This article first appeared in City & Country, The Edge Malaysia Weekly on January 29, 2024 - February 4, 2024

The Klang Valley housing market saw an overall increase in transaction activities in the primary and secondary markets in 3Q2023, according to Savills Malaysia director of research and consultancy Fong Kean Hwa in presenting The Edge Malaysia | Savills Klang Valley Residential Property Monitor 3Q2023.

“Purchasers are showing more confidence in acquiring properties and developers have been aggressive in their marketing strategies. These factors have contributed to a reduction in overhang units,” he says.

The number of overhang units in Kuala Lumpur decreased to 8,682 from 9,478 units in 2Q2023. Selangor’s overhang units declined to 6,145 units from 7,729 units in 2Q2023.

In terms of high-rise and landed residential supply, more new completions were observed during the quarter, with an approximately 2% increase to 40,483 units from 39,747 in 3Q2022.

In the high-rise segment, Kuala Lumpur and Selangor saw 22,842 units and 25,086 additional units respectively in 3Q2023. In the landed property segment, there was no additional supply in Kuala Lumpur, but 20,968 units were added in Selangor.

“The increased supply of residential properties is evidence of a market recovery from the pandemic days,” Fong remarks.

During the quarter, 4,331 residential units in Kuala Lumpur changed hands, representing an upward trend from 3,515 units transacted in 3Q2022. The collective value of transactions also rose significantly, reaching RM4.13 billion in 3Q2023, compared with RM3.14 million in 3Q2022.

In contrast, Selangor recorded 12,182 transactions worth RM7.61 billion in 3Q2023, a 3.8% decrease from 3Q2022, which saw 12,668 transactions worth RM7.69 billion.

In general, the transaction activities in both Kuala Lumpur and Selangor were still below pre-pandemic levels, notes Fong.

Meanwhile, home loan applications increased 1% quarter on quarter (q-o-q) in 3Q2023, reflecting improved homebuyer confidence, he says.

“The improved activity in the Klang Valley led to a reduction in overhang units, prompting developers to add new launches in the near future. Moving forward, we expect to see more collaboration between the government and private firms for affordable housing projects in mature areas. The government’s initiatives, including a RM5 billion loan scheme through the Housing Credit Guarantee [Scheme], aim to boost homeownership. [These initiatives] are expected to drive market recovery.”

As for the country’s economy, Fong notes that gross domestic product grew 3.3% year on year (y-o-y). “This was driven by factors such as capacity expansion, resumption of big-value projects and recovery of local tourism activities. The construction industry also performed strongly, contributing 7.2% of GDP growth in 3Q2023. Despite the challenging global environment, Bank Negara Malaysia expects the Malaysian economy to grow at a rate of 4% in 2023.”

Average transacted prices of 2-bedroom units (with built-ups ranging from 580 to 1,600 sq ft) sampled in the Kuala Lumpur submarkets of KLCC, Bangsar and Mont’Kiara remained under pressure during the quarter. On a y-o-y basis, KLCC and Bangsar prices dropped by 2.1% and 2.8% respectively, while Mont’Kiara prices saw a slight increase of 0.6%.

In terms of average rents, KLCC declined by 4.9% y-o-y. Mont’Kiara saw a slight drop of 0.3% y-o-y, although rates had improved in the two previous quarters. In Bangsar, the rental rate improved by 3.3% y-o-y.

Fong observes that developers have been repositioning their projects, launching more compact and economical units to a wider pool of purchasers. “These projects also come with smart home features, green features, convenient access to modern lifestyle services and EV charging stations.”

According to him, Bangsar and Mont’Kiara are still popular choices among homebuyers. Both areas saw new high-rise project launches during the quarter, namely Talisa @ Bangsar Hillpark by Bangsar Hill Park Development Sdn Bhd (803 units) and Pavilion Mont’ Kiara by Pavilion Group (336 units). The projects are expected to be completed by 2027.

In Selangor, average transacted prices of 3-bedroom units (with built-ups ranging from 900 to 2,100 sq ft) sampled in the sub-markets of Bandar Sunway, Subang Jaya, Petaling Jaya and Shah Alam moved slightly during the quarter but rents remained stable, with improved rental yields.

In Bandar Sunway, the average price dropped 1% y-o-y. Monthly rent, however, increased to RM3,500 on average, and rental yield stood at 4.9%.

Subang Jaya’s average price dropped 3.5% y-o-y but average rent increased to RM2,900 per month, resulting in an improved rental yield of 4.6% from the 4.3% recorded in 3Q2022.

In Petaling Jaya, the average price declined by 3.6% y-o-y but average rent grew 1.5% to RM3,450 per month, generating a higher yield of 4% from the 3.8% recorded in 3Q2022.

In Shah Alam, the average price dropped 0.8% y-o-y and average rent increased to RM2,700 per month. This resulted in a marginal increase in rental return of 4.3%.

Selangor saw the launch of a number of high-rise projects — four in Subang Jaya (Avaland Bhd’s Alora Residences and Amika Residences with 770 and 468 units respectively; Tropicana Corp Bhd’s SouthPlace 2 Residences @ Tropicana Metropark with 553 units; and Pinnacle Homes Group’s Pinnacle Subang Jaya with 941 units), one in Petaling Jaya (Pinnacle Ara Damansara by Pinnacle Homes Group with 1,225 units) and one in Shah Alam (Tujuh Residences by MRCB Land Sdn Bhd with 573 units). All the projects are slated to be completed by 2027 except for Tujuh Residences, which is scheduled to be completed in 2026.

An upcoming project in Shah Alam is Melati Ehsan Holdings’ Bayu 2Sixty, which will comprise 260 units. 

The 2-storey terraced houses (with sizes ranging from 1,300 to 1,900 sq ft) sampled in Kuala Lumpur’s Taman Tun Dr Ismail (TTDI), Bangsar (Lucky Garden), Overseas Union Garden (OUG) and Cheras (Taman Midah) recorded positive performances during the quarter, with three of the sub-markets showing significant increases in both average transacted price and rent.

In TTDI, the average price increased by 1.7% y-o-y. Rental yield grew from 2.4% to 2.5%, with average monthly rent at RM3,200, an increase from RM3,000 in the previous quarter and 3Q2022.

In Lucky Garden, the average price increased by 5.2% y-o-y. Average monthly rent increased by 6.7% y-o-y to RM3,200, leading to an improved rental yield of 2.4% compared to the 2.3% recorded since 1Q2022.

OUG’s average price went up by 4.7% y-o-y. However, this led to a decline in rental yield from 2.7% to 2.5%, with no change in average rental rates from the previous year.

In Taman Midah, the average price dropped 9.3% y-o-y from RM860,000 to RM780,000. “This is because in 3Q2022, homes with better specifications and features were sold. Otherwise, the majority of transactions in the area were within the price range of RM740,000 to RM830,000,” Fong explains.

Over in Selangor, positive trends in both average transacted price and rent were seen in the 2-storey terraced houses (with sizes ranging from 1,300 to 1,900 sq ft) sampled in Petaling Jaya, Subang Jaya, Puchong, Shah Alam and Klang. 

In Petaling Jaya, SS2 saw a 1.7% y-o-y increase in average price. However, average monthly rent remained unchanged at RM1,900, leading to the consistent rental yield of 2.4%. Meanwhile, the average price in Bandar Utama declined slightly by 0.9%. Despite this, average monthly rent increased 2%, resulting in a marginal improvement in rental yield to 2.4% from 2.3%.

In Subang Jaya’s Putra Heights, the average price increased y-o-y by 1.9%. Average monthly rent dropped significantly by 8.3% from RM1,800 to RM1,650, resulting in a lower average rental yield of 2.6%. “This can be attributed to the few tenancies with better rents of RM1,900 to RM2,500 that were terminated. The current transacted rents are within the range of RM1,400 to RM2,300,” Fong analyses.

Over in Puchong, Bandar Bukit Puchong’s average price fell slightly by 0.3% y-o-y but the rental market performed better, with the average monthly rent rising from RM1,500 to RM1,650. This led to a slight increase in rental yield to 3%. Bandar Kinrara’s average price declined 2.6% y-o-y. However, average rent improved by 2.4%, resulting in a higher rental yield of 3.6%.

In Shah Alam, Bandar Setia Alam’s average price marginally increased by 1.7% y-o-y. However, average monthly rent remained unchanged at RM1,500 y-o-y and rental yield stayed at 2.6%. Similarly, at Kota Kemuning, average price improved by 0.1% y-o-y while average rent remained unchanged at RM1,600 and rental yield stood at 2.8%.

In Klang, Bandar Bukit Raja’s average price showed an improvement of 0.6% y-o-y while average rent declined by 5.9%, leading to a reduction in rental yield from 3.3% to 3%. In contrast, Bandar Bukit Tinggi recorded a slight drop in average price of 0.1% y-o-y while average rent and yield remained unchanged at RM1,400 per month and 2.5% respectively.

The 2-storey semidees (with sizes ranging from 3,000 to 3,600 sq ft) sampled in selected sub-markets in Selangor saw positive performance in both average transacted prices and rents during the quarter.

In Petaling Jaya, homes in SS3 recorded a slight 0.6% y-o-y increase in average price. Average rent and yield remained at RM2,700 monthly and 2.1% respectively, unchanged from the previous year.

In Puchong, Bandar Kinrara’s average price dropped y-o-y to RM1.95 million, from RM2.15 million previously. “This is due to the market readjusting from the recent launch prices in Bandar Kinrara. One of the recently launched premium landed projects in the area is Irama Villa III by S P Setia, with offerings priced from RM1.46 million to RM2.43 million. Such new launches have put pressure on the subsale market. However, as the project is fully taken up, we are confident that average subsale price in the area will be readjusted back to the RM2 million threshold,” Fong explains.

Despite the drop in prices, average rents rose to RM4,200 during the quarter, raising rental yield to 2.6%, from 2.3%.

In Shah Alam, Bandar Setia Alam saw average price decline 7.2% y-o-y while average rent remained unchanged y-o-y, raising yield from 2.6% to 2.8%; whereas Bandar Tropicana Aman’s average price moved up by 4.3% y-o-y while average rent remained at RM3,400, lowering rental yield slightly from 2.8% to 2.7%.

In Klang, average price at Glenmarie Cove dropped 3.2% y-o-y while average rent increased by 6.3%, raising rental yield to 3.9%. Similarly, Bandar Parkland saw its average price decrease by 2.3% y-o-y but average rent remained unchanged, raising yield marginally by 0.1%.

“The KSL Esplanade Mall near Bandar Parkland and Bukit Tinggi has been operating since 2Q2023 and infrastructure works, such as the LRT 3 line, are in progress. We think the housing market in the area will benefit from the improved connectivity and services,” says Fong.

Cyberjaya’s Evergreen Garden Residence saw a 1.5% y-o-y drop in average price while average rent remained stable. Consequently, rental yield remained unchanged at 3.5%.

In Seri Kembangan, Taman Equine’s average price increased from RM1.33 million to RM1.45 million y-o-y whereas average rent dropped 3% to RM3,200 per month, resulting in a 0.4% dip in rental yield to 2.6%.

In Semenyih, Setia Ecohill saw average price drop 4.8% y-o-y but monthly rent has remained unchanged at RM1,800 since 2020, resulting in yield increasing from 2.1% to 2.2%. “The y-o-y rental yield performance across the surveyed areas indicate positive trends, with stability and improvement across the various residential property types,” Fong concludes.

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