Another article in The Edge Malaysia which came out on 27 March 2011:

Property values along MRT line to appreciate

The value of houses located along the proposed MRT line, like those in Taman Tun Dr Ismail (TTDI) and Bandar Utama, are expected to appreciate. CB Richard Ellis (CBRE) Malaysia managing director Allan Soo says the house prices will rise quickly but it will also depend on how fast the MRT is built and how much traffic it carries.

“If the MRT makes life easier, I would rather take it than drive. The line is one of the better ones I’ve seen as it stretches from Sungai Buloh to Jalan Bukit Bintang to Cheras,” he says when presenting The Edge/CBRE Klang Valley Housing Property Monitor for 4Q2010.

Data for the last quarter of 2010 showed growth in property prices in almost all areas surveyed. However, the data collected and the word on the street were markedly different. “It is a surprise, to be honest,” says Allan Soo, in presenting the monitor. “The fourth quarter is usually quieter; even the agents say it is so. The data is a surprise to us. It doesn’t tally with what we know.”

Nevertheless, the positive growth is welcomed as 2011 gets underway. However, several areas showed a drop or low growth, such as 2-storey terraced houses in Jalan Datuk Sulaiman in Taman Tun Dr Ismail, which dropped 20.51% for the quarter. Soo believes that the area is facing stiff competition from surrounding areas that are guarded. “Security concerns and issues may have caused some areas in Taman Tun Dr Ismail to lose their flavour compared with guarded communities,” he says.

Two other areas that recorded low or zero growth are on the high-rise list. The first is TTDI’s The Plaza, which recorded 0.74% growth. Soo believes this could be due to the positioning of the condominium, which means some units have better views than the others.

The second is Lanai Kiara in Mont’Kiara, which experienced zero growth in the quarter. Soo says competition is drawing buyers away from Lanai Kiara due to its age — there are newer condominiums in the vicinity to choose from.

On a positive note, the 1-storey terraced houses in the monitor showed positive gains compared with the year before. Streaking to the top of the list are houses in TTDI’s Burhanuddin Helmi. The 1-storey terraced houses in the Burhanuddin Helmi area showed positive gains due to better design and location.

“TTDI is still seen as a good location and the 1-storey terraced houses are the only things to buy if you missed out on the 2-storey homes,” Soo says. “The good performance of the Burhanuddin Helmi area is due to its better design and infrastructure.”

As for 2-storey terraced houses, all of those in the monitor showed strong growth, with houses in Bandar Sri Damansara SD10 surging 39.47% in 4Q. Bandar Utama’s BU1 homes were next, growing 32.73%.

Some older high-rises, such as Bangsar’s Tivoli Villas (+19.35%), TTDI’s Kiara Park (+15.56%) and Villa Flora (+15.38%), also outshone their younger competitors.

The growth in Tivoli Villas, Bangsar, is due to limited supply in the area and a strong tenancy market. “Bangsar and Damansara Heights do not have any new supply, with the exception of One Menerung. As a result, the tenancy market is still very established and strong in comparison with others,” Soo says. “Moreover, the high-rise market in Bangsar and Damansara Heights is stable. The secondary market grows and allows older units, like those in Tivoli Villa, to go up in price. This doesn’t happen in other places.”

As for the good performance of TTDI’s Kiara Park and Villa Flora, Soo says their large land size and good location and designs trumped the competition.

In summary, all areas and property types showed some growth. Soo believes 1Q2011 will be quiet. “This quarter will be flat but things will improve from the next quarter onwards,” he says.

As much as I would like to see property prices level off a bit, I am pretty sure property prices will not drop. Developers, are pretty savy nowadays - and most of them are cash rich from all the profits they accumulated over the past years. Some may put off new projects if times are bad rather than sell at lower prices. For 2nd hand houses, you might have some people with financial problems who are willing to let go at cheaper prices. But generally, now, the economy is good, people can still make monthly payments. They will hold on as long as possible - even eat maggie mee for lunch and dinner - rather than sell at a loss. If the economy tanks, govt collapse, developers will simply stop launching projects or setup overseas projects. But house owners may foreclosed and sell at a lost, but on the other hand, you might also think twice about buying even at depressed prices, because you worry whether the economy can recover, etc. So conclusion? Look for pre-owned houses via auction or adverts, and try to get bargains. Be prepared to look at property outside "prime areas" or even the Klang Valley. Be a contrarian, seek out jewels which maybe hidden under a pile of s**t!

This post has been edited by tigana: Apr 9 2011, 08:48 AM

Another 2 optimistic views on property market:

Property market to continue strong growth, Apr 9, 2011


No reduction in property launches, Apr 9, 2011

New condos / Service apts seems to many already, be cautious in 2014..

most also drop other areas lo.... i guess prime and major places wont be affected much rite??

Taman / Landed property which normally occupying big areas, "location" effect is very significant, i.e Bangsar is prime, Sri Hartamas is after that, followed by Bdr Utama, next is Kota / Sunway Damansara, Subang Bestrai, Sg Buloh etc etc, we cannot challenge the fact that they are different degree of "PRIME",
The problem with high rise like condo or service apt, MK for instance, I dun see any different in location among the condos, each block occupy small plot of land, the density is so high in bout 250 acres of land, if I can find another piece of 250 acres land nearby, I can make another MK, Solaris is like this, alreday eating into MK's mkt share, some tenants have moved out fr MK to Solaris.
Unlike landed property, Condo can be easily replaced, that is the dangerous part

Going up, down or sideways?

Is there a softening in the condominium market? Some locations seem to be doing better than others while others are not doing as well as before.

ABOUT two to three weeks ago, a developer promoted a friend-bring-friend sale, whereby if a friend were to buy a condominium unit, the introducer will get a small reward. That project, located in a desirable location, was launched last year, amid much fanfare.

In another project, a developer is offering a 20% rebate. This enables buyers to pay 10%, enjoy a 20% discount off the purchase price and get a 70% loan. This 30:70 ratio satisfies Bank Negara’s ruling (announced last November) which requires buyers of third and subsequent residential properties to fork out a 30% down payment.

In another part of Kuala Lumpur, a developer launched a condominium and had 80% sales on the first day, prompting the company to open up its second block just a few days after the launch of the first block.

At the same time, analysts are reporting that there will be a re-rating of property prices and that prices will go up. If their judgement call is correct, why are developers coming up with innovative schemes in order to sell their high-rise condominiums while other projects are selling like hot cakes?

Says SK Brothers Realty Sdn Bhd general manager Chan Ai Cheng: “The term ‘softening property prices’ is selective, it depends on location, type of properties and pricing. That 30:70 ruling by Bank Negara has not affected the market where buyers buy to stay, but it has affected those who are buying for speculation, or buy in order to flip it after it is completed.”

Chan says that ruling has been very well-implemented because most of her buyers now are those who buy in order to stay, and that 30% downpayment is not an issue with them.

“Most of our buyers are serious buyers, they buy to occupy and when you buy to stay, that 30% down payment is not an issue. It is only when you are buying to invest, or to speculate that you think many times before forking out that 30% money up front,” Chan says.
Mont’Kiara, predominantly an investor proposition, is facing a high rate of vacancy.

Much of SK Brothers’ work involves helping developers to market their projects.

Like S K Brothers, Reapfield is also seeking good sales from their negotiators. Senior vice-president Gerard Kho says the fact that the company increased its negotiators from 700 last year to 800 this year testifies that the market is good.

Unlike S K Brothers who help developers to market their projects, Reapfield’s sales are from the domestic, secondary market.

“When Bank Negara announced that ruling, we were concerned but our agents told us not to worry, that developers and buyers will work around it and today, that is what we are seeing. Overall, the market is adjusting to it, and a rebate is one of the ways to do it,” he says.

Nevertheless, there are certain things to note in the condominium market, excluding the KLCC market because that market is different, a real estate professional says.

“Condominium prices are not the only things to watch out for, although that is one of them. The rate of rental and its rate of increase or decrease says a lot about a location,” he says.

Mont’Kiara, predominantly an investor proposition, is facing a high rate of vacancy. “You can see that when you go by that area at night. Although the “how many units are lit up” principle may not be entirely accurate, it provides a good gauge of how popular a condominium project is.

“The next thing to look out for is rental rates – are they sliding? We are seeing that happening here in Mont’Kiara. Investors are accepting a lower rate of returns, of about 4% compared with 7% to 8%. Will it go down to 2.5%. I hope not, but how much further will investors go?”

He says these are signs of a market going down. Right now, because it is location-specific, there is not much concern. The company he works for is nevertheless, keeping tabs on that market. Mont’Kiara, on average, is priced about about RM600 to RM650 per sq ft today, although some may be launched at about RM800 per sq ft.

While Mont’Kiara offers mostly high-end condominium units, over at Damansara Perdana, the situation is slightly different. Prices are lower at Damansara Perdana and because of this, it enjoys a bigger market with both owner-occupiers and tenants. Because of its proximity to good amenities, it has a good rental market with a 430 sq ft studio unit at Ritz Perdana being rented out for RM1,200 to RM1,300. The older blocks in Perdana Exclusive (two rooms with 860 sq ft built-up area) are rented out for RM1,400 to RM1,500.

“The studio is doing better in both the rental and in the for-sale market,” he says.

In the event there is a softening, the condomininium market will be affected first, he says. Over at the KLCC market, there was much euphoria there and prices just escalated. Today, although prices have come down, that location seems to be holding well.

“The KLCC condominium market offers a different product and it is a market that does not follow the trend,” says Reapfield’s Kho.

RAM Rating Services Bhd head of real estate and construction ratings Shahina Azura Halip says demand for residential properties will remain healthy. This is supported by domestic economic growth, healthy demographics with 40% of the population aged between 20 and 44 years and 37% below the age of 20, rural-urban migration (urbanites as a percentage of the total population in Malaysia increased from 68% in 2005 to 71% in 2009) and low unemployment rates (less than 4% between 2006 and 2010).

“The high-end condominium market is envisaged to be more challenging given the substantial incoming supply. In Kuala Lumpur, where the bulk of such properties are located, the inventory of high-end condominiums summed up to almost 31,000 units as at the end of the third quarter of last year. This is projected to be joined by over 7,000 units in the next five quarters. This is expected to cap the potential upside for the prices of these high-end abodes.

“The demand and supply dynamics vary according to location. The outlook on the broad sector may not necessarily translate into similar views on different locales. Areas such as Mont’Kiara and KL central business district are facing huge incoming supply, which probably explain the incentives that may be offered to push sales for certain developments. According to statistics from Ho Chin Soon, the incoming supplies in these two areas are expected to increase by a respective 24% and 25% between 2010 and 2012.

“Prices of high-end units in these areas had fallen in 2009 and had only shown slight increase in the second half of last year. Dampened by the supply situation, rental rates for high-end condominiums in these areas have also been reportedly declining in the last few years.

“We think they are unlikely to recover this year due to the large incoming supply. Rental rates for luxury condominiums in KLCC, for example, have fallen from about RM5 per sq ft in 2007 to around RM4 per sq ft in the third quarter of last year,” Shahina says.

http://biz.thestar.com.my/news/story.asp?f...76&sec=business

Property prices are affected by inflation indirectly, as long as inflation is +ve, property prices will go up eventually even if the demand is slow. With the exception of a few places (Bukit Beruntung) most other places shows increases in prices. If I am to plot a chart showing property prices psf over 30 years, the graphs will show up all the way.

The main ingredients for cooking up a property are labour, steel and earth materials (cement, wood, etc). Earth materials are affected one way or another by oil prices. So we have earth materials and steel prices going up (inflation) which eventually will push up developers cost. The chain effect will reach consumers (home buyers) one way or another.

Another is population growth, it will create increase demand for properties and increase demand usually push up prices. Klang Valley is seeing tremendous population growth due to urbanization that is why almost all locations around Klang Valley experience rapid property price appreciation over these 2-3 years. Don't hope it will go down soon. My guess is it will continue to stay high and appreciates over time.

IMO, if you are buying for staying, it is always the best to buy as early as you can afford it. For investment or profit, location is important (I have seen some shit developers building shit quality properties at good location still manage to sell out and the properties continue to be in high demand).

Factors that will cause property prices to depreciate: war, calamity and shrinking population (not in my lifetime). I don't see any of these factors happening anytime soon.

Is this absolute factor?

We have seen 60% drops of housing prices in the states, but neither these were true..

Not absolute. But what happens in the state is a different case which cannot be applied locally unless our banking system change.

US property theory cannot be applied in local mkt.

Why?

bascially although ppl here always say our country this no good, that also not good compared with other countries
but in their opinion, our property outlook is still the best
whatever happens to other countries will not happen here
the other countries shud learn from us

+1!
Just to add a few comments,
1. I quote Property Guru Gavin's view, in most of the developed cities (countries), if you study their formation of the city, it is almost in circle shape, for instance take Shanghai most centralised spot as a LCG point, every KM in radius away fr the red spot will hv different in land value, the further away fr the center point, the lower the land value, regardless North South East West. But in Malaysia, we hv land used problem, Malay Reserved land will forever "under developed" even it is nest to KLCC or MK (if the land is forever sold to BUMI only)
2. Race issue is always a sensitive topic in this Bolehland, we dun talk bout politic or gomen policies, do you notice that those "Wong" township are majority occupied by Chinese (>80%)? Wat make Penang better than others states in the last 50 years?
3. We dun hv an effective transportation system like in Singapore, London or Hong Kong, if you follow the American Robert Kiyosaki teaching, I will say sure jialat , this guy dun encourage investor to take loan to buy car or house, if possible take public transport (dun buy car), rent a room, do a lot of investments, make money then buy with cash, his teaching is Cash is KING, I wouldn't say his theory is wrong, if you apply it in Singapore, HK and Japan, it is correct, but in Malaysia, do you want to take public transport? If an insurance agent take public transport to do business, he will definitely earn much much lesser
4. Almost all the foreign property investment theory mentioning "Location, location, location" - Golden Rule in the world, but IMHO, I dun agree, if I were to invest property in Malaysia, my priority is "Developer, Developer, Developer" then "Chinese, Chinese, Chinese" followed by "Location, Location, Location" DPC, Setia Eco Park, Sierramas, Tropicana are proven of the developer's effort, these are not prime areas at the beginning of the development.
5. Foreign teaching will encourage investor to invest in area where hv gd infrastructures, it is absolutely correct but not really in Bolehland, if one buta-buta follow, they will end up investing in Putrajaya (has the best infrastructure in Malaysia) and not Puchong, the result you knowlah
Disclaimer : I am not racist or against any race, the price show in that trend, wat to do?
my 2 bakuli

This post has been edited by UFO-ET: Apr 10 2011, 12:23 PM

I tell you, this is 200% true!!! Your observation is very sharp!

yes, 1000% true.

also in oversea, if a prop price drop, it is always related to population shrink as the township's economy or manufaturing activities loss competition to Asia eg China.
but u dun see price drop in CBD area. the report is always generalized the whole US or UK. like in msia, govt said KL price oni increase 5-6% in last year.

The US is different, because their banks lend money to a lot of people with poor ability to pay back loans. They kept hoping property prices will keep going up. The unemployment reached 10% and so a lot of people cannot pay back loans. In the end a lot of their banks needed bail outs from the government. A lot of properties foreclosed. Imagine - a lot of house values became less than the loan amount.

I read a lot of foreigners , including the Aussies, Chinese, etc are buying into US properties. Not because they hope the values will appreciate but because the rental yields are very good (and also the US dollar has depreciated agaisnt a lot of currencies).

In Malaysia, I believe things are different because, we learned from the last Asian financial crisis in the 1990's. The local banks are very prudent and most people in Malaysia are as well (so far). Bank Negara has an excellent governor - Dr Zeti.

LOL.. i went for vacation.. yesterday baru balik..
omg ! 2 week up 10k.. i hear dou also scare =.=
we must trust bolehland..
but still.. i'm going to wait.. >.<

they start to kenot tahan edi.. once their unit is finish build.. they will have to start pay the monthly installment.. see how many they grab during launching time.. if 5.. then jialat liao they pay the monthly installment..

we're saving up now luh.. keeping our bullet.. wait it crash then we shoot
what do u think we're doing now ?? while the props skyrocketing.. we're SAVING now lehh.. =.=

oh oh.. yeah.. i'll support those props that are more than 5 years old... support !! support BN !! opps..

by what i've read from all ur post..
i dun think u hope the price will come down by heart

WB CKHong haha. plenty to read eh. both sides have good points. in the end its whether u found a sucker to sell cheap/buy expensive.
if you are the sucker then u got no one to blame

welcome back
i told u want safe for property?
still go for vacation hehehe?