This article first appeared in City & Country, The Edge Malaysia Weekly on March 8, 2021 - March 14, 2021

The residential property market in Greater Kuala Lumpur is expected to see minimal price movements amid uncertainties on multiple fronts. Meanwhile, the recovery of the economy and property market will depend on the rollout of Covid-19 vaccines in the country, says Savills Malaysia director of research and consultancy Amy Wong in presenting The Edge/Savills Klang Valley High-Rise Residential Property Monitor for 4Q2020.

“Last year was tough for the property market. The overall residential property market in Greater KL suffered a dip in market activity as the country continues to face a prolonged triple-whammy crisis cocktail, courtesy of the Covid-19 pandemic, the subsequent economic downturn and prolonged political uncertainty,” she says.

Nonetheless, home ownership is still being prioritised by the government, with the focus on the middle 40% (M40) and bottom 40% (B40) income groups through the waivers introduced in Budget 2021 for the property sector, Wong adds. “Property developers will likely continue to strategise towards offering homes in the affordable price range, with lower entry cost being an integral part of the sales package in securing sales targets.”

To recap, the first nine months of last year saw the total residential property transaction volume and value drop 16.4% and 16.9% respectively from the corresponding period in 2019, according to data provided by the National Property Information Centre (Napic).

“Although there was some improvement in residential market activity in the second half of 2020 following the lifting of the Movement Control Order (MCO) in June, an overall downtrend was observed for the year,” says Wong.

According to her, there was increased buying interest, as reflected by the higher number of loan applications for residential property purchases just before the third wave of Covid-19 infections and reimposition of the Conditional MCO in 4Q2020. “Some developers reported improved sales after the first MCO, including higher-end residential projects in the prime areas of KL and Selangor,” she says.

Throughout 2020, Wong observed a significant number of property developers with high-rise residential projects in the Klang Valley holding preview or pre-launch events  to garner bookings from potential buyers before the projects were officially launched. “In KL alone, only 13 high-rise residential schemes were officially launched in 2020, compared with 26 in 2019,” she says.

Following a spike in Covid-19 infections across Malaysia at the start of the year and the reimposition of the MCO (MCO 2.0), the country’s economy will likely take some time to recover, and the same goes for the residential property market, says Wong. 

She adds that unlike the MCO imposed last year, property sales galleries have remained open during MCO 2.0, complying with all of the standard operating procedures, although fewer physical visits are expected. “We believe virtual platforms will be an important tool for property developers to market their inventories and maintain market presence.”

During the period in review, the high-rise residential property market in the prime areas of KL remained flattish compared with 3Q2020. “Selected high-rise residential properties with two bedrooms in KLCC, Bangsar and Mont’Kiara continued to record limited to no sales during the quarter, summing up a very muted year for the higher-end segment,” says Wong.

Capital values at these properties moved only marginally quarter on quarter (q-o-q). On a year-on-year (y-o-y) basis, average values dropped 2% to 5%. Similarly, asking prices dropped marginally in 2020 compared with the year before.

In Selangor, selected high-rise residential properties with three bedrooms in Subang Jaya, Bandar Sunway and Petaling Jaya recorded marginally lower sales of 0.4% q-o-q. “The continued pressure owing to the Covid-19 outbreak was also associated with the lower quantum of transactional activity during the quarter in review compared with 3Q2020, which saw the resumption of business activities after the first MCO,” says Wong.

Despite the downtrend, however, asking prices remained competitive and increased q-o-q during the period in review. This led to a positive trend in overall asking prices in Subang Jaya and Bandar Sunway.

In the KLCC area, market activity remained generally subdued last year. The secondary market transaction volume of sampled two-bedroom properties slowed tremendously and the number of recorded transactions fell almost 90% from 2019, according to the monitor.

While the capital values of KLCC properties in 4Q2020 were largely similar to those in the previous quarter, an overall annual comparison shows a 5% drop in the average capital value to RM1,135 psf in 2020 from RM1,190 psf in 2019. The average asking price saw a 3% y-o-y decline to RM1,245 psf from RM1,285 psf in 2019.

The quarter in review saw the launch of TRX Residences’ second tower, just outside the KLCC area. Tower B consists of 453 residential units, with sizes ranging from 474 to 3,854 sq ft and a gross price of about RM2,050 psf.

In Bangsar, the high-rise residential property market was also slower last year, with secondary market transaction volume of sampled two-bedroom properties falling by half from 2019. “With the lack of sales evidence, the capital values of our selected samplings in 4Q2020 were expected to largely maintain similar levels to those in 3Q2020,” says Wong.

However, the average capital value in Bangsar fell 2% to RM905 psf in 2020 from RM920 psf in 2019. Similarly, the average asking price fell 2% y-o-y to RM995 psf from RM1,020 psf.

In the primary market, Bangsar saw the soft launch of Bangsar Hill Park, a RM3.01 billion high-rise residential project comprising eight blocks with a total of 3,257 units. Block D (Verdura) offers 406 units with sizes ranging from 917 to 1,478 sq ft and a gross price of about RM910 psf.

Mont’Kiara’s high-rise residential market did not fare any better last year. “Between 2019 and 2020, the secondary market transaction volume of the sampled two-bedroom properties fell 70%,” says Wong.

The average capital value of the Mont’Kiara properties dropped 4% y-o-y to RM615 psf from RM640 psf in 2019. Asking prices declined 2% y-o-y to RM695 psf from RM710 psf in 2019.

In Subang Jaya, the capital values of most of the three-bedroom properties sampled were relatively stable q-o-q owing to limited transactions. The average value increased a marginal 0.2% to RM539 psf from RM538 psf in 3Q2020.

Average asking prices for Subang Jaya properties rose 1.2% q-o-q to RM582 psf from RM575 psf. According to Wong, the increase was attributed to the sampled units at Subang Parkhomes, where the asking prices for the 1,000 to 1,200 sq ft units stood at RM685 psf — up 7% q-o-q from RM640 psf. The larger 1,400 sq ft units saw asking prices increase 1.6% q-o-q to RM620 psf from RM610 psf.

“As we are reviewing the last quarter of 2020, the selected samplings managed to show short-term capital appreciation from 2014 to 2020. Our transaction data reveal that the compound annual growth rate (CAGR) of Subang Parkhomes’ 1,400 sq ft, three-bedroom units have prevailed over that of the smaller 1,000 to 1,200 sq ft units,” says Wong.

According to her, the units in the former category appreciated 1.6% annually to RM615 psf in 2020 from RM560 psf in 2014 while the latter category depreciated 0.7% annually to RM595 psf in 2020 from RM620 psf in 2014.

Similarly, Olives Residences’ 1,900 sq ft, three-bedroom units have shown an average annual appreciation of 1.5% to RM455 psf in 2020 from RM415 psf in 2014. “This is in contrast to the smaller units ranging from 1,400 to 1,500 sq ft, whose capital values stabilised at RM480 psf last year — the same as those recorded in 2014,” says Wong.

In Bandar Sunway, the sampled properties recorded a marginal 0.3% decrease q-o-q owing to limited transactions in 4Q2020, to RM595 psf from RM597 psf in 3Q2020. On a y-o-y basis, the secondary market was subdued and the highest drop in value of 1.5% was seen at Lacosta Bandar Sunway to RM660 psf, from RM670 psf in 2019. The average asking price in Bandar Sunway saw a marginal increase of 0.2% during the quarter in review, to RM614 psf from RM613 psf in 3Q2020.

According to Wong, the sampled properties whose asking prices recorded positive growth during the period in review included Lacosta Bandar Sunway (by 3% to RM690 psf from RM670 psf) and Nautica Lakesuite (by 3.6% to RM580 psf from RM560 psf). However, asking prices were on a downtrend at Nadayu 28, Sunway Lagoonview and Palmville Resort by 0.6%, 3.6% and 2% respectively.

Based on Savills’ six-year CAGR analysis, the capital value at Palmville Resort’s 1,570 sq ft units increased 0.4% annually to RM465 psf in 2020 from RM455 psf in 2014. As for Nadayu28, which was completed in 2015, units measuring 1,600 sq ft posted a marginal CAGR of 0.1% to RM785 psf in 2020 from RM780 psf in 2015, with the highest average transacted price at RM800 psf in 2017.

In Petaling Jaya, the capital values of sampled three-bedroom properties dropped 0.3% q-o-q to RM623 psf from RM625 psf in 3Q2020. According to Wong, a similar trend was expected for the locality’s average asking prices — decreasing 1.7% to RM643 psf from RM653 psf during the period.

Y-o-y, a higher degree of fluctuation was observed across capital values in Petaling Jaya. Among the sampled properties, Surian Condominium’s 1,400 sq ft units depreciated 5.7% to RM665 psf from RM705 psf in 2019. In contrast, Five Stones’ 1,700 to 2,000 sq ft units appreciated 10.8% to RM820 psf from RM740 psf.

Based on Savills’ six-year CAGR analysis, capital values of high-rise residential properties in Petaling Jaya depreciated by a smaller amount amid the pandemic compared with high-rise properties sampled in other parts of Selangor. Surian Condominium, for instance, recorded a CAGR of -1.4% to RM665 psf in 2020 from RM725 psf in 2014.

On the other hand, Five Stones managed to exhibit the highest CAGR of 2% during the same period, to RM820 psf in 2020 from RM730 psf in 2014, with the highest average transacted price recorded at RM835 psf in 2016.

During the quarter in review, MCT Bhd launched Aetas Damansara — a 226-unit luxury condominium along Persiaran Tropicana in Petaling Jaya — as well as 492 units of serviced residences under Phase 1 (Alira) at Metropark Subang.

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