Landed Residential Market In Klang Valley Expected To Slowdown
During the recent Property Market Report 2015 launch, Foo Gee Jen, the managing director of CH Williams Talhar & Wong said that the Klang Valley market for landed residential is expected to experience a slowdown this year.
Despite the slowdown, Foo says that prices of landed residential properties would not decrease, especially for medium-priced houses as these type of houses have the highest demand.
The annual growth of landed property in the Klang Valley for 2015 is forecasted at 1.5%. This value is below the nation’s population growth of 2.8% in the Klang Valley. Hence, when the supply of landed property is lower than the demand, this puts more pressure on the pricing of such properties.
He also added that most new launches in budding areas like Semenyih are now launched in smaller quantities of 150 to 200 units in each phase instead of 500 to 1,000 units. Developers want to create more excitement to ensure that all units are sold out.
However, the volume of property sale will decrease, due to weak sentiments of buyers in terms of the Goods and Services tax (GST). Post-GST implementation, there will be a 3.5% to 4% increase in residential property prices, contributed by the increase in operational and labour costs.
Besides that, there has been a recent trend whereby high-rise residential properties are moving from condominiums to serviced residences, which made up 54% of high-rise residential property last year. The average occupancy rate remained stable last year at 69%. However, the completion of new developments in 2015 is expected to decrease the average occupancy rate and lower the rental yield. This in turn creates a more competitive rental market, which will be an advantage to tenants.
Commercial Property Sector
Meanwhile, in the office sector, Kuala Lumpur is expected to be the first major city to hit the 100 million-sq-ft mark by the end of 2015. Average prime rents for Grade A offices are also expected to stabilise as 4.83 million square feet of office space will be completed this year.
Retail malls will face stiff competition from new players and increased difficulties in maintaining occupancy rate. The average rental rate in prime retail malls remained healthy at RM22 per square feet in 2014, with an average occupancy rate at 85%.
Consumers are expected to be cautious on their purchases (especially big item purchases) after the implementation of GST. The retail sector will face many challenges due to the large supply of retail space. Hence, mall owners have to be innovative by bringing new experiences to their mall as consumers want a different experience each visit.