Certain areas continue to register a strong premium as the landowners have not buckled to reduce prices
by FARA AISYAH / pic by TMR FILE
LAND prices in the country have remained stable despite the rise of unsold properties, drop in home values and a struggling secondary market, averting a potential bubble in the sector which is still struggling to overcome the massive overhang.
Over the last few quarters, the number of unsold properties, especially residential units, had increased with the value climbing to RM19.86 billion at the end of last year, involving 32,313 units.
The rise has triggered worries of a property bubble, a situation which will worsen if land prices, a key component of the real estate sector, tumble.
But analysts said land prices are holding on, with certain areas continuing to register a strong premium as the landowners have not buckled to reduce prices.
Asiacap Valuers and Property Consultants Sdn Bhd property valuer Kit Au Yong said land prices remain strong with key and prominent locations still commanding good rates.
“Some owners of development land are more willing to negotiate (on prices), but we have yet to see them willing to sell their property lower than the market price,” he told The Malaysian Reserve.
He said the dynamic of demand and supply continues to determine the price of land despite the inter-relation with home prices.
“Land supply in centralised locations such as the Klang Valley is still limited, but not totally unavailable,” he said, adding that this continues to sustain the prices of land.
Au Yong said the housing market continues to be active despite the shift to lower selling-price properties.
“The potential for development is still very much there,” he said, adding that many developers are still looking to acquire land as any project development will take up to three years, including related approvals.
He said land prices are on the upward trend for the industrial sector, but the semi-detached factory sub-sector is witnessing a downward sign.
Land prices are one of the key barometers to measure the health of the real estate sector. A fallout of land prices will heighten worries about the sector, which is already facing rising unsold properties, a massive glut especially for office buildings and a muted secondary market.
As long as land prices continue to hold at a premium, the sector will not falter.
“Land is demanded for developments. Even if the demands for condominiums or office spaces are down, the demand for other develop
ments will still be there,” said PPC International Sdn Bhd MD Datuk Siders Sittampalam.
“It is different from homes. We have not seen a substantial reduction in land prices, neither for landed properties. I believe land prices will maintain, and will not reduce any time soon,” he said.
Siders, however, does not deny that a weak economy will somehow impact the demand for any business.
According to PropertyGuru Malaysia, home prices in the country are expected to continue declining in the first half of 2019 (1H19).
The PropertyGuru Market Index — an analysis of over 250,000 property listings aggregated and indexed — showed that asking prices of homes in Malaysia continue to drop nationwide, as well as the key property epicentres of Kuala Lumpur, Selangor, Johor and Penang.
The PropertyGuru Market Index in the third quarter of 2018 revealed that the asking prices by real estate developers and individual owners nationwide dipped by 2.3% year-on-year and 2.3% quarter-on-quarter.
The downward trend persisted despite the overall improved consumer sentiment of 42% with 53% of Malaysians wishing to buy a home by the end of 2018. However, PropertyGuru Malaysia country manager Sheldon Fernandez said a continued, but stable, price downtrend is not necessarily a negative development.
The present market conditions have compelled developers and private sellers to be more competitive in terms of quality, design ideas and ownership packages, as well as pricing.