10042012 KV Residential Market (1)

APRIL 2012

KLANG VALLEY

RESIDENTIAL MARKET

OVERVIEW

CB Richard Ellis |

Landed Properties

New starts declined between 2008 – 2010, before rising again slightly in 2011. New housing starts outnumbered the total for 2009 and 2010.

The average household size in the Klang Valley is larger than that of SG & HK, suggesting latent demand should affordable properties be launched.

The Klang Valley has a young population base, with 40% under 19, signifying growing demand for housing over the next 20-30 years.

Significantly, we have seen a decline in loan approvals since 2006, with figures for January-February 2012 registering just 46% of the approval rate.

Condominium Supply is poised to grow strongly over the next five years, although we have seen developers move

away from larger units towards better located, smaller units.

Some luxury projects launched over the past year have done well (70% take-up rates), including the Mirage Residence (RM1,200-1,600 psf), The Face Serviced Apartments (RM1,350 psf) and Banyan Tree Residences (RM2,000psf), but we expect this segment of the market to slow.

34% of middle to high end range condos are located in the city centre (defined as KLCC area and Bukit Bintang), while another 35% is located in Mont’Kiara/Sri Hartamas.

Average asking rents have declined in prime areas of KLCC and Mont’Kiara, putting pressure on yields.

Klang Valley Residential Market Overview

Snapshot

CB Richard Ellis |

Total existing supply of residential properties in Klang Valley stood at 1.72 million units as of end-2011, equal to an annual growth rate of 1.2% from 2010.

Of the total existing supply in 2011:

Landed residential properties accounted for about 746,300 (43.4%) – this inclusive of terraced houses, cluster houses, semi-detached, and bungalows.

Serviced apartments and condominiums were about 369,700 units (21.5%).

Low-cost houses/flats captured about 580,000 units (33.8%) of the total.

The rest was the townhouses and Soho.

About 75.6% of residential housing units within the Klang Valley are located in Selangor.

Existing Supply of Residential Properties (All Types) in

Klang Valley

0.8

8

0.9

3 1.0

5 1.1

5 1.2

3 1.3

4 1.4

2 1.5

3

1.6

0

1.6

4

1.7

0

1.7

2

11.60%

4.8%

13.3%

6.7%

8.8%

6.1%

7.7%

4.6%

2.7%3.3%

1.2%

9.9%

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

1.800

2.000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Annual G

row

th R

ate (%

)

No.

of

units

(m

illio

n)

Breakdown of Residential Supply in Klang

Valley by Location

W.P Putrajaya

0.3%

Kuala Lumpur

24.1%

Selangor

75.6%

Source: Napic / PMR 2011 / CBRE Research

Existing Residential Supply in Klang Valley Klang Valley Residential Market Overview

CB Richard Ellis |

Total Incoming Supply, New Completions & New Starts

in Klang Valley

26

2,3

43

27

3,7

20

26

6,9

23

25

5,2

32

21

3,6

29

19

3,4

34

17

9,9

92

16

2,9

42

17

7,3

17

11

2,4

58

91

,20

7

80

,27

4

72

,94

4

92

,41

2

62

,41

7

30

,06

3

41

,82

7

20

,17

5

76

,44

9

65

,62

4

64

,01

7

61

,84

1

61

,68

3

41

,56

4

24

,58

6

22

,82

4

34

,55

0

-

50,000

100,000

150,000

200,000

250,000

300,000

2003 2004 2005 2006 2007 2008 2009 2010 2011

Total Incoming Supply (under-construction)

New Completions

New Starts

Num

ber

of

Units

Incoming supply, new completions and new starts trended down between 2005 – 2010 before rising in 2011.

Approximately 77% of total incoming supply (under construction) are located within Selangor.

Source: Napic / PMR 2011 / CBRE Research


Incoming Supply & New Starts Trends

CB Richard Ellis |

Population per Residential Housing Unit

2.83.2

3.7 3.9

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Hong Kong Singapore Kuala Lumpur Klang Valley

In Malaysia, ratio of population to existing housing stock is higher than HK & SG, suggesting market can absorb additional stock .

Average Household Size: Kuala Lumpur - 3.72 persons Selangor - 3.93 persons

Source: JPPH, CBRE Research, CSD

(HK), DOS (SG), Bank Negara Malaysia

Young population base with about 40% in Klang Valley under 19 years, will ensure robust demand for residential properties.

Population by Age Group 2000 Versus 2010

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

Below 19 44% 38% 36% 31% 40% 33%

20 - 34 25% 27% 32% 32% 29% 33%

35 - 60 25% 27% 27% 30% 26% 28%

60 and above 6% 8% 5% 7% 5% 6%

Malaysia,

2000

Malaysia,

2010

Kuala

Lumpur, 2000

Kuala

Lumpur, 2010

Selangor,

2000

Selangor,

2010


Population : Housing Stock Ratio

CB Richard Ellis |

Number of Residential Property Transactions by Price Range in

Kuala Lumpur

3,1

96

3,3

63

3,5

94

3,4

08

4,0

09

4,3

25

3,7

72

4,9

27

4,1

32

4,2

07

4,2

67

4,4

85

5,3

79

5,9

23

5,3

91

5,6

41

3,7

52

3,9

75

4,3

03

4,3

27

5,7

53

6,4

29

7,1

03

8,1

13

94

8

1,0

65

1,4

44

1,7

75

2,0

71

2,1

54

2,9

84

3,4

02

62

4

68

2

76

6

1,0

81

1,6

28

1,3

89

2,0

12

2,2

31

12,65213,292

14,37415,076

18,84020,220

21,262

24,314

0

5,000

10,000

15,000

20,000

25,000

30,000

2004 2005 2006 2007 2008 2009 2010 2011

No

. o

f T

ran

sacti

on

s

< RM100K

RM100K-RM200K

RM200K-RM500K

RM500K-RM1.0Mil

> RM1.0Mil

Total

Total residential property transactions increased steadily since 2004 in Kuala Lumpur. Total transactions in 2011 was almost double compared to 2004.

Majority of residential property was transacted at RM200K-RM500K since 2008. This has been the dominant market since 2008.

Increasing number of transactions for the residential property at the price range of RM500K-RM1.0mil and above RM1.0mil.

Source: Napic


Number of Residential Property Transactions by Price Range in KL

CB Richard Ellis |

Number of Residential Property Transactions by Price Range in

Selangor

11

,99

5

13

,43

0

13

,48

3

15

,09

5

16

,75

7

17

,12

6

16

,63

3

17

,67

3

13

,90

0

15

,18

0

17

,02

2

21

,87

0

21

,90

9

21

,27

5

22

,16

1

22

,81

0

11

,18

2

11

,67

1

14

,10

0

19

,61

3

20

,46

2

20

,56

1

22

,92

5

24

,55

3

2,0

00

1,9

67

2,7

73

3,5

32

3,5

89

4,0

93

5,5

11

7,2

86

58

3

73

8

85

0

1,2

54

1,4

58

1,6

72

2,2

15

3,0

22

39,66042,986

48,228

61,36464,175 64,727

69,445

75,344

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2004 2005 2006 2007 2008 2009 2010 2011

No

. o

f T

ran

sacti

on

s

< RM100K

RM100K-RM200K

RM200K-RM500K

RM500K-RM1.0Mil

> RM1.0Mil

Total

Similar to Kuala Lumpur, total residential property transactions increased steadily since 2004 in Selangor. Total transactions in 2011 was almost double compared to 2004.

Shift to RM200K-RM500K range started in 2010.

Source: Napic


Number of Residential Property Transactions by Price Range in Selangor

CB Richard Ellis |

Total combined residential property transactions in Kuala Lumpur & Selangor were 99,658 in 2011, up 9.9% from the total 90,707 transactions in 2010.

In terms of market share, terraced houses dominated with 34,658 units or 34.8% of residential transactions in KL & Selangor in 2011, followed by condominium/apartment (30.5% or 30,421 units).

Source: Napic

By Residential Property Type KL Selangor Combined KL & Selangor

2010 2011 2010 2011 2010 2011

Terraced Houses 4,047

3,712 29,609

30,946 33,656 34,658

Semi-D Houses 570

557 3,164

3,503 3,734 4,060

Detached Houses 651

639 2,935

3,044 3,586 3,683

Condominium/Apartment 10,835

12,805 14,687

17,616 25,522 30,421

Low-Cost Houses & Flats 3,987

5,537 10,771

11,453 14,758 16,990

Others (inclusive of Townhouses, Cluster Houses & Vacant Plot) 1,172

1,064 8,279

8,782 9,451 9,846

Total 21,262

24,314 69,445

75,344 90,707 99,658


Number of Residential Property Transactions by Type

CB Richard Ellis |

Approval ratings (which show the bank’s appetite towards mortgage loans) have dropped from 62% in 2006 to 51% in 2011 – however, this has not stopped total approvals increasing from RM33 billion in 2006 to RM95 billion for 2011.

Loans approved in Jan 2012 were lower than that in Jan 2010 & Jan 2011 – likely due to combination of new BNM guidelines plus number of holidays in Jan 2012.

However, the loans applied and loan approved were picked up again in Feb 2012. Loan approval rate was dropped to 46% of application.

Year Application

(RM mil)

Approved

(RM mil)

Approval

Rate(%)

2006 53,356.6 32,848.5 62%

2007 79,143.4 48,153.1 61%

2008 98,308.2 57,954.3 59%

2009 130,389.4 70,480.6 54%

2010 153,384.9 77,181.6 50%

2011 186,625.3 94,959.8 51%

2012 (Jan-Feb) 26,718.7 12,254.1 46%

Loan Applied for Purchase of Residential Property

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2006

2007

2008

2009

2010

2011

2012

Loan Approved for Purchase of Residential Property

0

2,000

4,000

6,000

8,000

10,000

12,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2006

2007

2008

2009

2010

2011

2012

Note: Based on BNM new loan guideline, effective from 1 Jan 2012, prospective loan borrower is assessed based on net income basis (instead of gross income) after deducting statutory deductions for tax and EPF and all other debt obligations (eg. car loan, other housing loan, credit cards).


Housing Loans

Source: BNM

Source: BNM

CB Richard Ellis |


Zoning of High-end Condominiums Location in KL

CB Richard Ellis |

Cumulative Supply of High-end Condominiums in

Kuala Lumpur (as at Q4 2011)

12

,48

3

14

,65

8

15

,90

7

19

,75

8

23

,09

0

28

,96

5

31

,52

3

37

,21

4

40

,08

2 47

,94

9

53

,01

8

5,3

89

6,1

21

6,6

34

9,0

67

12

,12

1

17

,34

8

19

,20

0

24

,78

1

27

,64

9 34

,86

2

39

,58

1

- - -

1,7

78

2,5

76

5,2

57

6,7

31

9,1

05

11

,55

1

15

,13

0

16

,92

7

-

10,000

20,000

30,000

40,000

50,000

60,000

2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e

Units

≥RM350psf (i.e total mid to high-end condos supply)

≥RM500psf

≥RM800psf

Total condominium supply (based on the zoning) in 2011 was 37,214, up by 18.05% from 2010. The supply figures include all projects with average prices of RM350 psf and above.

Irregular supply growth patterns with a minimum annual growth of 8.5% since 2002.

For the range ≥RM500psf, supply is estimated to increase threefold from 2007 to end-2012 (9,067 to 27,649), a period of 5 years.

About 24% are in projects priced at ≥ RM 800 psf.

The price grading is based on values for secondary transactions.


Total Supply of High-end Condominiums in KL (by price)

Total Existing Condominiums Supply by Grade in

Kuala Lumpur

RM350psf -

RM499psf

33%

RM500psf -

RM799psf

43%

RM800psf &

Above

24%

CB Richard Ellis |

About 33.7% of total supply, or 12,549 units, are located in the city centre (in this case, defined as KLCC area and Bukit Bintang).

There are currently over 6,000 condo units (16%) in the KLCC area, with another 2,800 units under construction or having launched sales.

Total Existing Condominiums Supply by Grade in

Kuala Lumpur

Mont'Kiara /

Sri Hartamas

13245

35%

Kuala Lumpur

City Centre

6017

16%

KL Sentral /

Brickfields

1668

4%

Bangsar

3442

9%

Damansara

Heights

1547

4%

Kenny Hills

570

2%

Pantai /

Kerinchi

658

2%

Kg. Baru /

Titiwangsa

202

1%

Ampang Hilir /

U-Thant

3333

9%

City Centre /

Bukit Bintang

6532

18%


Total Supply of High-end Condominiums in KL (by location)

Total Existing Condominiums Supply by Location in Kuala Lumpur

KL City

12,549 units

33.7%

KL Suburban

24,665 units

66.3%

CB Richard Ellis |

Average Capital Values of High-end Condominiums in

Kuala Lumpur

966

714

560

350

450

550

650

750

850

950

1,050

2004 2005 2006 2007 2008 2009 2010 2011

RM psf

KLCC

Bangsar

Mont Kiara

Based on 39 samples of high-end condominiums (all sizes) located within KLCC, Bangsar & Mont’Kiara, the average capital values have remained relatively steady since 2009.

However, transacted prices of some large condominium units have been dropped.

Rental rates on a psf basis have declined since 2007, reflecting weaker demand for rental units (coupled with increased supply).

Asking rents are also highest in the KLCC area, followed by Bangsar and Mont’Kiara.

Average Asking Rental Rates of High-end Condominiums

in Kuala Lumpur

3.94

3.25

3.08

2.50

3.00

3.50

4.00

4.50

5.00

5.50

2004 2005 2006 2007 2008 2009 2010 2011

RM psf per month

KLCC

Bangsar

Mont Kiara


Average Capital Values & Rents

CB Richard Ellis |

Transacted Prices (RM psf)

No. Name Location Built-ups

(sf) 2008 2009 2010 2011

1 One KL KLCC 3,286 n.a 1,350 - 2,000 1,100 - 1,600 n.a

2 3 Kia Peng KLCC 2,906 760 - 950 811 774 - 908 811 - 1,013

3 Park Seven KLCC 2,808 1,030 - 1,200 900 - 1,100 930 - 1,200 850 - 1,100

4 Stonor Park KLCC 3,326 1,100 - 1,200 800 - 850 930 830

5 10 Mont'Kiara MK 3,704 n.a 600 - 730 590 - 755 570 - 758

6 Mont'Kiara Damai MK 3,175 535 -747 598 - 640 500 - 646 580 -724

7 Bangsar Peak Bangsar 3,574 638 895 - 953 930 - 980 890 - 986

8 One Menerung Bangsar 3,240 n.a 830 - 1,200 880 - 1,080 850 - 1,250


The transaction prices were dropped for some of the high-end condominiums (large built-up units i.e. 2,800 sf onwards) in 2011 compared to 2008/2009.

Transacted Prices for Selected High-end Condominiums in KL

CB Richard Ellis |

Over the past four years, an average of 1,900 condo units priced ≥RM 500,000 per unit have been sold annually.

Average value per transaction was dropped from RM1.14 mil in 2009 to RM1.05 mil in 2011. (declined about 7.2%)

The purchaser profiles are based on a study of 39 condo projects of varying grades in various locations of KL and show that the bulk of demand is still local.

Total Transaction Volume and Average Value per

Transaction of Condominiums (Above RM500K per units) in

Kuala Lumpur

567

617

970

1,3

64

1,3

46

2,1

56

2,8

10

941.5 962.4 988.31,071.0

1,135.61,091.5 1,053.9

0

500

1,000

1,500

2,000

2,500

3,000

2005 2006 2007 2008 2009 2010 2011

Units

0

200

400

600

800

1,000

1,200

1,400

RM

'000

Transaction Volume Average value per transaction

Purchasers' Profile of High-end Condominiums

/ Serviced Residences in Kuala Lumpur

Foreign

Purchasers,

22.3%

Bumiputra,

13.4%

Non-

Bumiputra,

64.3%

Local

purchasers,

77.7%


Average Value per Transaction (Condo ≥RM500K) & Buyer Pool in KL

CB Richard Ellis |


Selected New High-rise Residential Projects in the Klang Valley

In general, these new launches are reported good take-up rate due to good marketing strategies by the developers.

CB Richard Ellis |

CBRE Malaysia provides a full range of services for property owners, occupiers and investors, including:

Estate Agency Services

Investment Services

Office Leasing & Tenant Representation

Research & Consultancy

Retail Consultancy and Leasing

Valuation (Corporate and Retail)

Project Management

Property Management

Facilities Management

Property Due Diligence

For more information, please visit our website at www.cbre.com.my, or contact us at +603 2092 5955.


Services

http://www.cbre.com.my/







CB Richard Ellis |

Thank You


10042012 KV Residential Market (1)

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