tropicana The Residences (353 units), the RuMa Residences (200 units) and Anggun Residences (384 units).
The firm said the number of completions accounted for 34% (2,093 units) of the pipeline for 2018 as of 3Q18, while some 4,083 units are slated for completion in 4Q18, according to figures by the property
About 49% of the upcoming supply will emanate from the city centre.
The firm said developers continued to refine and introduce various marketing strategies to clear their completed and unsold stocks, including offering attractive discounts and incentives.
The situation, however, had pushed developers to re-evaluate their product propositions.
The property consultant said developers are more cautious in launching high-end residential projects due to the shifting needs of the residential market and are moving towards the middle-income segment and affordable housing.
Nawawi Tie Leung said new launches in the market are now focused on offering residential units around the RM500,000 price range.
“Most of the demand are from purchasers buying for own stay, while investors remain on the sidelines.
“A new and strong public/private partnership will be needed to address price affordability if this segment is to drive the recovery in the residential market,” the firm said in a report yesterday.
It added that smaller-sized units continued to dominate the market as affordability remains the key issue.
In certain locations, asking prices and rentals remained depressed, especially for old and/or matured developments, where units have a typically large built-up area.
Nevertheless, developments along infrastructure projects including the mass rapid transit and light rail transit lines are expected to hold their value.
Meanwhile, Nawawi Tie Leung said demand for office space is expected to improve only when there is clarity on new major initiatives from the government on how it intends to drive more inward foreign direct investments into the country.
“Unfortunately for the market, this may need some time before any impact can be felt,” it added.