Post date: Aug 01, 2010 3:4:54 PM
By Siti Sakinah of theedgeproperty.com
Friday, 30 July 2010
KUALA LUMPUR: Developers of residential properties in the Klang Valley do not have to worry about an oversupply situation as the population in the Klang Valley has a ratio that suggests the market can absorb additional stock, said executive chairman of CB Richard Ellis (M) Sdn Bhd, Christopher Boyd.
He said the ratio of population to existing housing stocks in Malaysia stands at 6.5 while the Klang Valley ratio stands at 4.1 compared with Hong Kong (2.8) and Singapore (3.0) suggesting that the market can absorb additional stock.
Speaking at the 13th National Housing and Property Summit on Friday July 30, Boyd said the higher population per unit of housing stock would "translate into belated demand for housing".
Boyd also noted that Malaysia has a young demographic, with millions still in school that would eventually demand "a roof over their heads".
Existing supply of housing in the Klang Valley as of 1Q2010 shows that more than 70% of the supply is made up of the affordable segment including terraced, low-cost and flats, adding than less than 1 in 5 are either higher-end condos or apartments.
One the more speculative nature of the luxury condos and serviced residence market, Boyd said the stock of this type of property in the Klang Valley is limited compared with Hong Kong, Singapore or Bangkok.
As of 1Q2010, the cumulative supply of luxury condos and serviced apartments priced above RM350psf stands at 30,368 units and Boyd foresees the numbers increasing to 43,299 units by 2013.
"Although there is a potential of oversupply, the numbers are not catastrophic as across the board the demand and pre-sales are encouraging," he added.
Based on developer-reported figures of 45 luxury projects out of 53 projects, the take-up rate for luxury projects under construction is healthy, including in areas such as KLCC, the Central Business District and Bukit Bintang.
Boyd added that the average asking price for luxury condo and serviced apartments are RM893 psf in KLCC area, RM680 psf in Bangsar and RM541 in Mont Kiara.
On Klang Valley's purpose-built office market, Boyd said that between 2009-2014 the total supply of office space is projected to grow by 27.8 million sq f, which is equal to about 5.6 million sq ft per year.
However, he believes there is no oversupply yet and that the prime average gross asking rent for Grade A offices has remained stable at RM7 psf since 2008.