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Luxury condominiums oversupply in Kuala Lumpur

I wrote an earlier article about luxury condominiums. Read here: I do not believe majority can buy RM900psf, sorry  Well, one article appeared in a local English daily quoting many famous property gurus which tells about the oversupply situation of luxury condominiums in Kuala Lumpur. It quoted Savills Malaysia’s Asian Cities report which revealed that there were 21,069 units of luxury residential units priced above RM800 per sq ft in Kuala Lumpur. This grew 21% year on year. I am not sure if the wealthy ones are increasing as fast. 🙂 The new ones include Setia Sky Residence Block C (Jalan Tun Razak), The Greens (TTDI) and Icon Residence Mont Kiara (Tower 1 & 2) at Dutamas KL. Those launched end 2014 included The Residences @ Platinum Park along Jalan Stonor, KLCC and The Robertson (South Tower) at Jalan Pudu, KL.
The three areas which is still increasing in terms of price per sq ft includes KLCC, Bangsar and Mont Kiara. Hardly surprising because my KLCC articles always attract more attention than others such as Setapak or Sungai Buloh. The report said that the average transaction price for the three areas was RM871 per sq ft as at end 2014. Savills said that the subdued overall property market sentiment since 2014 will continue into the second half of 2015. As we noted, there were some predictions that H2 2015 should be better than H1 2015. Well, if Savills is right, this is no longer happening. May have to look forward to 2016 instead.
In terms of occupancy rate, KL has an average of 68%. Bangsar has an average of 84% while Mont Kiara / Hartamas is at 61%. So, if you must stay at any of these two spots (Bangsar / Mont Kiara), the latter may be a good place to start searching. In terms of buying in anticipating of an increase in price from current levels, please rethink or focus only on undervalued ones. Even if property prices would always increase in prices, I would not bet on every single one of these luxury developments being well sought after. Sooner or later, due to market preferences, some of these slightly less attractive ones would start losing out.
Come on, just look at the same area, even if on the same road, the prices can be very different. Be reminded that anything close to these price levels meant that many are certainly not qualified to buy. As for buying and waiting for international buyers, just make sure that development is already full of these foreigners first. If I am a foreigner, one of the first question I would normally ask would be whether there are already some of my fellow citizens residing in the condo that I am buying. Happy buying and waiting if luxury is your game.
written on 30 Aug 2015
Next suggested article: Cheapest and most expensive in Mont Kiara
 
 
 
ropping, not their values.”
According to CH Williams Talhar & Wong’s (WTW) property market report 2015, the luxury condo segment saw a slowdown with fewer transaction activities recorded in 2014 compared with 2013.
“As of 2014, total luxury high-rise residential units was 31,402 units, with the prime locations being Kuala Lumpur City Centre, Ampang/U Thant, Kenny Hills, Mont’Kiara/Sri Hartamas and Golden Triangle area where luxury developments remained highly sought after by both foreign and local investors.
“Last year witnessed the completion of more serviced residences compared with condominium units. As recorded in 2014, serviced residence was 54% of the total cumulative supplies of high-rise residential, which had surpassed condominiums.
Newly completed serviced residences units were priced between RM701 and RM1,500 per sq ft.”
In Kuala Lumpur, WTW says the average transacted price per sq ft for luxury condominium had decreased 6.1%, to hover around RM1,070 psf in 2014.
“Luxury high-rise residential located outside the Golden Triangle area has seen an upward trend since 2011, with average transacted prices increased by 10.5% to RM840 per sq ft in 2014.”
It adds that there were few newer launches in 2014.
“These include Anjali North Kiara (365 units; RM580 per sq ft), Block B of Residensi 22 (270 units; RM800 per sq ft) and The Mews (256 units; RM1,700 per sq ft). “Serviced Residences developments that were launched in 2014 were Dorsett Residences (252 units; RM2,100 per sq ft), Ritz Carlton Residences (287 units, RM2,500 per sq ft) and The Establishment (646 units; RM1,200 per sq ft).”
Overall, average occupancy rate in Kuala Lumpur remained stable in 2014 at 68%, says WTW.
“Developments in Bangsar outperformed other localities, registering an average of 84% whilst Mont’Kiara/Sri Hartamas have seen only a satisfying occupancy rate, averaging at 61%.”
According to the report, condos that were completed in 2013 are still experiencing low occupancy rate in 2014 although all units were fully sold.
“Moving forward, the completion of on-going construction is expected to exert more pressure on the existing condominiums/serviced residences, resulting in the decrease of the average occupancy rate in 2015 and a more competitive rental market, one that is favourable to tenants.
The rest of 2015 is expected to be “lacklustre” as 2014 due to the stringent lending regulations and the implementation of GST where some buyers are cautious over their decision making, the report says.

Property Investment always start with knowledge. Equip ourselves with more here.

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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