Cautious sentiment in KL high-end condo market

Against a backdrop of softening demand, a weak economy and cooling measures, market sentiment in the high-end condominium segment in Kuala Lumpur is expected to remain cautious, says Knight Frank Malaysia in its Real Estate Highlights 2H2015 report.

Meanwhile, competition in the rental market in KL and on the fringes of the city is likely to increase as new supply comes on stream. The competitive environment may push developers to defer their launches, scheduled for the first half of this year (1H2016), to a later date.

“The competitive high-end condo market is also driving developers to a greater level of product innovation and marketing strategies,” says Knight Frank.

According to the property consultant, the cumulative supply of high-end condos in KL stands at 42,749 units. A total of 3,139 units were completed in 2H2015. Of the new supply, 48% (1,508 units) is in Mont’Kiara/Sri Hartamas, 35.5% (1,113 units) is in KL city and 16.5% (518 units) in Ampang Hilir/U-Thant.

Among the notable completions during the period under review are Face Platinum Suites (Phase 1), Mirage Residences and Crest Sultan Ismail in KL city; Concerto and Verdana in North Kiara; and DC Residency in Damansara Heights. There was also Damai 8, A Residency D’Suria, 9Madge and Brunsfield Residences in Ampang Hilir/U-Thant.

Another 1,998 units are expected to be added to the existing stock in 1H2016, courtesy of seven new completions. The bulk will be located in KL city (1,591 units), followed by 160 and 118 units in KL Sentral and Mont’Kiara respectively. Among the projects are Pavilion Banyan Tree Signatures, The Ritz-Carlton Residences Kuala Lumpur, KL Trillion, The Residences at The St Regis Kuala Lumpur and Tower A of One Kiara.

Knight Frank notes that KL will continue to see the entry of branded residences as it moves towards becoming a world-class city by 2020. This is supported by major investments in its public transport system.

“The impending completions of Pavi­lion Banyan Tree Signatures, The Ritz-Carlton Residences Kuala Lumpur and The Residences at The St Regis Kuala Lumpur, leveraging international-class hotel brands, mark a new era of luxury living in KL,” says Knight Frank.

A flat performance

With potential buyers and investors continuing to take a wait-and-see approach, developers are offering buyers attractive packages to boost sales.

“There has been an increase in projects that offer leaseback arrangements and pool management programmes with guaranteed rental returns (GRR) … [This is] to boost sales and attract potential buyers and investors looking for long-term investment in terms of rental returns and potential capital appreciation,” says Knight Frank.

Meanwhile, ample choices and opportunities for sales and lettings await buyers and tenants looking for good buys and bargains.

“During the review period, asking prices and rents in most locations were generally flat,” says Knight Frank.

Condo/apartment transactions declined 6.3%, with 1,694 transactions in the third quarter of last year compared with 1,808 in the preceding quarter.

High-end condos in the small to mid-sized range (600 to 1,300 sq ft) in KL city — in selected schemes such as ViPod Residences, Marc Service Residence and Pavilion Residences — were sold for more than RM1,700 psf in 1H2015. Larger units (above 2,000 sq ft) in The Troika, Quadro Residences and ONE KL were going for between RM1,100 and RM1,300 psf.

“In the primary market, prices of luxury branded serviced residences range from RM2,000 to RM3,000 psf,” says Knight Frank.

Notable launches and previews

The latest branded residence to make its debut in KL is KSK Land Sdn Bhd’s YOO8 by Kempinski, located in the RM5.4 billion integrated 8 Conlay in the city centre. Tower A, which has 564 units with built-ups of 700 to 1,300 sq ft, was launched in November last year at a benchmark average price of RM3,200 psf. The 468-unit Tower B is scheduled to be launched in 1H2016.

Wing Tai Asia’s build-then-sell (BTS) project, Le Nouvel KLCC, has an indicative price of RM2,200 psf upwards. The luxury apartments have built-ups of 1,810 to 2,832 sq ft and are expected to be launched this year.

Agile Mont’Kiara, a development by China developer Agile Property Holdings Ltd and PJ Development Holdings Bhd, opened its 44-storey Tower H (171 units) for sale in October last year. The partially furnished units are priced between RM900 and RM950 psf on average.

Bina Puri Holdings Bhd has announced that all 357 units in its Opus KL Tower 2 will be equipped with Calvin Klein furniture and Gorenje Kitchen appliances. The units — 700 to 1,100 sq ft each — are priced from RM1,500 to RM1,600 psf.

KSL Group’s 18 Madge in Ampang Hilir/U-Thant features 48 units (2,234 to 4,207 sq ft) and two penthouses (13,913 sq ft and 14,803 sq ft). Prices start at RM2.7 million.

UDA Land Development Sdn Bhd unveiled Anggun Residences, located within walking distance of the Medan Tuanku monorail station, in October last year. It has 384 serviced apartments on top of a 3-storey retail podium. The units are priced from RM1,300 psf. - The Edge Property