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Housing Property Monitor (1Q2011) [15-06-2011]  
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Housing price growth in the Klang Valley in the next few months is expected to moderate following exceptional performance over the past year.

Although transactions in 1Q2011 have slowed from the previous quarter, 2Q is expected to see a more vibrant market. “Traditionally, the first quarter of the year is slow as it is the festive season,” says Allan Soo, managing director of CB Richard Ellis (CBRE) Malaysia, when presenting The Edge/CBRE Klang Valley Housing Property Monitor for 1Q2011.

Samples from the monitor also indicate that prices are stabilising as some properties maintained their values in 1Q2011 from the previous quarter after several quarters of growth.

“Going into the first quarter of 2011, there was some fear that the market was going to be soft,” says Soo. “However, this was not the case, although the market was not as vibrant as it was last year. The market remains very active and if you look at transactions, they are pretty good.”

An aspect of the market that may be of concern to buyers and investors is the increase in interest rates. Soo says this will not affect the property market much because the rate hike “isn’t high enough”.

“What is really moving are the smaller serviced apartments and condos of between RM450 and RM600 psf, which are selling very well. The market has evolved, with more activity in and excitement over smaller units in Petaling Jaya and the Kuala Lumpur suburbs than the KLCC area.
“It is also about affordability because the price range hasn’t reached RM500,000,” he adds.

Soo believes affordability is helping move the market, although on a psf basis, prices are still higher than before.

The monitor shows positive growth across the board except in Lanai Kiara, which showed no growth in 1Q. Soo says this could be an indication of the competitiveness in the Mont’Kiara area where there are many new condominiums to choose from.

He highlights some potential hot spots for investors — Bukit Ceylon near KLCC; Setapak; Bandar Menjalara in Kepong; and Kota Damansara.

On Bukit Ceylon, which is close to Changkat Bukit Bintang, Soo says: “There are a couple of new developments in the area.”

At the moment, the smaller units among the high-rise residences in the KLCC area are still going for RM980 to RM1,200 psf.

Setapak is another up-and-coming area, says Soo, thanks to being bordered by growing areas such as Melawati and Sentul. The demographics and the inter-racial community in the area as well as the varied choice of property types make this area attractive. “What has really opened up the area is the DUKE,” he adds.

Soo also thinks the small enclave of Bandar Menjalara, opposite Bandar Sri Damansara, has “good growth potential”. The area is green and well planned with a good road system, he says.

He also sees Kota Damansara doing well as it will benefit from three proposed mass rapid transit stations.

The 1-storey terraced houses sampled in the monitor show y-o-y price growth across the board, with those in Taman Tun Dr Ismail’s (TTDI) Jalan Burhanuddin Helmi showing a 33.33% rise. The average price for this type of house in the area is RM600,000 now compared with RM450,000 a year ago. Soo says the area continues to have a “desirability factor” and even though it is not gated and guarded, it still attracts interest due to its good location and amenities.

After Jalan Burhanuddin Helmi, the next highest y-o-y price rise of 28% for 1-storey terraced homes was recorded in Bandar Sri Damansara’s SD2, SD3 and SD4 areas. The average price in 1Q was RM320,000 compared with RM250,000 last year. “This area has been doing well in the past few quarters,” says Soo. “Perhaps this is a second option because as Petaling Jaya expands, it is now considered close enough to get to. Infrastructure has improved and the area is more accessible than before.”

Q-o-q price growth was encouraging with all areas, except for Bangsar’s Lucky Garden and Puchong’s Bandar Kinrara and Puchong Perdana, maintaining their values. TTDI’s Jalan Abang Haji Openg saw 10% average growth to RM550,000 from RM500,000 in the last quarter.

Rents for 1-storey houses in 1Q showed a slight increase from a year ago, but generally rents remained stable, with no q-o-q change.

For 2-storey terraced houses, prices in Bandar Sri Damansara’s SD10 area surged 41.03% from a year ago — the highest growth recorded among the sampled properties. The average 1Q price for a house in the area was RM550,000 compared with RM390,000 last year.

The values of 2-storey terraced houses in Bandar Utama’s BU12 also recorded a steep rise of 33.93% from a year ago. The average price of the property type in this area was RM750,000 compared with RM560,000 the previous year.

Soo says a possible reason this area still garners interest is the low number of property launches generally, making the secondary market more attractive. Moreover, Bandar Utama products are in demand.

Several areas maintained their values in 1Q, such as TTDI’s Jalan Athinahapan and Jalan Datuk Sulaiman; Bandar Utama’s BU1;  Bangsar Baru; USJ4 and 6; and Puchong Jaya. Bandar Sri Damansara’s SD7 showed 10% average growth to RM550,000 from RM500,000 the previous quarter.

Rents for 2-storey terraced houses, both y-o-y and q-o-q, have been stable.

In the high-rise residence sector, Bangsar’s Tivoli Villa recorded the highest annual price growth of 23.81% followed by another mature condo estate, TTDI’s Villa Flora, at 21.79%. The average price in Tivoli Villa was RM390,000 compared with RM315,000 a year ago while in Villa Flora, the average price was RM475,000 compared with RM390,000 the previous year.

Q-o-q, Bandar Sri Damansara’s Menara Damansara showed a 9.09% rise in prices to RM180,000 from RM165,000 the previous quarter, ahead of all other high-rises. The high-rises that did not show any growth are TTDI’s The Residence and The Plaza; Mont’Kiara’s Lanai Kiara; USJ’s Goodyear Court; Bangsar’s Cascadium; Sri Hartamas’ Plaza Damas (Mayfair); and KLCC’s Stonor Park. Rents, both y-o-y and q-o-q, for all high-rises were stable.

Soo says the rental market, especially for high-rises, is still soft due to a lack of foreign expatriate tenants.

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