Luxury Homes Selling Fast
by Eileen Ng, The New Strait Times Online 05-May-2007
KUALA LUMPUR: Are you looking for a luxury dream home? If you
are, then you’d better move fast as million-ringgit properties are
being snapped up like hot cakes.
However, if you are in the market for medium-range properties, you will
be spoilt for choice. Unlike the high-end properties, there is a glut
of houses in the RM200,000 to RM400,000 range.
The reason? Malaysia’s high-end residential properties are 30 per cent
cheaper than those of its regional neighbours.
Since last year, the nouveau riche comprising new millionaires,
corporate leaders and foreign investors, have been snapping up million-ringgit
homes in the Mont Kiara, Sri Hartamas and Kuala Lumpur City Centre
areas.
These properties are in demand because of their strategic location and
high investment returns of eight to 10 per cent annually.
About 60 per cent of the buyers are Malaysians, while the rest are
foreigners from the Middle East, South Korea, Japan and Singapore.
In contrast, oversupply of medium-range properties has caused a
stagnation in the market as many think there is no long-term value in
them.
Compounding the situation is the fact that buyers are taking time to
choose their dream homes due to the wide variety available.
Real Estate and Housing Developers’ Association (Rehda) president Ng
Seing Liang said the abolishment of Real Property Gains Tax (RPGT) from
April 1 had spurred interest in high-end homes.
"A recent survey by Rehda showed that enquiries on high-end properties
went up by 22 per cent after the RPGT was abolished."
He said the performance of middle-range properties was not encouraging
because of excess stock.
The stagnation was also caused by a lack of first-time buyers.
"A lot of young working adults cannot afford to buy anything above the
range of RM300,000," said Ng, who believes that sales would be
stimulated if the government were to set up a fund to help first-time
buyers.
Valuation firm Raine & Horne International Zaki + Partners Sdn Bhd
associate director James Tan said while Singapore and Shanghai sold
their high-end properties at RM3,500 to RM8,000 per sq ft, Malaysian
developers were pricing theirs at an average of only RM1,000 per sq ft.
"Due to this, loads of foreigners are picking up our million-ringgit
properties, especially those from the Middle East who are comfortable
here due to similar cultural and religious sensibilities."
He said the lacklustre performance of the medium-range properties had
even affected secondary sales and rentals, which had dropped by 10 per
cent.
SK Brothers Realty chief executive officer Charlie Chan said the
outstanding performance of high-end properties showed that the rich in
the country were getting richer.
"It is also an indication that the economy, especially the stock
market, is doing well."
Chan said the present scenario had confounded property experts who had
expected the high-end real estate bubble to burst.
"I don’t think the bubble is going to burst. We are experiencing strong
performance at the stock market, the economy is doing well and
commodity prices are high. In fact, this is just the beginning."
On the middle-range properties, Chan said many of the properties were
located at undesirable locations, making them difficult to sell.
He said there were also a lot of developers building houses in this
segment and this added to the problem.
"Buyers are also in no hurry to commit. They are shopping for the best
developer, bank rates and product before committing."
Property developer Mah Sing Group Bhd managing director Datuk Leong Hoy
Kum said location played an important role in determining the
desirability of a project.
Leong, whose company builds both medium- and high-end homes, said
buyers chose development projects that were centrally located or had
good accessibility.
Other factors include security, developer’s track record, product
finishing and concept.