Prices of residential properties in Kuala Lumpur are expected to increase 10 percent this year, given the higher replacement costs and rebound in transaction volume, according to AmResearch.
The research unit of the AmInvestment Bank group, one of Malaysia’s largest investment banks, noted that the previous forecast of a five percent has been revised to 10 percent due, to escalating land costs, as well as the increasing prices of construction materials like cement, steel and aluminium.
The recent aggressive bids for land sites around mature estates will solidify the strong price tags, as land traditionally accounts for between 25 and 30 percent of the total residential prices, it said.
“The expected re-acceleration in residential prices would also be preceded by a sustained expansion in transaction volume, which is already underway now.”
With the strong response to recent launches, developers revealed that property demand in the Kuala Lumpur area has rebounded.
“We reaffirm our overweight stance on the property sector with SP Setia and IJM Land as our deep convictions buys,” it said.