The Greater Kuala Lumper region saw its lowest loan approval rate for more than 20 years, – at slightly over 40 percent – as reported by Bank Negara Malaysia during the second quarter of the year.
According to real estate firm JLL in its latest research report, the residential market in the region remained weak during the quarter, supported by several property developers reporting low earnings as a result of poor local property sentiment.
Three luxury projects; St Regis (208 units), Banyan Tree Signature (441 units) and Le Nouvel Serviced Residences (197 units) were completed during the three-month period. According to JLL, total supply is expected to increase by 236 percent year-on-year (YoY) to 7,422 units.
The average capital values of prime residential space in Greater Kuala Lumpur decreased slightly by just 1.5 percent to RM 860 per sq ft as owners competed to sell their units at moderately lower prices due to concerns of an oversupply, noted JLL.
Rental demand, particularly in the centre of the city, remained muted according to JLL, due to recent staff retrenchment in the oil, gas and financial sectors. The average net effective rent of prime residential space in Kuala Lumpur declined by 2.9 percent from RM 2.73 per sq ft per month during Q1 to RM 2.65 per sq ft per month during the second quarter of the year.
Commenting on the news, Alva Horgan, Managing Director of Emerging and Frontier Markets for Dot Property Group, noted the worst thing for any developer or agent to do at this time would be to reign in their marketing budget.
She said: “Marketing spend during any downtown is factually proven to go much further and is worth far more. Those who maintain their spending will be in a far more healthy position now, and also when the market starts to turn as we’re already seeing in some parts of the Klang Valley.”
