Slow recovery for luxury condo market

THE Kuala Lumpur luxury condominium market, having taken a hit over the last couple of years due to the pandemic, is expected to remain soft in 2022.

Savills Malaysia Sdn Bhd group managing director Datuk Paul Khong says the high-end condominium market is anticipated to stay subdued for at least the first two quarters of 2022.

He says the discontinuation of the Home Ownership Campaign (HOC) and moratorium by the central bank are contributing factors to the subdued luxury condominium market this year.

“Many developers have previously been clearing their unsold stock via the HOC as a priority,” he tells StarBizWeek.

Khong says he expects to see some improvements in 2022 due to pent-up demand from buyers within the high-end residential segment.

“But a full recovery here will take more time and probably be delayed into the first half of 2023.

“The challenges faced by the luxury condominium market in 2021 will carry into this year. This is on top of the fact that there were no fiscal goodies announced at Budget 2022 in October last year.”

Rahim & Co International Sdn Bhd real estate agency chief executive officer Siva Shanker agrees that the segment was affected by the pandemic last year.

“We don’t think there will be any major improvements this year. However, we do believe that the downward movement of prices will stop and flatten out.

Given the subdued environment at the moment, Siva says now would be a good time for buyers to enter the market.

“For sellers, they are just going to have to accept that prices will remain the same for a while.”

In light of this, Siva says he does not expect “a flurry of activity” within the Kuala Lumpur luxury condominium market this year.

“We expect to only see real meaningful growth perhaps by mid 2023,” he says.

Going into 2022, however, Khong says there are several factors that can help spur the local property market, including the high-end condominium segment.

“The property market drivers to look forward to include a low-interest rate environment, improved market sentiments post-Covid, the reactivation of the Malaysia My Second Home programme and reopening of international borders.

Khong adds that “cost pressures” on new property products are also expected to continue to push prices higher.

“Developers will have to come up with innovative packages to capture their own niche, target markets, as they push their high-end units into the market despite the discounts to their profit margins.

“Demand is still basically a factor of product and pricing.”

According to Knight Frank in its Real Estate Highlights report for the second half of 2021, the cumulative supply of high-end condominiums stood at 66,128 units in 2021 following the only completion during the review period, namely Ascott Residence (199 units) in Kuala Lumpur.

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