Positive outlook for luxury condo market
Higher sales volume, new launches to drive segment
THE luxury, high-rise residential market in Malaysia is expected to see positive movements in terms of transactions this year, underpinned by increased sales volume, new property launches and successful completions.
Savills Malaysia group managing director Datuk Paul Khong says luxury apartments in good locations will still attract niche high-networth individuals and investors.
“This is especially if pricing, the product, its concept and location all match well,” he tells Starbizweek.
Khong notes that there are several luxury apartment projects that will be launched in the coming months.
“Paramount Group will be launching its luxury residential project, The Ashwood in Taman U-thant, Ampang. Pavillion Damansara Heights are also coming through with Phase 2 of its high-end condos above its mall.”
Additionally, Khong says Exsim Group has a few lineup of projects in the KL City area, including Kyliez Suites Phase 2 @ KLCC, Hugoz Suites Phase 2 @ KLCC and Branniganz Suites @ Bukit Bintang.
“There is also Times Square 2 by Berjaya Land Bhd, located adjacent to Berjaya Times Square, which will be launched in the first quarter of this year.”
Khong believes that prices of new luxury condominiums will continue to escalate, going forward.
“We expect base pricing to continue its escalation with the cost-push factor in construction costs in both material and labour.
“Other factors include the costs of doing business locally, the increase in service tax to 8% starting March 2024 for services in the real estate sector, as well as inflation and global uncertainties.”
Overall, Khong says he remains “cautiously optimistic” about the local luxury condo segment, emphasising that the sector shows plenty of promise, moving forward.
“Demand for the high-end condo market segment stems from high-net-worth individuals, high-income earners and also foreign investors buying into the local Malaysian market.
“The weaker ringgit will also make buying properties in Malaysia attractive for foreign investors.”
With the Malaysia My Second Home programme anticipated to be more favourable for potential investors in 2024, Khong adds that this will also help to lure foreigners into the country.
“We are seeing some Chinese investors looking around for properties to invest in the country’s best and premium locations.
“The Rm170bil in investment commitments from China, coupled with the celebration of the 50th anniversary of bilateral ties between China and Malaysia, plus its visa-free entry, will have a positive impact.”
Fuelled by government support, particularly in light of the Budget 2024 announcements and strengthened collaboration between developers and banks to enhance home ownership, Knight Frank, in its Real Estate Highlights report for the second half of 2023, is also cautiously optimistic on the outlook of the luxury condo sector.
“The cautious optimistic outlook can be attributed, in part, to the easing of inflationary pressures and favourable improvements in the labour market, resulting in higher demand for housing.
“Nevertheless, with the overnight policy rate maintaining at 3%, there is some strain on home buyers, as the elevated borrowing costs are likely to influence their purchasing decisions.”
Overall, Knight Frank says the average transacted prices of high-end condominiums and serviced apartments in Kuala Lumpur were marginally higher (circa 1.9%) in the second half of 2023, when compared to the first half of last year.
“In terms of average asking rentals, most of the localities depicted a flattish or upward trend, except for Mont Kiara, which recorded a slight decline.
“Moving forward, with more new completions entering the market with better features and amenities, it is expected that the rental market will continue to strive in a positive direction.”
According to Knight Frank, transacted prices of high-end condominiums and serviced apartments in Kuala Lumpur averaged at between RM830 to RM890 per sq ft in the second half of 2023.
Meanwhile, average asking rentals ranged between RM2 per sq ft and RM5.80 per sq ft during the same period.
Commenting on the luxury condo market in Johor, KGV International Property Consultants executive director Samuel Tan says prices of these units have increased in the first quarter of 2024.
“It is due to a congruence of several factors. These include the progress of the Johor Baru–singapore Rapid Transit System (RTS) at more than 60%, which is expected to be operational by the end of 2026.
“This project has stirred lots of interest for properties near the RTS station. Prices used to hover around RM600 to RM900 per sq ft. New projects are being marketed from RM1,000 to RM1,500 per sq ft. This is precipitated by the increased rentals.”
Additionally, Tan says the agreement by the Malaysian and Singaporean governments to establish the Special Economic Zone in Johor Baru and the Special Financial Zone in Forest City will fuel further excitement.
“Many businesses and investors are expected to flock to Johor Baru due to the lower cost of living, cheaper properties and slower pace of life.”
Tan says he expects the total year-on-year transaction volume and value of luxury apartments in Johor Baru to increase in 2024.
“Price increases will depend on the location and property types, among other factors.
“Serviced apartments will continue to move northwards not just because of the hype but because of the increasing land, building, labour and compliance costs. Of course, increased demand will also generate higher prices.”
“Demand for the high-end condo market segment stems from high-net-worth individuals, high-income earners and also foreign investors buying into the local Malaysian market.” Datuk Paul Khong