With close to 2,600 high-end condominiums scheduled for completion in Kuala Lumpur this year, the outlook for the luxury condominium market in the capital city is expected to be challenging.
“Bank Negara is keeping a close eye on the mortgage loan market on concerns of rising household debt-to-gross domestic product levels and has issued new guidelines to further tighten lending with effect from Jan 1,” said property consultancy Knight Frank, in its Second Half 2011 Real Estate Highlights report.
“This will inevitably have a negative impact on this sector as demand turns cautious with further pressure expected on prices and rentals of high-end condominiums in selected locations and schemes.”
Concurring with the bearish outlook is DTZ Research. In its Property Times Kuala Lumpur fourth-quarter 2011 report, DTZ pointed out that the sizeable number of new condominiums entering the market about 5,004 units in 2012 and another 4,502 units in 2013 was expected to put downward pressure on the rental market, especially in the Kuala Lumpur city centre, as a majority of them are in this location.
“The rental market will continue to feel pressure from the significant new supply that will be completed in the next two years. In addition, the economic uncertainty and tightening of credit by banks will contribute to the cautious demand for luxury residential properties,” Property Times added.
The Knight Frank report said during the review period, prices and rentals of high-end condominiums in selected schemes in Kuala Lumpur and the city fringe continued to face downward pressures due the high number of existing supply and new completions as well as a weak leasing market emanating from low occupational demand from local residents and expatriates.
The projects that are scheduled for completion this year include Residensi Kia Peng, The Pearl @ KLCC (formerly known as Stonor 16), Crest Jalan Sultan Ismail, Setia Sky Residences Phase 1A (Boheme Tower), St Mary Residences, Verticas Residensi (Towers A, B and C), Suasana Bukit Ceylon, 9 Madge, Amarin Wickham, Gaya Bangsar, and Matahari Desa Sri Hartamas.
Recent upmarket condominium projects that have been launched included Verdana @ North Kiara (Phase 1), Icon Residence Mont’Kiara, Mirage Residence, Laman Ceylon, 188 Suites, St John Woods Residence, Rimbun Condominium (formerly known as Amphill Residence) and Platinum Suites Phase 1 of Platinum Victory Face project.
Other projects in the pipeline during the first half of this year include serviced apartments project KL Trillion, Royce Residence, SoHo units @ Arcoris Mont’ Kiara (formerly known as MK 20) and Damansara City 2 serviced apartments.
In the primary market, developers continued to offer attractive incentives such as rebates, discounts and a limited period of free maintenance fees to drive sales.
There was also a notable shift with more sales and leasing activities in the city fringe and suburban areas evident from several successful previews and launches of high-end condominiums at new benchmark prices commensurate with higher building specifications and improved level of facilities.