KL luxury condos losing lustre

Straits Times: Tue, Nov 22

KUALA LUMPUR: Five years ago, Ms Lynn Bakar bought a condominium unit in central Kuala Lumpur with a view of the Petronas Twin Towers, for RM400,000. But then another condo tower, Sky Residence, started rising up next to her Orion building, and would soon block her view. Three months ago, she sold the 1,260 sq ft fully furnished unit at close to RM600,000 (S$246,000). 'It wasn't easy to find a buyer who was willing to settle at my number,' she told The Straits Times, adding that she had hoped to get a higher price. But she may have got out just in time. After two years of prices jumping by around 30 per cent a year, property analysts say the KL luxury condominium market is softening because of a spate of condos all being completed within months of one another. Landed property prices, however, continue to rocket. Investors, including foreigners, pushed the prices of luxury condos in the KL City Centre (KLCC) area to more than RM2,000 per sq ft (psf) in 2007. But in 2009, prices fell to between RM1,000 and RM1,500 psf, amid the global economic crisis, before confidence in Malaysia's economy started picking up and developers began launching projects again. Now, the area around the Twin Towers is bristling with luxury high-rise developments on offer. In the third quarter of this year alone, an additional 2,278 condo units were completed in KL, with two buildings in the city centre and eight projects in the expatriate enclave of Mont Kiara, according to property consultancy DTZ Research. Next year, another 5,384 condo units will come on the market, DTZ said in a recent report. Among the most prestigious openings last year was the shiny, glass-clad Troika, designed by British architects Foster and Partners, just off the KLCC Park. Condos there cost around RM1,800 psf. But industry insiders say sales have not been encouraging because of a huge supply in the KLCC area. Last month, Singapore's Banyan Tree launched Banyan Tree Residences, near the swish Pavilion shopping mall in Bukit Bintang, with prices averaging RM2,000 psf, making it among the highest priced in town. It comes just behind the super-luxe Binjai On The Park in KLCC, which sells for RM2,500 psf. Banyan Tree Residences is set to be completed in 2016. Analysts say sales are good due to its strong brand. But not all luxury condos are created equal. With more and more hitting the market, prices and rentals may stay soft to flat next year, amid a worsening European debt crisis and Malaysian government measures to curb speculation. 'Demand for luxury property is expected to turn cautious, given the greater economic uncertainties and a tightening of credit by the banks,' said DTZ. The Mont Kiara suburb, which now resembles some areas of Singapore in the density of its luxury high-rises, is feeling the effects. 'Rentals are not keeping pace with property prices and have started stagnating over the past six to nine months,' said property analyst Steve Tan of TA Research. With new buildings entering the market next year, Mont Kiara rentals, currently at about RM3.50 psf, could drop 'especially for larger units where demand has not kept pace with supply', said DTZ. Real estate agent Anthony Lim of Tower Realty said rentals in the KLCC and Mont Kiara areas have dropped as much as 30 per cent this year because of oversupply and foreigners cutting costs because of the European debt crisis. But he added that the rental rates in Bangsar were holding steady. Much depends on location, and public relations consultant Hazel Ho, 32 - who owns a unit in the Carlton condo in Sri Hartamas near Mont Kiara - said: 'I'm not too worried because my unit is located next to the new palace and a college. There is already an established catchment area.' To attract buyers, experts say, developers will need to offer more than the usual trimmings, for example, private lifts, clubhouse facilities or rooftop gardens. Tower Realty's Mr Lim said: 'If your condo has uniqueness, or is different from the others, you will stand out. If you are just the same as all the rest, then you will not do well.' Some developers are resorting to smaller units marketed as Soho, or small office, home office, to lure younger buyers and investors. 'Developers are now shifting their focus to affordable housing for next year as there is pent-up demand for this,' said TA Research's Mr Tan. [e-mail] DARE TO BE DIFFERENT 'If your condo has uniqueness, or is different from the others, you will stand out. If you are just the same as all the rest, then you will not do well.' Real estate agent Anthony Lim Source: The Straits Times