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Malaysia has seen eight transactions on the secondary market for landed residential properties over RM10 million in 2016. Yes, you read that right — over RM10 million.

This story first appeared in TheEdgeProperty.com pullout on June 30, 2017 and subsequently appeared on edgeprop.my. View source here.

According to the National Property Information Centre’s 10 Million Ringgit Property Deals of 2016 Report, these properties are located in Kuala Lumpur, Selangor and Penang.

Most of these expensive homes are located in KL — in the premium addresses of Bukit Tunku (or Kenny Hills), Ampang Hilir, Taman Duta and Bukit Bandaraya. Malaysians would recognise these areas as among the most exclusive addresses in the country for high-end landed homes.

According to Savills Malaysia Sdn Bhd chairman Datuk Christopher Boyd, these luxury neighbourhoods are “long-standing high-end neighbourhoods”, most prominently known for their expatriate communities.

“Ampang Hilir caters to the expats working at the International School of Kuala Lumpur (ISKL), diplomats and embassy staff, as well as high-net-worth individuals who had long ago bought plots and built their own standalone detached homes.

“Bukit Tunku doesn’t cater to the same crowd, but one similarity in the demographic of both is the local high-net-worth individuals who built their own bungalows there, as it was known as one of the premier addresses in town,” Boyd tells TheEdgeProperty.com.

Nawawi Tie Leung Real Estate Consultants Sdn Bhd managing director Eddy Wong concurs, saying that these established top-tier residential areas in KL will continue to be favoured for their prestige and central locations. The homes in these areas are also very spacious and sizeable to commensurate with their owners’ lifestyle.

Topping the list of RM10 million deals last year was a double-storey detached home in Kenny Hills or Bukit Tunku that was sold at a whopping RM22 million. The house sits on a 5,919 sq m (63,711 sq ft) freehold plot.

This was followed by a RM15 million 3-storey leasehold semi-detached house in Ampang Hilir with a land area of 1,100 sq m.

 

Beyond KL

Also attracting the affluent are houses in Tropicana Golf & Country Resort in Petaling Jaya, Selangor.

Last September, a 3-storey detached home on a 13,552 sq ft plot in the luxury residential enclave was transacted at RM10 million. The last time a property here made it to the RM10 million and above list was back in 2013 when a 3-storey detached home and a 2-storey detached home were sold for RM10.6 million and RM13.2 million, respectively.

The Tropicana Golf & Country Resort is a 625-acre township, anchored by the 380,000 sq ft Tropicana Clubhouse, with the 27-hole East and West championship golf courses adjacent to it.

Wong says the fact that the guarded-and-gated community is located within a golf resort makes it “very appealing” to wealthy homebuyers, aside from its accessibility to KL city centre.

“It is already one of the most desirable addresses in Klang Valley. However, if you were to compare it with Bukit Tunku or Taman Duta, Tropicana Golf & Country Resort offers a wider range of residences such as high-rise apartments and linked houses, which slightly dilutes its exclusivity,” he says.

Meanwhile, Boyd notes that Tropicana Golf & Country Resort capitalises on a lifestyle that offers a sense of escapism away from the hustle and bustle of city life.

“But this perhaps means it won’t be one of the most top-end [addresses] in the future although it has its own niche market.

“Similar developments like Gamuda Land’s Valencia also see good potential as high-end homes that are slightly more affordable than Taman Duta, Bukit Tunku and Ampang Hilir areas, due to their distance from the city and the seclusion factor,” he says.

 

Up, up, up in Penang

Beyond the Klang Valley, the northern state of Penang has also managed to make its way into the list with a double-storey detached home sitting on a 12,174 sq ft site in Seri Tanjung Pinang, which was sold at RM11.6 million last year.

The gated-and-guarded, well-landscaped and well-planned Seri Tanjung Pinang, which was developed by Eastern and Oriental Bhd in 2005, is the first township development in Penang with a marina and well-managed lifestyle mall to cater to the needs of its residents.

Moreover, it is located close to the famous Gurney Drive promenade and other prime shopping centres such as Gurney Plaza and Gurney Paragon.

“This area is perceived by the locals as one of the most liveable upmarket residential areas on Penang island. Overall, the landed home prices in this township appreciated at least 250% over the last 10 years,” says Henry Butcher Malaysia (Penang) Sdn Bhd asset valuation senior vice-president Shawn Ong.

He adds that a similar development to Seri Tanjung Pinang’s houses is the Water Villa of The Light Collection at The Light Waterfront development in Gelugor, Penang by IJM Land Bhd. The 3-storey water villas that come with a basement and a roof terrace carries a RM15 million price tag.

 

Luxury home market

According to Boyd, there is always a market for extremely high-end properties but these type of property transactions are never in high volume.

“A handful to a couple of dozen would be transacted each year, as only an elite few can afford these properties. These transactions should be considered separately from any speculation of the general residential property market and not likely to have much effect on the general public’s need for their own homes.

“This [luxury] market sector has been hit badly by the general downturn in the [property] market and the last two years have been tough. However, it has always been a cyclical market and will undoubtedly swing back,” Boyd says.

Wong is of the opinion that due to limited supply, the luxury homes segment will continue to enjoy constant demand due to the homes’ exclusivity and central locations. Hence, prices are expected to remain stable.

“Its market dynamics is quite different from the general residential property market, so any spillover effect will be limited,” he adds.

AS land costs in urban centres like Kuala Lumpur, Penang and Johor Bahru have risen significantly due to land scarcity, property developers have little choice but to go vertical and construct high-rise projects, be they residential, commercial or integrated developments.

This story first appeared in TheEdgeProperty.com pullout on March 31, 2017 and subsequently appeared on edgeprop.my. View source here.

“Within the context of the current soft market conditions where affordability is a key consideration for both house buyers and investors, developers have been focusing more on smaller-sized units where the unit price is less prohibitive,” Henry Butcher (M) Sdn Bhd COO Tang Chee Meng tells TheEdgeProperty.com.

A little bit further away from urban centres, new township developments still offer mainly landed homes, but within the city there has been a growing trend of small-sized units within high-rises, he says.

“Studio units, 1-bedroom and 2-bedroom units — we are seeing more of these within the development mix of high-rise residential projects located within urban centres.

“These high-rise homes cater to first-time homebuyers such as young singles and new couples as well as small families and elderly people whose children have all left the nest,” Tang adds.

According to data from the National Property Information Centre (Napic), the total existing supply of non-landed/high-rise residential units in the country, including low-cost flats, flats, apartments and condominiums, stood at 1,422,560 units as at the third quarter of 2016 (3Q2016), which translates to about 28.99% of the total existing residential stock of 4,906,722 units in the country.

If the existing supply was to include commercial-titled Small-office Home-office (SoHo) units and serviced apartments which totalled 89,359 units, the figure would rise to 1,511,919 units.

Looking ahead, the future supply of all non-landed residential properties (not including SoHos and serviced apartments) stands at 523,645 units as at 3Q2016 consisting of incoming supply of 306,554 units and planned supply of 217,091 units.

Meanwhile, the future supply of SoHos and serviced apartments are 269,507 units in total as at 3Q2016, and comprises incoming supply of 164,113 units and planned supply of 105,394 units.

Nawawi Tie Leung Property Consultants Sdn Bhd managing director Eddy Wong points out that the future supply of high-rise properties shows a significant number especially considering the prevailing weak market sentiment amid tight credit conditions.

“There will be a significant pressure on prices to adjust, though the actual impact on the various sub-markets would vary depending on locality, demographics and income levels,” he says.

Interestingly, based on the Malaysian House Price Index, the high-rise residential sub-sector has registered the second highest price growth among all residential property types from 2000 to 3Q2016, coming in next after detached houses.

According to data from TheEdgeProperty.com, over the years, the average transacted price of non-landed residential properties in KL had risen by RM176 or 49.72% to RM530 psf in 3Q2016, from RM354 in 1Q2012.

Similarly in Selangor, the average transacted price had shot to RM313 psf as at 3Q2016, RM113 or 56.5% higher than RM200 psf in 1Q2012. However, since 4Q2014, the average transacted price has seen no significant growth in Selangor.

Meanwhile, as at 3Q2016, the transaction volumes of non-landed residential properties in KL and Selangor had declined 68.33% and 70.07% respectively year-on-year, to 623 and 1,196 transactions, respectively.

Looking for good buys

Wong notes that the current slowdown in the property market is a good opportunity to look for good buys, as developers are more amenable to offering good incentives to move their inventory.

He advises investors to consider the key factors such as location, connectivity and accessibility to amenities when selecting what to buy.

“High-rise developments which are centrally located, with good connectivity and with easy access to amenities such as shopping, dining and entertainment, are very well sought-after. Meanwhile, the properties around the RM500,000 price point is currently very popular given the tight credit condition which places a constraint in the purchasing power among homebuyers,” he says.

Meanwhile, Tang says investors should look for areas that offer good growth potential. In the Klang Valley, such areas include Cheras, Kepong, Setapak, Wangsa Maju, Ampang, Bukit Jalil, Puchong, Old Klang Road and Bandar Malaysia, he offers.

These areas, he adds, are able to cater to the middle income group and will see vast improvements in infrastructure and accessibility especially areas along the mass rapid transit (MRT) lines as well as the recent light rail transit (LRT) extensions.

Based on his observations of new launches over the past year, Tang says smaller-sized units with built-ups of less than 1,000 sq ft and priced in the RM300,000 to RM600,000 price segment appear to have recorded the best sales in the Klang Valley.

Outlook

In the mid to longer term, the market for non-landed residential property in KL and Selangor looks positive, says Wong. He believes the market will be supported by its young demographic and the growth in household incomes.

Tang concurs. Although demand may be temporarily disrupted due to the slowdown in the economy, tighter credit availability and poorer consumer sentiments, the future will see high-rise residences becoming a more popular choice among developers and homebuyers.

“As land cost is not likely to go down, we foresee that high-rise residential properties will remain the affordable option for residents in the main urban centres,” Tang says, adding that this high-rise residential property development trend will also likely continue.

Tolerance and understanding ensure harmony

High-rise living is becoming a norm as increasingly more people are moving into high-rise homes nowadays.

However, when large groups of people live close together and share the same facilities, there may be some discomfort and strain due to the differences in age groups, cultures and behavioural preferences.

Hence, Nawawi Tie Leung Property Consultants Sdn Bhd managing director Eddy Wong says the residents should have tolerance and understanding plus civic-mindedness to ensure a happy and pleasant living experience for everyone in the community. This is especially crucial when dealing with disputes that may arise.

According to Henry Butcher (M) Sdn Bhd COO Tang Chee Meng, one way to overcome the challenges of living in high-rises is to outsource and employ a good and effective manager who is firm, fair and able to secure everyone’s cooperation while implementing rules and policies according to what has been set by the Joint Management Body or Management Corporation.

The common problems faced when staying in high-rises involve getting all residents to pay their maintenance fees on time; and residents who lack civic-consciousness and a sense of pride and ownership of the common facilities like the lifts and recreational equipment.

There could also be difficulties getting the full cooperation of residents in following house rules like keeping pets, parking of vehicles in the designated bays and adhering to security arrangements, Tang says.

Hence, he urges every owner to play their part in observing house rules and paying their maintenance fees and sinking fund in full and on time, otherwise the management and maintenance of the property will deteriorate due to lack of funds and in the long term this could have an adverse impact on the property’s value.

In addition, adequate and clear communication between the management team and the residents is also very important, he adds.