The large condominium market in the Klang Valley is expected to be more challenging, as the small and compact studio unit has grown in popularity across Greater KL.
In 2015, developers have begun to increasingly adopt the smaller unit model for strata developments within the city centre as well as key urban areas. The trend was to develop smaller units in the urban areas and to look to the suburbs for bigger landed properties.
“About 55% of residential transactions in Greater KL was for homes below RM500,000. This certainly alludes to smaller units being transacted from anything of 500sqft to 800sqft, depending on the area. It certainly makes sense for developers to adopt this approach to stay below the RM500,000 threshold for an affordable property, which is within the financial reach of many buyers,” shared Ho Chin Soon Research CEO Ishmael Ho.
In 2016, developers are expected to continue building smaller units in the city centre and other urban centres to keep their built-up prices below or within the RM300,000 to RM500,000 range. Unit sizes will range from 450sqft to 850sqft.
The SOFO, SOHO and SOVO model will continue to be in vogue and by linking these with good road access and public transportation connectivity, developers will look to push the “small is beautiful” strategy to tap the market, especially the 25 to 35-year-old demographic.
Looking at statistics, properties priced below RM200,000 have actually gone up from 5% to 14% of all new launches. Secondly, half of all properties launched in 2015 were below RM500,000. This is a clear sign that developers are moving towards smaller units. If this is anything to go by, one can expect the trend to continue into 2016 and thereafter.
It is inevitable as Greater KL develops, we will have greater density and smaller units – following development patterns of other cities such as London, Hong Kong and so on. This is the reality of urban living and people will need to get used to living further away or living within the city but having less space.
“I personally think that a SOHO in the city centre makes good sense. You can target the expats or locals who are working in the commercial and business districts who wish to be close to the workplace. There is a clear rental market for this demographic. But the SOHO property should be close or within the urban areas,” explained Khalil Adis Consultancy CEO Khalil Adis.