Nevertheless, some see the soft market as an opportunity to attract buyers or investors, if not tenants, while some developers also believe that the market is gearing up for an upturn going into 2017.

At the Rahim & Co property research seminar earlier this month, Rahim & Co executive chairman Tan Sri Abdul Rahim Abdul Rahman said while many developers had been holding back their launches this year, some, had in fact, been generating positive sales.

“At the moment, the market is tough, but it’s a cycle,” he said.

Property consultant DTZ Nawawi Tie Leung managing director Eddy Wong says the slowdown in the current property market has had an impact on the luxury condominium sector in the country.

“Sales value of units within the KLCC area has generally dropped. Some areas have since adjusted.”

Wong points out that developers with projects within the KLCC area have “enjoyed a good two to three years” prior to the market slowdown.

“However, despite the slowdown, I don’t see any developers facing distress. To manage the situation, we see them adjusting their product mix according to the market.”

He says rentals for luxury condos have come down since oil and gas companies started downsizing their businesses in the country.

“We see many expatriates moving back to their countries and there have been more vacant units. Because of this, it’s been a bit harder for owners to sell or rent their properties.

“There were a lot of foreign investors that bought properties two or three years ago and they’re finding it hard to sell now.”

The slowdown has also seen a few luxury condos “go under the hammer,” says Wong, although he emphasises that the situation “is not critical”.

“Some borrowers have trouble servicing their loans. But the situation isn’t dire, to the point that there have been fire sales. Nothing of serious concern.”

Will prices hold?

According to Abdul Rahim, the Malaysian high-end condominium market became a highly sought-after segment about 10 years ago as Malaysians started to become more discerning, especially with the development of KLCC as a prime location for investors and buyers.

Launches of KLCC projects started in 2004 and completed in 2007. These were predominantly large units of 2,500 sq ft and above and attracted families, mostly from the oil and gas sector.

“Developers started building world-class homes – and thus emerged a market for the high-end customers. People started getting used to paying for prices higher than RM5mil.

“This started to become the norm and it spurred developers to build more of the same.”

This “phenomenon” was also spurred by steady demand from expatriates, Abdul Rahim says.

“So this trend carried on, and when there was a bubble, it led to an oversupply situation and the segment started to slow down. Eventually, prices dropped between 3% and 5%. In some places, it dropped by as much as 10%.

“Eventually there was less demand and as the economy was affected by the fall in oil prices, demand from expatriates was also affected. There has been a downtrend in the luxury residential market and I think it will take two to three years to fully recover.”

Abdul Rahim says prices of luxury condominiums currently tend to range between RM1,000 per sq ft (psf) and RM1,500 psf.

“But there are some developers that also claim to sell at RM2,000 psf.”

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SK Brothers general manager Chan Ai Cheng says she expects more adjustments in rental rates and a slight downward adjustment in pricing for high rise units.

“It has been a challenging year for the property market at all levels. Market confidence (resulting in a lot of wait and see and not to over commit in uncertain times) contributes to most of it, topped with the cooling measures that targets high-end properties.

“As it is demand is weakening plus higher loan rejection rates of some 50%, developers and owners alike are feeling the pressure.”

Chan says overall, this segment of the market is the most affected by the economic uncertainties, market sentiments and cooling measures.

“Property, given its nature as a hedge against inflation and a medium to long term investment, these momentary adjustments should be viewed as such. Always keep in mind the basics of property ownership/ investment, which is worth revisiting.”

Axis REIT Managers Bhd head of investments and Malaysian Institute of Estate Agents immediate past president Siva Shanker, one of the speakers at Rahim & Co’s property research seminar, says the local luxury condominium segment was facing an oversupply situation.

“We expect this segment to consolidate. Sales above RM1mil will slow; people don’t know when the market will recover. The market below RM500,000 is hot right now,” he says.

DTZ’s Eddy Wong believes that the market in 2017 will be similar to this year.

“It will move sideways. I don’t see the market crashing. Some places will see volumes decreasing, others maybe even increasing slightly. It will be a mixed bag.

According to the CH Williams Talhar & Wong (WTW) Property Market Report 2016, the condominiums sector is expected to be more challenging in the next two years, with the large incoming supply scheduled for completion in 2016 and 2017.

Infrastructure developments such as MRT SSP Line and East Klang Valley Expressway are likely to spur more condominiums developments in the prime as well as suburban areas.

WTW says total number of luxury condominiums in Kuala Lumpur was 36,252 units in 2015, an increase of 4,625 units compared to 2014.

“The total number of luxury condominiums units is expected to increase another 13,500 units the upcoming two years,” the report says, adding that average occupancy at between 77% and 80% in Golden Triangle.”