Cautious demand for Malaysia's luxury homes

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The demand for luxury residential properties is expected to become cautious due to the greater economic uncertainties and a tightening bank credits, according to DTZ Research in its latest Property Times market report.

The research house added that high-end properties in Kuala Lumpur could suffer from a downside in prices if the property market struggles next year.

"The residential sector experienced significant completions in the quarter and this will put pressure on rentals, especially in the larger prime condominium units where demand has not kept pace."

"Generally, while price remains stable, new pressure to sell is expected as some owners taking delivery of completed units may wish to exit their investments. There remained selective demand for new launches," it said.

The previous quarter witnessed 2,278 condominium units completed in Kuala Lumpur while 52 condominiums will be completed by the end of 2011. By next year, around 5,384 units will enter the market with around 92 percent or 4,952 units located in the city centre.

The market report noted that the average capital value of high-end condominiums in Kuala Lumpur remains stable at RM626 psf, with properties in the Kuala Lumpur city centre averaging RM902 psf.

"The market may see short-term selling pressure as owners of newly delivered units may exit their investment," it said.

The average rental value of high-end condominiums in Kuala Lumpur is also stable at RM3.50 psf per month but the completion of new units will keep the rate competitive.

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