Demand will lean towards landed properties

As the New Year rounds the corner and plans are made for the coming year, house buyers may find less variety in terms of geographical location and market segments. This is to be expected as the next two years are expected to be challenging, even for the most robust of property developers owing to the current global financial turmoil.

What is certain today is that developers are rather uncertain about how things will pan out and prefer to take a wait-and-see attitude.

The larger ones have already started their series of market studies and are in the midst of re-strategising and changing their product mix. Others are waiting to see what the big boys are going to do while they keep a low profile.

It is disconcerting, to say the least. Bracing for the worst, some developers have deferred their launches, particularly those offering high-rise condominiums as they tend to be rather speculative. Other developers and property consultants say landed properties will be more popular, in terms of both demand and price.

Says Rahim & Co managing director Robert Ang: “There will be a demand for landed properties. Their prices will hold up better.”

At Colliers, deputy managing director Lee Vun Tsir says landed properties in prime locations like Bangsar, Damansara Heights, Kenny Hills and Bukit Tunku will continue to be alluring.

“As security becomes an issue, gated and guarded projects will generate new interest among home buyers. We are seeing enquiries for these projects among the oil and gas boys.

“After all, there are not many of these gated and guarded developments; Duta Nusantara, Duta Tropika in Sri Hartamas, Flora Murni, Aman Kiara in Mont’Kiara and Seri Beringin and Idamansara in Damansara Heights,” says Lee.

Rentals at Seri Beringin are expected to be about RM12,000 and RM15,000 and Idamansara between RM17,000 and RM18,000.

Because Colliers is leaning towards higher-end projects – RM2mil and above – Lee declines to comment on mass housing.

“We have clients asking for fire-sale properties. We have not seen these yet, but we are seeing more lelong signs for Mont’Kiara condominiums,” he says.

Lee says 2009 will be an interesting year for the property market. If all the stimulus packages announced around the world works, just as our own RM7bil package, the market will turn around very fast. Prime development at the right price will always have buyers, especially today.

Many are waiting with cash, which is why cash is king today, but we will not see the dizzying prices of last year, says Lee.

There will be the YTLs buying from the Eng Lians, says Lee, referring to YTL’s purchase of a one-acre plot in Jalan Stonor from the Eng Lian group.

As for house buyers, Lee says they are unlikely to go wrong with landed properties or those with low density.

“Places like KLCC and Mont’Kiara are highly speculative. So be wise. The signs are there. One of which is developers giving 10:90 deals, pay 10% and the rest after the completion of the project. Or they may include interior decor in the price of the house.These are good deals, but always go for reputable developers in good locations. That means access.

“Developers who have sold between 70% and 80% of their projects are on their way home; they are safe. It is the developers with many units, with less than 20% sales, who may encounter problems,” he says.

Among the larger property companies, SP Setia Bhd says it will ride out the next two years fairly well.

“What is certain is demand has shrunk, competition is intense and every developer will have to find market share. Other developers are watching us, to see what steps we take, being one of the larger ones with a land-bank of over 4,000 acres in the Klang Valley, Penang and Johor,’’ group managing director and chief executive officer Tan Sri Liew Kee Sin.

“Developers in a single location with a single product will be in trouble. The KLCC vicinity and Mont’Kiara will be very speculative while Damansara Heights, Bangsar, Kenny Hills and Bukit Tunku will hold their ground. Taman Tun Dr Ismail will remain a comfortable area to live, while Bandar Utama and Subang Jaya will be congested,” he says.

Bandar Raya Developments Bhd (BRDB) chief executive officer Datuk Jagan Sabapathy says the company’s properties will hold their price. It is developing One Menerung, The Troika at KLCC and Capital Square.

Jagan declines to say how prices will go, saying only the company’s buyers have not deferred payments. About three-quarters of the group’s revenue for 2009 will come from the property division arising from unbilled sales of The Troika, One Menerung and CapSquare Office Tower 2.

“I have friends asking me if there are any fire-sales. I tell them there will be none, not in the type of properties we are offering. We have not seen any decline in the prices for The Troika and One Menerung. While we recognise that the prices of our developments are dependent on market conditions, both these projects occupy a premium space in the luxury property market,” says Jagan.

On the second phase of CapSquare Residences, he says this will be deferred due to the current economic situation and the weaker market sentiment.

“While the continuing uncertainty over the length and depth of the economic downturn makes accurate predictions impossible, BRDB has the financial flexibility to weather the current meltdown. We have not seen an erosion in our collections and we are well-supported by RM1bil in unbilled sales and RM400mil in value of unsold properties in prime locations,” Jagan says. - By THEAN LEE CHENG (The Star)

1 comment

December 21, 2008 at 4:20 PMewe lee

next year market demand will more towards smaller unit which is below 200K property as penang main activity is from factory. there will be price drop for those propery at 400K to 600K.