Property Transaction Update - MPI October, 2010

Post date: Nov 07, 2010 11:4:44 PM

Jan-July 2010 data from NAPIC recorded a total of 4,815 transactions with a value of RM14.4b (US$4.6b) in the 4 major states tracked by MPI; Kuala Lumpur, Selangor, Johor and Penang. The residential sector continues to be robust throughout the year in Kuala Lumpur, Selangor and Penang. A total of 1,066 transactions (RM2.45b/US$0.79b), 998 transactions (RM2.25b/US$0.73b) and 278 transactions (RM0.50b/US$0.16b) were recorded in Kuala Lumpur, Selangor and Penang respectively. Transactions in Johor remain dominated by the industrial sector. The development of Iskandar Malaysia is seen to be the main driver of further growth for the state’s industrial sector. A total of 105 industrial land amounting to RM0.32b/US$0.10b changed hands. (Fig. 6-9)

Greater KL Conurbation Residential Property Price Trend

Notwithstanding existing favourable conditions such as low lending rates and high margin of financing available to property purchasers, limited supply of land and innovative product offerings are noteworthy factors that are influencing price premiums of residential properties in Kuala Lumpur (KL) and to some extent, Penang island. Rental rates for landed property in KL is observed to be moving faster than the stable rentals for high rise units, currently averaging between RM2,800 – RM3,000 (US$620 - US$930) per unit. Average gross yields for double storey terraced houses and high rise units in 2Q10 are stable at 3.3% and 6.6% respectively. A trend in pricing tiers emerges from the difference in asking prices of suburban areas such as Puchong, Shah Alam and Rawang moving inwards towards the heart of KL city. Both landed and high rise property in outer areas have the potential to command up to 70% of the value of each inner tier, giving rise to the potential that properties in the outer fringes of KL could appreciate even further. The new Mass Rapid Transit plan to increase connectivity will also contribute to further price appreciation in the suburban areas. Currently, residential properties in Tier 3 and Tier 4 are purchased by first time home buyers.