Residential property overhang in KL hit 52,666 units in 2Q2019; more supply in pipeline

Residential property overhang — defined as completed units that remain unsold nine months after launch — in Kuala Lumpur stood at 52,666 units in 2Q19.
This is a 10.9% increase from the overhang stock of 1Q19, says Nawawi Tie Leung Property Consultants in its 3Q19 report on the Malaysian capital’s real estate market.
The total overhang in 2Q19 is 32,810 residential units, 18,186 units of serviced apartments and 1,670 Soho units. The majority of the overhang units are priced between RM200,001 and RM300,000 ($65,599 and $98,902) and makes up 22.3% of the total overhang units.
For the remainder of the year, more condominium units are expected to be released into the market. In 3Q19, 2,514 units were added to the current stock after the completion of three high-rise projects. The bulk of the new supply came from 1,516 units of serviced apartments at EkoCheras, located outside the city centre at Jalan Cheras’ Mile 5. The other two completed projects are from Stonor 3 with 400 units and Aria KLCC with 598 units.
Meanwhile, prices and rents for high-end condos eased marginally by 0.8% and 2% q-o-q at RM1,028 and RM3.78 psf per month respectively.
In the office market, the total stock in Kuala Lumpur increased to 84.8 million sq ft in 3Q19, following the completion of The Exchange 106.
Average occupancy rate dropped to 77.6% in 3Q19 from 79.7% in 2Q19. Nawawi Tie attributes this to the “slower-than-expected take-up” at The Exchange 106.
The first batch of tenants are expected to move into The Exchange 106 by next month while the bulk of other tenants are expected to follow suit by March and April 2020.
In 3Q19, Kuala Lumpur’s office market was mainly driven by the expansion of serviced office/co-working space operators and tech firms such as Klook, Agoda and Fave. Expansion in the office market is expected to gather momentum as other major tech companies contemplate expanding their presence in Malaysia.
Currently, the serviced office and co-working space in KL is split between 51% and 49% in the Golden Triangle and KL Fringe respectively.
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