Property market in Kuala Lumpur showing sign effected by economy crisis. Malaysian Institute of Economic Research (MIER) projects Malaysia will have 50% chance of full-year recession this year and is quite certain that the country will dip into technical recession in the first half of this year.

MIER expects the domestic economy to return to normalcy only in two to five years. Malaysia is not spared from the global financial crisis as well as property market meltdown. Since late last year, the domestic property market has started to show signs of weakening.

Kuala Lumpur City Centre’s (KLCC) high-end condominium is heading towards a 15%-20% price depreciation in two to three months. Property buyers are looking for more realistic pricing, reflecting the current conditions. In a worst-case scenario, he is projecting up to 30% drop in prices over that period.

Average price stands at RM1,500 per sq ft in KLCC presently. In other suburbs such as Bangsar, Damansara Heights and Cheras, predicts a 10%-15% decline. The rental of office space in KL should not be affected at least until the end of the year but expects prices to come down after that.

Downgrade the office to save money to overcome downturn market, reduce from RM8 to RM6 per sq ft. The KLCC landlord reduce by 10% to 15% (to prevent the tenant moving out). But at this time, the rental rates are maintained.

There will be additional 8 million sq ft of office floor in KL by 2011 or 2012. Currently, the rental rates at KLCC and the KL vicinity are between RM6 and RM8 per sq ft and between RM4 and RM6 per sq ft respectively.

Retail space is mostly occupied and rental rates have been maintained. However, the segment may witness a downtrend should the unemployment rate rise.

The commercial sector is least affected now, but in the long-term, affordable housing will be the least affected by the crisis, as people still need a house to stay in.

Property developers not to be unduly concerned about the external factors such as interest rates and global economy but instead concentrate on their branding. No matter what the economic cycle is, there are always buyers out there. Property developer- SP Setia Bhd’s launch a home loans package promotion recently getting a good result to sold property.

Economy of the United State is the backbone of world economic stability.As such, consumer confidence of the property market will only be restored once the US stabilises. The US is in recession but once it stabilises, property market will rebound directly.

Meanwhile, Real Estate and Housing Developers’ Association Malaysia concurs that the current world economic crisis will certainly affect the property market. Expects the property sector to trend downwards by 5% to 10% in y2009. There will be definitely a drop in terms of demand and prices, but the situation is still under control. From International Real Estate Federation Asia Pacific, the prospects of the property market is not so bright but compared to other countries, it is holding steady in terms of pricing.

Frankly, it’s a good time to buy a property when property market in downturn. Property is always a good investment. Buying investment property might bring capital growth and rental return. Hope that the next stimulus package will bring some goodies to this sector to spur sales and generate economic growth.

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