KLANG VALLEY RESIDENTIAL MARKET OVERVIEW

APRIL 2012

Klang Valley Residential Market Overview

Snapshot
Landed Properties New starts declined between 2008 2010, before rising again slightly in 2011. New housing starts outnumbered the total for 2009 and 2010. The average household size in the Klang Valley is larger than that of SG & HK, suggesting latent demand should affordable properties be launched. The Klang Valley has a young population base, with 40% under 19, signifying growing demand for housing over the next 20-30 years. Significantly, we have seen a decline in loan approvals since 2006, with figures for January-February 2012 registering just 46% of the approval rate. Condominium Supply is poised to grow strongly over the next five years, although we have seen developers move away from larger units towards better located, smaller units. Some luxury projects launched over the past year have done well (70% take-up rates), including the Mirage Residence (RM1,200-1,600 psf), The Face Serviced Apartments (RM1,350 psf) and Banyan Tree Residences (RM2,000psf), but we expect this segment of the market to slow. 34% of middle to high end range condos are located in the city centre (defined as KLCC area and Bukit Bintang), while another 35% is located in MontKiara/Sri Hartamas. Average asking rents have declined in prime areas of KLCC and MontKiara, putting pressure on yields.
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Klang Valley Residential Market Overview

Existing Residential Supply in Klang Valley

Existing Supply of Residential Properties (All Types) in Klang Valley
2.000 16.0%

1.42

1.600

No. of units (million)

1.23

1.400

9.9%

1.34

11.60%

1.53

1.60

13.3%

1.64

1.800

14.0%

12.0% 10.0% 7.7% 8.0% 6.0% 3.3% 1.2% 4.0% 2.0% 0.0%

Total existing supply of residential properties in Klang Valley stood at 1.72 million units as of end-2011, equal to an annual growth rate of 1.2% from 2010. Of the total existing supply in 2011: Landed residential properties accounted for about 746,300 (43.4%) this inclusive of terraced houses, cluster houses, semi-detached, and bungalows. Serviced apartments and condominiums were about 369,700 units (21.5%). Low-cost houses/flats captured about 580,000 units (33.8%) of the total. The rest was the townhouses and Soho.

1.70

1.72

Annual Growth Rate (%)

1.15

1.000 0.800

0.88

0.93

1.05

1.200

8.8%

6.7%

6.1% 4.6% 2.7%

4.8% 0.600 0.400 0.200 0.000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Breakdown of Residential Supply in Klang Valley by Location

W.P Putrajaya 0.3% Kuala Lumpur 24.1%

Selangor 75.6%

About 75.6% of residential housing units within the Klang Valley are located in Selangor.

Source: Napic / PMR 2011 / CBRE Research

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Klang Valley Residential Market Overview

Incoming Supply & New Starts Trends

Total Incoming Supply, New Completions & New Starts in Klang Valley
273,720 266,923 255,232

Total Incoming Supply (under-construction) New Completions New Starts

300,000

262,343

250,000

213,629

193,434

Number of Units

179,992

200,000

150,000

112,458

62,417 41,564

100,000

92,412 61,683

91,207 65,624

80,274 64,017

76,449

72,944 61,841

41,827 22,824

162,942

177,317

50,000

2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: Napic / PMR 2011 / CBRE Research

Incoming supply, new completions and new starts trended down between 2005 2010 before rising in 2011. Approximately 77% of total incoming supply (under construction) are located within Selangor.
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20,175 34,550

30,063 24,586

Klang Valley Residential Market Overview

Population : Housing Stock Ratio

Population per Residential Housing Unit
4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Hong Kong Singapore Kuala Lumpur Klang Valley

3.7 2.8 3.2

3.9

In Malaysia, ratio of population to existing housing stock is higher than HK & SG, suggesting market can absorb additional stock . Average Household Size: Kuala Lumpur - 3.72 persons Selangor - 3.93 persons

Population by Age Group 2000 Versus 2010

50.00% 40.00% 30.00% 20.00% 10.00% 0.00%
Malaysia, 2000 44% 25% 25% 6% Malaysia, 2010 38% 27% 27% 8% Kuala Kuala Lumpur, 2000 Lumpur, 2010 36% 32% 27% 5% 31% 32% 30% 7% Selangor, 2000 40% 29% 26% 5% Selangor, 2010 33% 33% 28% 6%

Young population base with about 40% in Klang Valley under 19 years, will ensure robust demand for residential properties.

Below 19 20 - 34 35 - 60 60 and above

Source: JPPH, CBRE Research, CSD (HK), DOS (SG), Bank Negara Malaysia

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Klang Valley Residential Market Overview

Number of Residential Property Transactions by Price Range in KL

Number of Residential Property Transactions by Price Range in Kuala Lumpur
30,000
< RM100K RM100K-RM200K

25,000

RM200K-RM500K RM500K-RM1.0Mil

No. of T r ansactions

24,314 20,220 21,262

20,000

> RM1.0Mil Total

18,840 14,374 15,076

15,000 12,652 10,000 13,292

5,000

0
Source: Napic

3,196 4,132 3,752 948 624

2004

3,363 4,207 3,975 1,065 682

2005

3,594 4,267 4,303 1,444 766

2006

3,408 4,485 4,327 1,775 1,081

2007

2008

4,325 5,923 6,429 2,154 1,389

4,009 5,379 5,753 2,071 1,628

2009

3,772 5,391 7,103 2,984 2,012

2010

Total residential property transactions increased steadily since 2004 in Kuala Lumpur. Total transactions in 2011 was almost double compared to 2004.

Majority of residential property was transacted at RM200K-RM500K since 2008. This has been the dominant market since 2008.
Increasing number of transactions for the residential property at the price range of RM500KRM1.0mil and above RM1.0mil.
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4,927 5,641 8,113 3,402 2,231

2011

Klang Valley Residential Market Overview

Number of Residential Property Transactions by Price Range in Selangor

Number of Residential Property Transactions by Price Range in Selangor
80,000 70,000
< RM100K RM100K-RM200K RM200K-RM500K RM500K-RM1.0Mil > RM1.0Mil

75,344 69,445 61,364 64,175 64,727

No. of T r ansactions

60,000 50,000 40,000 30,000 20,000 10,000 0

Total

48,228 42,986

39,660

15,095 21,870 19,613

11,995 13,900 11,182 2,000 583

13,430 15,180 11,671

13,483 17,022 14,100

16,633 22,161 22,925

16,757 21,909 20,462

17,126 21,275 20,561

Source: Napic

2004

2005

2006

2,773 850

1,967 738

2007

3,532 1,254

2008

2009

4,093 1,672

3,589 1,458

2010

5,511 2,215

2011

Similar to Kuala Lumpur, total residential property transactions increased steadily since 2004 in Selangor. Total transactions in 2011 was almost double compared to 2004. Shift to RM200K-RM500K range started in 2010.

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7,286 3,022

17,673 22,810 24,553

Klang Valley Residential Market Overview

Number of Residential Property Transactions by Type

By Residential Property Type 2010 Terraced Houses Semi-D Houses Detached Houses Condominium/Apartment Low-Cost Houses & Flats Others (inclusive of Townhouses, Cluster Houses & Vacant Plot) Total
Source: Napic

KL 2011 3,712 557 639 12,805 5,537

Selangor 2010 29,609 3,164 2,935 14,687 10,771 2011 30,946 3,503 3,044 17,616 11,453

Combined KL & Selangor 2010 33,656 3,734 3,586 25,522 14,758 2011 34,658 4,060 3,683 30,421 16,990

4,047 570 651 10,835 3,987

1,172 21,262

1,064 24,314

8,279 69,445

8,782 75,344

9,451 90,707

9,846 99,658

Total combined residential property transactions in Kuala Lumpur & Selangor were 99,658 in 2011, up 9.9% from the total 90,707 transactions in 2010. In terms of market share, terraced houses dominated with 34,658 units or 34.8% of residential transactions in KL & Selangor in 2011, followed by condominium/apartment (30.5% or 30,421 units).
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Klang Valley Residential Market Overview

Housing Loans
Loan Applied for Purchase of Residential Property 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Loan Approved for Purchase of Residential Property 12,000 10,000 8,000 6,000 4,000 2,000
Source: BNM Source: BNM

2006 2007 2008 2009 2010 2011 2012

Approval ratings (which show the banks appetite towards mortgage loans) have dropped from 62% in 2006 to 51% in 2011 however, this has not stopped total approvals increasing from RM33 billion in 2006 to RM95 billion for 2011. Loans approved in Jan 2012 were lower than that in Jan 2010 & Jan 2011 likely due to combination of new BNM guidelines plus number of holidays in Jan 2012.
However, the loans applied and loan approved were picked up again in Feb 2012. Loan approval rate was dropped to 46% of application.
Year 2006 2007 2008 2009 2010 2011 2012 (Jan-Feb) Application (RM mil) 53,356.6 79,143.4 98,308.2 130,389.4 153,384.9 186,625.3 26,718.7 Approved (RM mil) 32,848.5 48,153.1 57,954.3 70,480.6 77,181.6 94,959.8 12,254.1 Approval Rate(%) 62% 61% 59% 54% 50% 51% 46%

2006 2007 2008 2009 2010 2011 2012

0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Note: Based on BNM new loan guideline, effective from 1 Jan 2012, prospective loan borrower is assessed based on net income basis (instead of gross income) after deducting statutory deductions for tax and EPF and all other debt obligations (eg. car loan, other housing loan, credit cards).
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Klang Valley Residential Market Overview

Zoning of High-end Condominiums Location in KL

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Klang Valley Residential Market Overview

Total Supply of High-end Condominiums in KL (by price)

RM350psf (i.e total mid to high-end condos supply)

37,214

28,965

19,758

17,348

19,200

15,907

15,130

16,927

30,000

23,090

24,781

27,649

40,000

31,523

34,862

RM800psf

39,581

50,000

40,082

RM500psf

47,949

53,018

Units 60,000

Cumulative Supply of High-end Condominiums in Kuala Lumpur (as at Q4 2011)

Total condominium supply (based on the zoning) in 2011 was 37,214, up by 18.05% from 2010. The supply figures include all projects with average prices of RM350 psf and above. Irregular supply growth patterns with a minimum annual growth of 8.5% since 2002.

12,483 5,389

14,658

12,121

9,067 1,778

6,634

6,121

10,000 -

2,576

5,257

6,731

9,105

20,000

11,551

2004

2005

2006

2007

2008

2009

2010

2011

2012e 2013e 2014e

Total Existing Condominiums Supply by Grade in Kuala Lumpur RM800psf & Above 24% RM350psf RM499psf 33%

For the range RM500psf, supply is estimated to increase threefold from 2007 to end2012 (9,067 to 27,649), a period of 5 years.

About 24% are in projects priced at RM 800 psf. The price grading is based on values for secondary transactions.
RM500psf RM799psf 43%

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Klang Valley Residential Market Overview

Total Supply of High-end Condominiums in KL (by location)

Total Existing Condominiums Supply by Location in Kuala Lumpur

KL City 12,549 units 33.7%

About 33.7% of total supply, or 12,549 units, are located in the city centre (in this case, defined as KLCC area and Bukit Bintang).

Total Existing Condominiums Supply by Grade in Kuala Lumpur

KL Suburban 24,665 units 66.3%

Pantai / Kerinchi 658 2% Mont'Kiara / Sri Hartamas 13245 35%

Kg. Baru / Titiwangsa 202 1%

Ampang Hilir / U-Thant 3333 9% City Centre / Bukit Bintang 6532 18%

There are currently over 6,000 condo units (16%) in the KLCC area, with another 2,800 units under construction or having launched sales.

KL Sentral / Brickfields 1668 4% Kenny Hills 570 2%

Kuala Lumpur City Centre 6017 16% Damansara Heights 1547 4% Bangsar 3442 9%

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Klang Valley Residential Market Overview

Average Capital Values & Rents

Average Capital Values of High-end Condominiums in Kuala Lumpur
RM psf 1,050 950 850 750 650 550 450 350 2004 2005 2006 2007 2008 2009 2010 2011 560 KLCC Bangsar Mont Kiara 714 966

Based on 39 samples of highend condominiums (all sizes) located within KLCC, Bangsar & MontKiara, the average capital values have remained relatively steady since 2009. However, transacted prices of some large condominium units have been dropped.

Average Asking Rental Rates of High-end Condominiums in Kuala Lumpur

RM psf per month

5.50 5.00 4.50 4.00 3.50 3.00 2.50 2004

KLCC Bangsar Mont Kiara

3.94 3.25 3.08

Rental rates on a psf basis have declined since 2007, reflecting weaker demand for rental units (coupled with increased supply).
Asking rents are also highest in the KLCC area, followed by Bangsar and MontKiara.

2005

2006

2007

2008

2009

2010

2011

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Klang Valley Residential Market Overview

Transacted Prices for Selected High-end Condominiums in KL

Transacted Prices (RM psf)
No. 1 Name One KL Location KLCC Built-ups (sf) 3,286 2008 n.a 2009 1,350 - 2,000 2010 1,100 - 1,600 2011 n.a

2
3 4 5 6 7 8

3 Kia Peng
Park Seven Stonor Park 10 Mont'Kiara Mont'Kiara Damai Bangsar Peak One Menerung

KLCC
KLCC KLCC MK MK Bangsar Bangsar

2,906
2,808 3,326 3,704 3,175 3,574 3,240

760 - 950
1,030 - 1,200 1,100 - 1,200 n.a 535 -747 638 n.a

811
900 - 1,100 800 - 850 600 - 730 598 - 640 895 - 953 830 - 1,200

774 - 908
930 - 1,200 930 590 - 755 500 - 646 930 - 980 880 - 1,080

811 - 1,013
850 - 1,100 830 570 - 758 580 -724 890 - 986 850 - 1,250

The transaction prices were dropped for some of the high-end condominiums (large built-up units i.e. 2,800 sf onwards) in 2011 compared to 2008/2009.

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Klang Valley Residential Market Overview

Average Value per Transaction (Condo RM500K) & Buyer Pool in KL

Total Transaction Volume and Average Value per Transaction of Condominiums (Above RM500K per units) in Kuala Lumpur 3,000 2,500 941.5 2,000 988.3 1,071.0 1,135.6 1,091.5 1,053.9 1,400 1,200 1,000 800 600 400 200 0

962.4

RM '000

Over the past four years, an average of 1,900 condo units priced RM 500,000 per unit have been sold annually. Average value per transaction was dropped from RM1.14 mil in 2009 to RM1.05 mil in 2011. (declined about 7.2%)

Units

1,500 1,000 500

1,364

1,346

2,156

2,810

567
2005

617

970

2006

2007

2008

2009

2010

2011

Transaction Volume

Average value per transaction

Purchasers' Profile of High-end Condominiums / Serviced Residences in Kuala Lumpur

Bumiputra, 13.4% Foreign Purchasers, 22.3% Local purchasers, 77.7%

The purchaser profiles are based on a study of 39 condo projects of varying grades in various locations of KL and show that the bulk of demand is still local.

NonBumiputra, 64.3%

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Klang Valley Residential Market Overview

Selected New High-rise Residential Projects in the Klang Valley

In general, these new launches are reported good take-up rate due to good marketing strategies by the developers.
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Klang Valley Residential Market Overview

Services
CBRE Malaysia provides a full range of services for property owners, occupiers and investors, including:
Estate Agency Services Investment Services Office Leasing & Tenant Representation Research & Consultancy

Retail Consultancy and Leasing

Valuation (Corporate and Retail) Project Management Property Management

Facilities Management
Property Due Diligence

For more information, please visit our website at www.cbre.com.my, or contact us at +603 2092 5955.
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Klang Valley Residential Market Overview

Thank You

CB Richard Ellis | Page 18