APPD Market Report Article
Kuala LumpurFebruary 28, 2022
Market demand remains steady due to continued incentives
- The final extension of the government initiated Home Ownership Campaign (HOC) until end-2021 allowed prospective buyers to continue placing bookings on prime residential properties. Although sales galleries opened, only double vaccinated people were allowed to enter limiting any further sales.
- With the international borders still closed, foreign investment and leasing activity was limited. The rental market continued to be primarily supported by existing demand with viewing activities improving upon the reopening of the economy.
New project completions continue to face delays
- Six projects comprising 1,645 units that were expected to complete during the quarter were postponed due to slow site progress. Construction work on site has been granted approval, however, developers face issues from increased costs of materials, worker shortages and introduction of some standard operating procedures.
- One (1) project development, The Colony & The Luxe by Infinitum completed this quarter adding 723 units to the stock. Tower C of Sunway Belfield was launched this quarter after Tower A and B received good response despite the pandemic. The new tower consists of 880 units, expected to complete in 2026.
Prices continue to drop on supply concerns
- Developers continued to provide attractive programmes to entice prospective buyers. However, even with these programmes, government incentives and the reopening of the economy, prime residential prices continued to drop as supply concerns still lingered.
- Prime residential rents also continued to drop, albeit lower at 0.3% driven by the lack of foreign leasing activities in the market. Submarkets which were severely impacted were those located surrounding business areas.
Outlook: Open borders should boost prime residential demand
- As the country is expected to reopen its international borders, it is likely that investors may slowly regain confidence in the Kuala Lumpur prime residential market. We expect a gradual recovery in the first half of 2022 driven by the likely increase in leasing market activities.
- However, we are also likely to witness the largest amount of supply coming into the market (around 12,000 units) in 2022 barring any delays. This coupled with the expiry of the government initiated HOC, is expected to put further pressure on financial indicators in the near term.