This article first appeared in City & Country, The Edge Malaysia Weekly on June 10, 2019 - June 16, 2019

The secondary market of high-rise residential properties in Kuala Lumpur and Selangor was muted in 1Q2019, says Savills Malaysia director of research and consultancy Amy Wong when presenting The Edge/Savills Klang Valley High-rise Residential Property Monitor for that quarter. However, the primary market fared slightly better as it was driven by the Home Ownership Campaign (HOC) 2019.

“With discounts of 10% to 26%, the HOC will have some impact on the secondary market. In general, the six-month campaign will help developers sell off their unsold properties,” she says, adding that the campaign is unlikely to benefit the secondary market.

The HOC is one of the measures to be taken to tackle the country’s housing issue under Budget 2019.

“Our view on the property market remains neutral for the near term with windows of opportunity for recovery in the mid to longer term,” says Wong.

In the Kuala Lumpur region, the secondary market was lacklustre with 2-bedroom high-rise residential units sampled in KLCC, Bangsar and Mont’Kiara showing stagnant prices. The average transacted prices moved within a 1% range during the period under review — down 0.9% and 0.4% in KLCC and Bangsar respectively, but up 0.1% in Mont’Kiara.

Based on the samples, the difference between the average asking price and average transacted price narrowed slightly to 9.8% during the period. In 4Q2018, the average asking price was 10.2% higher than the average transacted price.

“We envisage the secondary market to continue to be muted in the next quarter. Large impending supply in KL remains a stumbling block in the near term,” says Wong.

Like KL, four zones in Selangor saw an inactive secondary market during the quarter. Based on the 3-bedroom high-rise residential units sampled, there was no transaction.

“Shorter-term growth in prices for the high-rise residential properties in Subang Jaya, Bandar Sunway, Petaling Jaya and Shah Alam has been largely flat, with average values down 2.45% from a year ago,” Wong says, adding that average asking prices have also declined.

Nonetheless, she is optimistic about the outlook because several institutions have announced plans to allocate more funds for mortgages and the Bandar Malaysia project with 10,000 affordable homes has been revived.

An overall lacklustre quarter

In KLCC, the 2-bedroom units sampled recorded no transaction in 1Q2019 and Savills expects their prices to remain the same as in the previous quarter, considering factors such as the property itself, the facilities and amenities in the surrounding areas and the current market condition.

The estimated prices of the sampled developments in KLCC dropped 0.9% quarter on quarter to between RM810 and RM1,800 psf. Asking prices also declined marginally by 0.7% q-o-q.

According to Wong, a significant impact from the HOC has yet to be seen on KLCC’s primary high-rise market. The average take-up rate of incoming developments was still at around 50%.

In Bangsar, no new transaction was recorded for the sampled 2-bedroom units. “Although property launches were limited in Bangsar, the secondary market for high-rise residential properties was still weak,” says Wong.

Prices of 2-bedroom units in Bangsar, which ranged from RM750 to RM1,200 psf, stayed flat during the quarter — down 0.4% q-o-q and unchanged year on year.

“The price expectations of sellers dropped further in 1Q2019, with average asking prices declining 2.4% q-o-q. Tivoli Villas, Cascadium and Suasana Bangsar have all recorded lower average asking prices for the second consecutive quarter,” says Wong.

Similarly, Mont’Kiara, which had always been the more active secondary market among the three zones in KL, also saw an inactive secondary market for the high-rise residential sector during the quarter. There was no transaction for the 2-bedroom units sampled. Savills expects prices of the sampled developments to remain the same as in the previous quarter.

In 1Q2019, prices of the sampled developments ranged from RM610 to RM700 psf. Likewise, the average asking price was flat, at RM722 psf — up 0.6% from 4Q2018.

“Apart from KLCC, Mont’Kiara is also an area with one of the largest numbers of incoming high-rise residential units. The take-up rates of these developments were 60% to 70% — very little change compared with the previous quarter,” says Wong.

“Given that Mont’Kiara is a sought-after location that still presents attractive prices, we expect the HOC to boost the take-up rates of the incoming high-rise residential developments there in the next quarter.”

Limited launches

In Subang Jaya, there was no transaction for the 3-bedroom units sampled during the period under review. Prices of the samples were down marginally by 0.4% from the previous quarter. Savills estimated transacted values ranged from RM450 to RM640 psf — still 0.1% higher y-o-y.

The average asking price declined 3% q-o-q to RM598 psf. It is worth noting that asking prices are usually 3% to 15% higher than the transacted values.

New launches in Subang Jaya were limited in 1Q2019, says Wong. “The incoming high-rise residential developments in the area were reported to have achieved take-up rates of around 60%.”

Like Mont’Kiara, Bandar Sunway saw a more active secondary market among the zones in Selangor under review. However, there was no transaction for the 3-bedroom units sampled.

“Due to the absence of secondary market transactions, we have estimated the transacted values for the sample developments [in Bandar Sunway] to be flattish, ranging from RM480 to RM790 psf, during the quarter under review,” says Wong.

Similar to other zones in Selangor, the average asking price for the 3-bedroom units in Bandar Sunway declined marginally by 0.7% q-o-q.

In Petaling Jaya, the secondary market — based on the 2-bedroom units sampled — was also inactive.

In PJ North, the average price dropped 0.8%, but in PJ Central, it was up 0.7%. The price levels in both areas continued to hold up at RM550 to RM720 psf for PJ North and RM710 to RM810 psf for PJ Central.

According to Wong, there were no new launches in Petaling Jaya in 1Q2019 and the new supply in 4Q2018 saw an average take-up rate of 40%. “There are projects that are still performing well, despite the overall declining sales performance. Factors such as product, pricing, location, accessibility and sales packages play an important role here.”

With over 12,000 high-rise residential units slated for completion between 2019 and 2022, she says the outlook will remain challenging.

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