APPD Market Report Article

Kuala Lumpur

May 31, 2022

-6.6%

MYR 2.95

Rents
Falling

Developers are setting conservative sales targets

  • Most developers are setting conservative sales targets this year (lower than FY21 actual sales), likely due to the expiration of the Home Ownership Campaign (HOC) end-2021. Several developers continued to offer incentives such as rebates from 0% to 15%, free disbursement & legal fees and provision of partially furnished units to entice buyers.
  • The lack of incoming expat population and the current closure of international borders continued to hinder rental rates. Thus, many landlords are absorbing some of the income shocks and are pricing down their rental units as they compete to attract a pool of tenants with limited financial ability.

1,002 units completed within the quarter

  • Two (2) project developments, Lucentia Residences @ BBCCKL & The OOAK @ Kiara 163, completed in the quarter adding 1,002 units to the stock. No new launches took place during the quarter.
  • One (1) project comprising 604 units that was expected to complete during the quarter was postponed due to slow site progress. Construction work on site has been granted approval; however, developers face issues from increased cost of materials, worker shortages and the introduction of some standard operating procedures.

Prices continue to drop due to supply concerns

  • Foreign investment activity was limited due to the closure of international borders.
  • All-in residential financing annual rate maintained low, hovering around 2.9%-3.1% depending on the financial institution.

Outlook: Leasing demand to rise as purchase barriers increase

  • A large amount of supply is expected to enter the market (around 11,000 units) in 2022, putting pressure on the capital values.
  • However, rental demand will likely increase driven by the ending of HOC and loan moratorium, resulting in hurdles in residential property sales market.

Note: Kuala Lumpur Residential refers to Kuala Lumpur's prime residential market.

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