Following with the recession and an over-built property market, are we now witnessing a rental meltdown in the city center? Back in the 90s, we would normally measure investments by percentage yield, and the norm back then was a 10% yield would be average.
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Back then, the star investments were in places like 202DC, D'Mayang, Mayang Court, Menara Bukit Ceylon, Sri Raja Chulan etc.... some of these places are mentioned in this blog. Selling price back then for a 3 bedroom unit was around RM300,000 to RM350,000, and renting for between RM2500 to RM3000/month. At the peak of it, some even fetched up to RM6000 rent. Really great for these investors.
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These days, one is looking at spending around RM750psf to RM1000psf for prime properties in the city center. That means anything from RM250k for a studio to over RM1million for larger units. On the lower scale in KL city center, dominated by the likes of Maytower and Casa Mutiara, the average rent for a 450sf studio is about RM1200/month. That's hardly 6% returns.
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On the other end of the scale, we have those luxurious units in places like Stonor Park, K-Residence, Park Seven etc... these are peddling for well over RM3million and rental is about RM10k to RM15k/month. I would say these are bad investments since the cost of furnishing a unit for a tenant who can afford that kind of rent would be very high, not to mention the much higher maintenance fees for the larger sizes.
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On the mid range, I was a not at all surprised when I opened the classifieds last week to see 2 bedroom 1000sf units at the Meritz, Idaman Residence and Marc now going for RM6000 - RM7000. This is probably not too bad going for Meritz or Marc since the first time buyers probably got them for around RM600 - RM700psf. However, a RM1million unit at Idaman Residence is now advertised for RM4000/month. The smaller 900sf units are going for RM3800/month. No doubt there has been cases of desperate investors trying to off-load 1000sf Idaman Residence units at par value ... RM800k? And not to mention 231TR at RM650psf. But the rental return still does not justify.
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With such low rental, is there still a market? Many units are still vacant. There are less than 10 units occupied now at 231TR despite being handed over in early January. Apparently there is only 1 successful subsale, mine. Owners who invested around RM500k for a 2 bedroom unit in 231TR are trying to look for tenants willing to pay RM3000/month. Considering the monthly installment at RM2600 + maintenance fees RM350... that's just almost breaking even - if one can find a tenant, that is...
4 comments:
Interestingly, there is an article about this in Malaysiakini yesterday:
http://www.malaysiakini.com/news/103967
Boom to bust for luxury condo market
May 10, 09 8:04am
Prices of luxury condos that have mushroomed around Kuala Lumpur’s iconic Petronas Twin Towers in recent years are crashing as the global financial crisis hits.
Prices slump by up to 30%
Hope for economy to bounce back
i must be missing something... i can't seem to find any 30% discounts in the classifieds. maybe the properties i am looking at are real hot cake. maybe 5 to 10% at most but are any being sold? i tested the market by putting one property in the market at pre-2009 price. not much response... so it shows that many owners are basically holding out and not selling unless they get a good price. today, you can't get a good price, so don't sell. let me know if you see a desperate seller.
To update fyi - there are now more than 55 units occupied at 231TR. Some units I heard managed to get 10% rental yield. What was your subsale price?
omg...only 25% occupancy?
i think 10% yield applies to those 1st round buyers only. i dont think its too difficult to get RM1800/month rental for the 1 bedroom. But the 2 bedroom units are really stretching hard to find tenants.
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