Monday January 28, 2013

Brisk transactions for property with deals at RM106bil for Jan-Sept last year


The residential sub-segment accounted for 63.7% of total property market transactions for the first nine months of 2012. The residential sub-segment accounted for 63.7% of total property market transactions for the first nine months of 2012.

PEALING JAYA: Despite the property sector taking a breather last year, total property transactions amounted to RM106bil for the first three quarters of the year compared to RM103bil for the same period in 2011.

This represents an increase of 2.9%, according to Property Services and Valuation Department deputy director-general (technical) Faizan Abdul Rahman.

Faizan was officiating at last week's 6th Malaysian Property Summit 2013 organised by the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector.

Faizan said the residential sub-segment accounted for 63.7% of total property market transactions for the first nine months of 2012. This represents a marginal increase of 1.3% over the same period in 2011.

In terms of value, residential transactions amounted to RM41bil of the RM106bil worth of property transactions generated, or 38% of transaction value.

This compares with the RM45bil generated by the residential sub-segment in 2011, or 45% of total property transactions worth RM103bil.

On the outlook for this year, Faizan said “the increase in price (for this year) will not be as high as in previous years. Prices will moderate.”

A couple of participants raised concerns on the increasing prices in Johor, with high-rise projects hovering around the RM1,000-per-sq-ft mark. Encorp Marina Puteri Harbour by Encorp Bhd is priced from RM625,000 to RM2.3mil a unit, or from RM915 per sq ft.

Sky 88 luxury serviced apartment located along Johor Baru's Jalan Dato Abdullah Tahir, at 55 storeys, will be the tallest building in Johor. Developed by SP Setia Bhd, its prices range from RM750 per sq ft to over RM1,000 per sq ft for units facing Singapore.

They raised concerns that Singapore's measures to curb property prices might result in more purchases from those residing in the city state. While Johor property prices are hitting new levels on a per sq ft basis, they are still priced considerably lower than Singapore's.

Still on the overall residential sub-segment, property company Raine & Horne associate director James Tan Keen Meng highlighted the substantial number of serviced apartments, which are built on commercial land titles, expected to enter the market.

“According to the National Property Information Centre reports, there are an existing 32,324 units of serviced apartments today. In two to three years, another 29,000 units will be entering the market,” he said, adding that the sheer numbers were a concern.

On property prices progressing to more realistic levels, Tan said “unless there is a double-digit growth in interest rates, I don't see any reduction in property prices.” This, he said, was unlikely considering the world economic situation.

On the retail sub-sector, Henry Butcher Retail managing director Tan Hai Hsin said in his presentation that at least seven more shopping centres would be added to the Klang Valley's current 210, bringing the number to 217.

The seven new shopping centres would add another two million sq ft of space, equivalent to 26 football fields, to the current 54.8 million sq ft, equivalent to 713 football fields.

He expects the retail sector to remain healthy because people are still spending and it is increasingly getting “difficult to predict the future anymore.”

“Malaysians ... may be worried but we have been worrying for about 10 years. Our economy has not recovered from the 1998 crisis, but we are not in recession either.”

He said the world economy would influence the local retail sector, pointing out that Singapore was almost in recession while Japan was still in recession.

“We have been fortunate that the oil and gas sector has been supporting the economy,” he said.

Despite the oversupply, some of these malls are reporting more than 90% occupancy. The Paradigm, located along Lebuhraya Damansara-Puchong, and Setia Mall in Shah Alam are two examples.

“It seems to be the case that the bigger the mall, the more successful it would be because people want to hang out there. So they do not mind spending one hour looking for a parking spot because they will be there for six hours,” said Tan.

On the purchases of commercial shop offices, Tan said investors perceived this sub-segment as providing good rental with the possibility of capital appreciation.

“But there are shop offices which have been vacant for many years. The location and the emergence of new projects may render some of the older ones less attractive,” he said.

Tan gave positive assessment of the commercial and retail scene in KL Sentral, Mid Valley and KL Eco City commercial projects, as all three would benefit from the success of each other.

He said the geographical template offered by the three locations was similar to Bukit Bintang, former Pudu Prison and Menara Warisan developments, where each leveraged on the other.

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