KL property market to continue falling

KUALA LUMPUR: The property market in Kuala Lumpur could depreciate as much as 10% to 15% going forward, while the prices of high-end condominiums in the Kuala Lumpur City Centre (KLCC) area may fall up to 30% in the next two to three months, said property consultant Rahim & Co.

The rest of the property market in Malaysia was expected to remain stable, it said.

“The drop in prices will be more drastic in the KLCC area due to higher price escalation that (it had enjoyed) from 2005 to 2008,” said Datuk Abdul Rahim Rahman, executive chairman of Rahim & Co.

“We are beginning to feel the impact on property in KLCC that depends on foreign buyers.”

He said there had been indications that the asking price for high-end condominiums in the KLCC area had fallen by 30% from the RM2,000 per sq ft they fetched last year.

The foreign buyers that had supported property sales in KLCC “are now beginning to reduce and Malaysian buyers are adopting a wait and see attitude,” he said.

“Sellers have started to offer lower prices (and the prices) have dropped 10% to 15% in the KLCC area,” Abdul Rahim told reporters during the one-day seminar aimed at updating participants on property trends and issues in Malaysia.

However, it was unlikely that the domestic real estate market would drop as much as 45% as had happened in Hong Kong, London and Singapore, he said, adding that real estate prices in those cities were expected to further depreciate by 50% or 60% in the next few months.

Abdul Rahim said Malaysian office spaces still enjoyed 90% occupancy rates and rental prices had not dropped as there was no oversupply and many of the leasing contracts were not expiring.

Currently, office rental rates in KLCC fetch between RM6 and RM8 per sq ft, while rates in the rest of KL are going for RM4 to RM6 per sq ft.

“However, we know that it is going to be an additional 8 million sq ft of office space in 2011 and 2012, and we expect because of this, there will be downtrend in rental rates even without this economic crisis,” Abdul Rahim said.

By The Star