Saturday, April 26, 2008

Has the KL prime property market slowed down?

Several estate agents I had a chat with recently revealed that the property market has indeed slowed down. Most units transacted in the subsale market were apparently done more than 10% below "market rate". How do we determine what is the actual market rate? Take Marc Residence for example. It was launched at around RM600psf and in the height of the speculative market reached RM1500psf. A few estate agents handling Marc has told me that nobody has been able to sell at this "market rate" in these past few months. There are in fact some buyers out there but they are investors looking for cheap sale.

The tenancy market has of course followed this trend. Despite their prime locations, Marc and almost neighbour, Parkview has many vacant units. Aside from realtors' feedbacks, my measurement technique is normally taken at night between 9pm to 10pm with a glance up the building to see how many units have their lights on. If less than 50%, it's not very encouraging. This is certainly true at the moment. Another test would be the classifieds section. The most active one being the Star classifieds (http://classifieds.thestar.com.my/). We've been seeing a long list of Parkviews and Marc Residences in the listings. True enough that these 2 properties have always attracted a very long list in the classifieds. Previously because it was lucrative. Agents told me they were selling like hotcakes and sometimes 5 or 6 agencies' posting represent a single owner. However, one can't help but notice that lately the same listing been there weeks on end without any buyers.

One agent revealed that his one week posting in the classifieds for Seri Bukit Ceylon only attracted 2 calls. Both from co-agents who represent buyers on the lookout for a cheap sale.

Now for the great economic debate. Are we or are we not in recession? Is this 1997? Recession or no recession, my experience is that this is indeed a very difficult period for us property investors. Difficult because, with the ever dwindling pool of buyers, it takes us longer to sell and we are facing more competition, hence lower premium. Without contradicting myself earlier, it is also more difficult for us to buy because interest rates are still low, most owners are still holding on to their high premium. So while some transacted units saw huge discounts, in fact not many units are beign transacted at the moment. I hold the personal opinion that it is a bad idea to hold cash at the moment with inflation on the rise and interest rates so low. So what to do with the cash? And to buy in to any prime property at a bargain is difficult at this stage for the reason mentioned.

3 comments:

lars.wil said...

Interesting what you write. and something that all condo buyers now is probably considering. occupancy is still something like 90% in KLCC but there are few condos in the market. it is nothing compared to the supply that is coming. buying MARC at 1500 psf is probably a mistake at this time.

Anonymous said...

With high number of units coming onstream in the next few years and current challenges to world markets (which many say that Malaysia will not be hit), do you think if this slide will bottom out soon?

sinleong said...

never mind what i think... most articles i read about the economy all say the worst is yet to come. of course don't believe all the rosy pictures painted by the BN controlled media..