Good Time to Buy Homes
The majority of members of the Real Estate and Housing Developers' Association are extremely optimistic about the housing market outlook. Buyers are benefiting from easy access to finance, a low interest rate regime, low unemployment and positive gross domestic product growth.
CB Richard Ellis (Malaysia) Sdn Bhd believes this is a good time to buy any type of residential properties as it is possible to lock in the long term low interest finance still available in the country.
Research by real estate firms indicates that the property affordability gap is still among the lowest in Asia Pacific - luxury property prices in Kuala Lumpur rose by a mere one per cent in Q1 2010 while that of Hong Kong is five times higher.
Even with the reintroduction of the real property gains tax, sale of properties soared 52 per cent to RM25.30 billion in Q1 2010.
In terms of demand and supply, Malaysia's residential market is balanced as growing urbanisation is offset by the large supply of housing although there has been rising demand in the mid-tier and luxury segments. This is reflected in the recent increased interest in suburban areas such as Damansara Heights, Bangsar and Mont'Kiara. Like the commercial market, prices of housing are still extremely undervalued compared to the rest of Asia though home prices have been steadily appreciating for most of the decade.
A new home pricing benchmark was set in the exclusive Mont'Kiara enclave when Verve Suites was snapped up at RM1,580psf. KL also recorded one of the highest selling prices - RM38 million for a 14,300sq ft apartment with unobstructed views of KL City Centre (KLCC).
According to property investment company IP Global Ltd - whose secondary sales assistant manager Winnie Cheung met with local estate agents in the capital to get an update on the market and property prices - demand for units in KLCC continues to grow with new developments such as The Pavilion, St Mary Residences and Verticas Residensi reaching prices from RM1,070psf to RM1,580psf.
On Penang, Raine and Horne International Zaki + Partners Sdn Bhd regards it as one of the country's top places for property investments alongside KL, Greater KL, Johor and Sabah. It has RM2.10 billion worth of residential real estate lined up for development from 2010 to 2011.
The state government has put up prime land for tender, including a piece of freehold site between Penang Bridge and the Queensbay shopping complex offered at the minimum reserve price of RM200psf. According to the real estate consultant, land pricing in Penang is seen as affordable in the region and has attracted property investors from South Korea, Japan, Singapore and the United Kingdom.
The average yield for residential properties in Penang hovers between one and six per cent with condominiums and flats recording highest yields of between five and six per cent. Tourism is the state's largest economic component after manufacturing. Most tourists come from Indonesia, Singapore, China, Japan and Taiwan and Penang's hotels registered occupancy rates of about 70 per cent in H1 2010. Medical tourism is also growing and its main markets are Southeast Asia and the Middle East. In addition, an educational hub is being established to provide talent to multinationals operating there.
Penang's property market remained buoyant in Q1 2010 with both the primary and secondary segments generating stronger sales thanks to attractive homeownership packages offered by developers.
However, unless there are unexpected events to boost home purchases, it expects a slower increase in prices over the next few months. Tanjung Tokong, Tanjung Bungah, Batu Ferringhi, Pulau Tikus and Teluk Kumbar are the current residential hotspots but developers are also eyeing land in Batu Maung, Gurney Drive, Teluk Bahang, Balik Pulau and Relau.
Rent for standard affordable three-bedroom flats with built-up areas of 700sq ft to 750sq ft on Penang island are trending upwards with those in Paya Terubong posting rent increase of 25 per cent from RM400 in Q4 2009 to RM500 in Q1 2010.
In contrast, rents for three-bedroom apartments or condominiums in Tanjung Bungah, with built-ups of over 900sq ft, dipped 15 per cent from RM1,300 to RM1,100 in the same period.
For landed homes, rents for single-storey terrace houses with built-ups of 1,200sq ft to 1,600sq ft in Green Lane and Jelutong fell from RM700 to RM650 and from RM750 to RM700 respectively.
In value terms, the prices of almost half of the properties sampled increased: Single-storey terraces with built-ups of 1,200sq ft to 1,600sq ft rose two per cent to RM430,000 while those in Tanjung Bungah moved up to RM360,000. However, double-storey bungalows sampled in Tanjung Tokong saw an 11 per cent drop in value from RM1.68 million in Q4 2009 to RM1.5 million in Q1 2010.
