Owners of luxury residential properties are slashing their asking prices by up to 30 percent just to secure a rental or sale, on the back of the growing number of unsold units, reported Malay Mail Online.
Property agents revealed that the phenomenon was particularly prevalent within the secondary market.
“If you look at the property market in KLCC and KL Sentral, owners are willing to rent out office spaces and homes for RM3 and RM4 per square feet compared to RM7 and RM8 before 2013,” said Oriental Realty senior property consultant Jeremy Jr.
The drop in prices is fuelling a vicious cycle – lower rental yields make it harder for property owners to meet mortgage repayments, forcing some to dispose off their units at lower prices, affecting rental prices further.
And with the glut affecting new launches, property developers aggressively promote their new projects, while resisting blatant price-cuts.
“Freebies like kitchen cabinets, plaster ceilings, zero percent down payment… these are among other (offers) developers give out these days to sell their new launches,” said Jeremy, noting that the zero down payment effectively works out to a 10 percent discount on the property’s list price.
While realtors declined to speculate on the reasons for the easing of demand for luxury homes, a JLL study released in January attributed the drop to the slump in the oil-and-gas as well as financial services sectors.
Notably, O&G expatriates are some of the main takers of luxury properties in Malaysia.
“Sales and rentals for properties valued at more than RM1 million have been very slow in the past four years or so,” shared property agent Michael Lim.
“After almost six months, I just sold one condo in KL for RM1.2 million recently after the owner was willing to reduce the price by RM300,000.”
National Property Information Centre (NAPIC) data showed that total transaction within the luxury residential segment fell 9.3 percent from 2,014 in Q2 2016 to 1,826 in Q3 2016.
Although the falling prices could be a boon for buyers, the situation’s long-term effects could be detrimental to the overall development and area, explained Lim.
“If everyone is selling off their property for 20 to 30 less in a particular area, the value of the development will definitely start dropping,” he added.
Image sourced from Booking.com
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