Luxury condo prices dive in KL

Posted by luxuryasiahome on February 19, 2009
PRICES of luxury condos in the Kuala Lumpur City Centre (KLCC) area have dived 15-20 per cent as the economic downturn bites and foreigners try to cash out for the best they can get, says a real estate consultant.
Malaysian buyers were the first to sign up for the high-end condos in 2004 during the onset of recovery after the 1998 Asian financial crisis, Rahim & Co managing director Robert Ang said on Monday. They bought at a half the price of foreigners who went into the market in 2006-07.
‘Most foreigners bought at appreciated levels, so they are flexible about asking prices,’ he said. ‘But Malaysians, having bought earlier, are getting returns of 7-8 per cent and have no reason to sell unless they are cash-strapped. Also, they can refinance as the cost of funds has decreased.’ The only bright spot is that so far there have been no forced or fire-sales, Mr Ang told a news conference.
Rahim & Co’s executive chairman Abdul Rahim Rahman said he believed prices in the KLCC area would have softened anyway because of oversupply.
An estimated 1,760 units will be completed in the area this year, adding to 1,200 in the past two years.
Mr Ang said: ‘The apartments are not well occupied, so there has been some strain on rental yields and returns, which at the end of last year were 4-5 per cent.’
At the peak, top KLCC apartments were edging towards RM3,000 (S$1,254) per sq ft. But most projects are now selling at RM1,000 plus psf in the resale market, though developers are still asking about RM2,000 psf for premium units under construction, such as at OneKL.
It is highly unlikely that better times are around the corner. Sellers and buyers know the market has yet to feel the full impact of the global economic slide.
Just on Monday, Malaysia’s Deputy Prime Minister Najib Razak said the government’s 2009 economic growth target of 3.5 per cent may not be achieved, as exports and production figures collapse.
Although property players claim the overall market is still liquid, fear of the unknown has led to a near-collapse in demand for luxury condos.
Mr Ang said Rahim has advised clients to defer new launches of luxury developments to the second half or third quarter. On the brighter side, landed property prices have held up so far, he said.
In the past three years, many foreigners went into Kuala Lumpur real estate, buying as many as a third of the units in some KLCC projects. They were attracted by the weak ringgit and a market that had not run up as much as others.
But now, some of them may be about to pay the price. After Malaysia’s last recession in 1998 the property market took about four years to recover. Mr Abdul Rahim reckons things could move faster this time - if the economic decline can be swiftly arrested.
Source : Business Times - 19 Feb 2009