'Property mart may take 2 years to rebound'

MALAYSIA'S real-estate market, glutted with luxury homes planned in boom times, may suffer the full effects of the global economic slump in coming months and take two years to rebound, property consultant Rahim & Co said.

“Before it starts recovering, we have to face the worst,” Abdul Rahim Rahman, the company’s chairman and founder, told reporters today in Kuala Lumpur. “The real-estate market is usually slower to recover than the economy.”

Luxury condominium prices near the Petronas Twin Towers in central Kuala Lumpur will extend declines by June after dropping as much as 20 per cent from last year, as oversupply crimps sales and demand dries up, Rahim said. Condo prices lost 5 per cent to 10 per cent in the Klang Valley surrounding the capital, he said.

Malaysia’s government may next month put forward a second stimulus plan, adding to November’s RM7 billion (US$1.9 billion) package, in a bid to avoid joining neighbouring Singapore in recession. Interest in luxury apartments is evaporating even as developers roll out projects planned before the worldwide slowdown, Rahim said.
“In 2006, 2007, our calls were all, ‘what have you got, is there anything interesting to buy?’ Those calls have stopped,” he said.

There may be 30 per cent too many luxury apartments in the centre of Kuala Lumpur, he said. Developers are committed to introducing new projects so they can cover costs and are exacerbating the glut, Rahim said.

The global recession, partly caused by a real-estate slump in the US, triggered economic slowdowns from the UK to New Zealand. In Malaysia, Rahim is advising clients to delay new projects to the third quarter, consider shrinking them, or use cheaper furnishings to make prices more attractive.

“Demand is very, very weak,” Robert Ang, managing director of Savills Rahim & Co, the firm’s international real-estate agency, said today. “I don’t see prices even stabilising or picking up in the near future, especially luxury condos.”

The number of high-end apartments in Kuala Lumpur will double to more than 30,000 in the next three years, Malaysian property consultant Regroup Associates Sdn Bhd said in December.

The average price of luxury condominiums in the centre of the Malaysian capital has fallen to between RM1,000 and RM1,500 a square foot. Foreign buyers pushed prices to more than RM2,000 in 2007.

By Bloomberg