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Thursday April 25, 2013 MYT 12:00:00 AM
Friday April 26, 2013 MYT 12:44:36 AM
by liz lee
KUALA LUMPUR: Luxury condominiums and even landed property may face a 5%-10% price correction this year in response to a slower occupancy rate last year.
This does not, however, mean that property prices would start to tumble as overall mass market housing would be able to sustain slower growth.
According to real estate services provider CH William Talhar & Wong managing director Foo Gee Jen, the occupancy rate among luxury condominiums in Kuala Lumpur registered only 67% last year, which was “not a very healthy sign”.
That said, the property market outlook for 2013 is flattish, with fair opportunities in prime locations and more focus on areas near public transport lines and affordable housing.
“The occupancy rate has been under pressure, but sales has been surprisingly strong,” Foo pointed out after releasing the Property Market Report 2013.
“If the scenario continues, then the occupancy rate could fall as low as 60%,” he said, noting that the high-end category now encompassed condominiums above RM700,000 in prime locations.
With the lower occupancy being the issue, Foo believes the market needs to re-evaluate its holding power, “How long can you hold an empty building without tenants?”
As for mid-range residential properties, which Foo said the price was hovering around RM400,000 now, there would not be any price correction as “the demand for these is always there”.
Separately, prices in the secondary property market would remain in tandem with the primary market. “The secondary market always benchmarks its prices against the new property within the locality,” he said.
Foo believes that the total transaction value for the sector would be lower, as there would be more affordable housing entering the market, although volume is unlikely to drop.
“I believe this year would be the reverse of last year, when transaction value was higher, because the market was focused on developing properties worth RM500,000 and above in 2011 and 2012,” he said.
Going forward, Foo saw the emergence of new high-density residential developments along expanding public transport lines, such as the MRT, LRT or new highways.
“The market for affordable houses is those who rely on public transport, (therefore) developers won't go into such housing projects unless the area is supported by infrastructure,” he said, noting that these projects need to be government-driven.
“The Government would need to give the green light to build high density, only then would it be viable for the developers.”
Following the same line of thought, Foo opined that low-cost housing should not be the main focus in property development as the country moves towards a high-income nation status.
“I think we should move away from building boxy houses as we move towards becoming a high-income nation,” he said.
As for office buildings, Foo said there would likely be an oversupply in the Klang Valley with upcoming mega projects, and the vacancy rate could go up a further 2.5% from 14% in 2012.
He believes rental would be under pressure on landlords competing for tenants who may prefer to pay only slightly higher rent at newer buildings with facilities.
“Old building owners would suffer more and many landlords are prepared to negotiate early with current tenants to lock in their tenancy instead of waiting for the tenancy to expire,” he said, adding that these landowners needed to upgrade their facilities, bring in retail components like upmarket cafes or find a niche market to appeal to.
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News, Business, Business, Property market 2013 outlook, price correction, luxury condominiums, foo gee jen, williams talhar & wong
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