On the back of the global financial crisis, the Klang Valley property market ended with a weak sentiment last year, entering 2009 amidst many uncertainties.

While the escalation of construction costs have slowed, banks have been tightening loan terms, making it difficult for home buyers to secure suitable home loans.

The above scenario resulted in a quiet property market where developers delayed launches and slowed down the rolling out of new projects. Executive director of Knight Frank Malaysia, Sarkunan Subramaniam, feels that property prices would decline too.

“Property players and hunters can certainly expect the market to slow down with property prices decreasing by five to 10 per cent as the slower economy brings down demand. The wait-for-bargains stance on property purchase will prevail and some good bargains will arise in the later part of the year,” says Sarkunan.

Director of Metro Homes Sdn Bhd, See Kok Loong, says in this changing market, property players such as developers should be involved in more research and look for real demand prior to offering projects to the market, whereas property hunters should be able to find good investment in 2009, depending on the type of investment they are looking for.

“This year, returns may not be that good, as rental returns have generally faced downward pressure but in the long run, capital appreciation for landed property should be alright.

“Prices may come down a bit but not in a very drastic manner as the holding cost is still low. Refinancing will become a trend whereby owners refinance for the purpose of consumer spending and others,” says See.

The Klang Valley market

According to See, the current market situation is alright, despite it having slowed down since November last year. There are still transactions, most of which are concentrated on mid-range homes such as those below RM600,000. The rental market would also do well, with more people renting instead of buying and the landlord mentality of low rent rather than no rent prevailing.

“The commercial sector would very much depend on catchment and location. Those in the right location would continue to do well, where they are backed by the spending power of residents. In newly completed areas without much population, it would take a while (to perform),” says See.

Meanwhile, offices would face pressures of falling rents as more buildings are due for completion soon, while multinational companies continue to downsize or slow down on expansions.

The industrial sector is also expected to perform poorly as demands for factories would slow down as demand for manufacturing and exports decline. “However, selected locations would still do well such as prime areas that moved in to the showroom category like Petaling Jaya, Balakong, Sunway Damansara and Kota Kemuning,” adds See.

The best locations

On the current hottest spot in Klang Valley, See says the demand is everywhere. However, areas such as Petaling Jaya, Taman Tun Dr Ismail, Bangsar, Hartamas, Subang Jaya, Puchong and certain parts of Shah Alam would continue to do well, especially in the landed property sector.

“With a lower monthly budget, people would compare the cost of staying in a condominium – such as management fees, higher water bill and more – as opposed to a landed home that come without all these (costs),” he explains.

As for the performance of the market in the first half of 2009, See expects things to be challenging. “Negative news would drive away investors and house buyers looking to upgrade would be cautious as well,” he says.