High-end condominium, is generally interpreted as the price per square foot or more in RM500 ringgit, the price of real estate units, mainly in Kuala Lumpur, Kuala Lumpur city within a city, and especially the family home type property area.
As we all know, began in August 2007, the outbreak of the global financial crisis, in full white-hot in August 2008, until August 2011, the situation seems surfaced the opportunistic attack .Today, the potential instability in global financial markets, global market regulators have made the latest response, however, decision-making tools used the effort seems to have been weakened.
Appraiser Alvin Feinandasi said that, the big question for us is: whether a second round of deflation will affect the real estate industry, market development, as well as high-end condominiums in Kuala Lumpur prospects?
By the impact of Office and high-end Apartment building
During the global financial crisis, a consensus is basically: no significant effect on the financial crisis hit Malaysia's industry or market, but at least two areas affected, are: office buildings and luxury condominiums in Kuala Lumpur the market.
Prices and rents in these two projects, both fell about 25% of the market, supply and demand are affected, with this knowledge, we need to realize that the Malaysian industry market areas, there may be external factors local and overseas market fluctuations.
He said, For this reason, we must keep an open mind, in the global economy expanded by the European sovereign debt crisis and the U.S. economy takes a long time to adjust to the decline of the reform of the international architecture of the local high-end condominium market is facing the impact of material will be inevitable.
Respond to the deflation of investors, tend to safe assets such as U.S. Treasury bonds, inflation is expected to face the main investors, then flock to buy assets such as gold and other popular investment vehicles.
Then where the property industry position? In the U.S., the market did not rush approach, property industry is a tool to hedge inflation, deflation, after all, still troubled by American investors.
High inflation rates in the Indian market, investors are not eager to burst into the property market, although demand is still, however interest rates still high , loan and financial backup tight by mainly by high interest rates policy, the Government main point to maintain high interest rates is to the fight against inflation, weaken the high inflation worries.
Malaysia property market at optimistic needs
Alvin Feinandasi also Khong & Jaafar Group Managing Director, he said that in the past five years, the Malaysian properties had better market performance in general, remain optimistic about the market demand, government support economic growth, coupled with banks and financial institutions support, the developers also offer real estate and financing package.
From the fundamentals, this is a free market, supply is not restricted, the current housing supply patterns remain optimistic in the long run, help maintain a stable level of house prices, the risk mainly by developers, financial institutions and housing are shared.
Adjustment over Fundamentals of Apartment
High-end condominium and office areas affected by the global financial crisis, the risk are more obvious then stabilized at a lower level. If there is more impact, then the market will continue to adjust, especially high-end condominiums, the fundamentals appear to be adjust .
On high-end condominium market adjustment, Alvin Feinandasi that market to other types of properties, such as a landed property, quality town houses, located in selected areas of the property value has increased.
Then there is the economic situation, the risk of inflation heating up, is one of the luxury apartment market to promote the main cause of speculative demand, other factors including low interest rates, developer incentives, and limited investment options.
There, the quality townhouses, demand driven, steady increase in the price, market and promote the housing industry continues to move forward, the market fundamentals have a transfer, the latest trend is a small area, more people have the ability to purchase commercial and residential, for example, SoHo, and shopping malls connected condominium, service apartments, are more than demand.
In the global financial crisis, the value of Kuala Lumpur's luxury condominium apartments fell about 25%, and now, many owners of luxury apartments for new tenants, the rent does not exceed the maximum 15,000 ringgit, or at a low level between 5000-10000 ringgit rent, the returns ranged from 3%, or 5 to 6%, investment condominium, the ideal rate of returns of at least 5 to 6%.
High rents apartment will inhibited the development
If the development is based on gross square feet per RM1,200 ringgit, based on RM1,200 per square foot estimated rent per square foot at 3 ringgit 80 cents per month, the annual rate of about 3% returns.
Based on rent at 3 ringgit 80 cents per square foot, if the building area of 1,000 square feet, the monthly rental is 13,000 ringgit, however, it is not able or willing to pay by the majority of tenants. Therefore, this will inhibition of high-end condominium market, this is main reason of increasing.If there is an economic restructuring plan, if the future rent up to 20,000 ringgit, or 5 ringgit 70 cents per square foot. The development will total value of RM2,000 per square foot.
Looking to the future
To build Kuala Lumpur become world-class city
Government initiative launched economic restructuring plan, the focus will be the development of Kuala Lumpur as a "livable city", in addition, the authorities have worked hard to build a world-class Kuala Lumpur city, looking to attract more overseas talents come to our country, which will help high-Kuala Lumpur condominium market, targeting their condominium fundamentals, with solid rent levels, the condominium market prospects remain optimistic.
Malaysia and many other regional governments, through a number of decisions and measures to implement the market and properties industry fundamentals will be closely linked and in order to maintain financial and social stability.