Sluggish Rental Market

By THEAN LEE CHENG | Sep 4, 2010 [THE STAR]

EVEN as certain top-end condominium units have been sold at hefty prices, the general rental market in the KLCC vicinity has remained somewhat sluggish.

Furthermore, given the expected fall in the number of expatriates in the country, real estate consultancy Rahim & Co executive chairman Datuk Abdul Rahim Rahman says the rental market in KLCC may not improve in the next two years while prices could also fall as owners come under pressure from their financiers.

“This may lead to some of these owners off loading their properties at a discount,” he says.

However, quality projects in exceptional locations with good branding and developers with strong established records in high-end development will fare better, enjoying strong demand from investors, owner occupiers and tenants.

Even so, Rahim expects some moderate price appreciation of around 10% yearly, in spite of falling rental yields, as investors are now focused on capital gains.

“The days of high rental yields are over. This in itself is not necessarily a negative thing. It is a sign of a maturing market,” says Rahim.

The market in the first half of this year, he says, has been sluggish compared to the heady days of 2006/2007 when prices in the KLCC vicinity rose to hitherto unseen heights.

Rahim adds however that the market has bottomed out and is now in recovery mode, with asking prices ranging between RM850 to RM1,700 psf. But the rental market is still soft; the average rental is dropping by 13% from RM4.88 psf in December 2008 to RM4.23 psf in June 2010.

Having said that, Rahim says developers are more optimistic now compared to last year and have started reviewing their development proposals.

According to him, there are about 7,000 units currently in the KLCC core area bounded by Jalan Ampang, Jalan Pinang, Jalan Kia Peng and Jalan Tun Razak.