The average price and rental rate of high-end condominiums in Kuala Lumpur were stable in 2Q2015, according to the latest DTZ Property Times Kuala Lumpur.
There was a slight drop in the average price by 1.6% q-o-q to RM738 psf, while the average rent had gone up to RM3.55 psf per month in 2Q, compared with RM3.42 psf in the previous quarter.
The report also noted that there will be more demand for smaller units than larger ones due to budget constraints, but it will be moderated with a larger supply of small units in the pipeline.
The second quarter of 2015 saw steady new supply of 1,437 high-end condominium units, a 4% increase compared with the previous quarter.
All of these new completions are located beyond the city centre, such as Arcoris Residences @ Arcoris Mont'Kiara, Verdana North Kiara and G Residences.
Some 5,125 units of high-end condos are expected to enter the market by year-end, of which half are located within the city centre.
Going forward, sales, especially of luxury properties, are expected to be slow and demand is likely to be project-specific.
The report cited UEM Sunrise Bhd's Residensi Sefina as an example that drew strong interest.
The project comprises 245 units of high-end condos with built-ups ranging from 1,300 to 1,700 sq ft and priced from RM830 psf or RM1.1 million.
Office rents and values stagnate
According to DTZ Malaysia, capital values and rental rates of offices in 2Q were stagnant at RM942 psf and RM6.40 psf respectively, against average appreciation of 0.44% on a quarterly basis in 1Q.
Meanwhile, office space in KL stands at 75.3 million sq ft as at 2Q, representing a 3.8% increase from the last quarter.
A potential oversupply stemming from an additional 2.8 million sq ft of space from the completion of Naza Tower @ Platinum Park, Q Sentral at KL Sentral and Summer Suites in KL, coupled with a further five million sq ft of office space coming onstream next year, is expected to pull down values and rents.
On the other hand, DTZ Malaysia noted that the corporate office market is undergoing a 'rejuvenation' '“ while new supply comes onstream, older buildings are being refurbished or converted for different uses.
'The refurbishment of older buildings, such as Menara Citibank and Menara JCorp, could help to support rent and occupancy and the demand stemming from tenants relocating to new buildings help to offset some of the pressure,' it added.
DTZ Malaysia also expected a resilient market amid a challenging economy and weak sentiments.
'A weaker ringgit may even increase the interest of international investors to local properties. Indeed, this reason was cited by Singapore's Royal Group as one of their main reasons for acquiring the DoubleTree by Hilton,' it said.
The consumer sentiment index (CSI) fell by 10.4 points quarter-on-quarter to 72.6 points in 2Q '“ he lowest in six years '“ as consumers contend with the Goods and Services Tax and concerns over their financial and employment outlook.
Sales slumped to 3.5% in 2Q from 3.8% the previous quarter, but is expected to pick up by 4.8% in 3Q and 6.9% in 4Q, causing sales to grow by 4.9% this year '“ lower than the 5.5% forecast earlier.
However, despite poorer retail performance, overall occupancy rate declined marginally to 90% and more malls entered the market in 2Q, such as Atria Shopping Centre in Petaling Jaya and Mitsui Outlet Park KLIA.
'The retail industry continues to be attractive to some developers with more large shopping malls being planned,' said DTZ Malaysia.
'Overall, the retail scene is entering a more competitive and more subdued period in the coming years.'