APPD Market Report Article

Kuala Lumpur

December 1, 2021

-8.7%

MYR 3.0

Rents
Falling

Unsold rate sustains on account of limited supply

  • Surging cases, strict standard operating procedures (SOPs) and non-operational sales galleries in the first month of the quarter hampered the sales greatly. Although the sales galleries opened eventually, only fully vaccinated individuals were allowed to visit them. Due to this regulation, only a certain portion of prospective buyers could stop by, limiting the active sales transactions.
  • The unsold rate broadly remained stable through the muted quarter before new completions. Two newly completed projects held substantial unsold units at the time of hand-over resulting in slight increase of unsold rate q-o-q. In spite of these small quarterly alterations, the unsold rate remained fairly stable y-o-y due to limited number of completions.

A muted quarter for new completions and launches

  • As restrictions began to mellow slowly, two projects were able to provide vacant possession to respective home buyers adding 480 units to the stock, which now increased to 49,468 units. Ten more projects comprising 5,027 units, that were expected to complete in the quarter, were postponed due to slow site progress and disruptions during lockdown, with most of them postponed to early next year.
  • Greater KL (Federal Territory of Kuala Lumpur along with neighbouring state of Selangor and federal territory of Putrajaya) moved to phase 2 of the National Recovery Plan starting 10th September. However, for most of the quarter, strict containment measures under NRP phase 1 were in place. As a result, project approvals remained low and new launches were muted.

Both asking rents and asking prices continue to contract

  • Although the majority of occupiers were looking to move to more suitable dwellings as per evolving needs, many condominiums restricted entries to non-residents and prevented viewings and move-in/move-out activities to limit the risk of infection. As a result, in spite of interest from existing tenant pool, the rental market remained under pressure.
  • Non-lucrative rental market caused many investors to adjust their portfolios. Increased numbers in sales listings gave buyers more negotiation power, putting pressure on asking prices. Additionally, the federal initiatives attracted buyers to the primary market, which put dual pressure on the secondary market, resulting in further drop in asking prices.

Outlook: Market expected to become buyer favourable

  • With a large volume of supply pushed to 2022 and the Home Ownership Campaign (HOC) wrapping up by year-end, the market is likely to remain competitive in the near future. Although the Malaysia My Second Home (MM2H) resumed recently, fundamental changes were made to tighten the regulations. This is expected to drastically reduce the number of applications, creating negligible boost in demand.
  • In addition, the demand-supply gap will continue to widen due to new completions and overall cautious sentiment among existing customers amid economic uncertainty. These adverse conditions are likely to put pressure on financial indicators. Asking rents and prices are expected to continue to contract.

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

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