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Escalating land cost in Kuala Lumpur driving developers south of Klang Valley

Publication Date : 23-07-2014

 

More developers are choosing to relocate their developments towards the south of the Klang Valley due to escalating land prices in and around Petaling Jaya and Kuala Lumpur.

“Escalating land prices within Greater KL have reduced the supply of affordable landed properties, which remain in demand,” said AllianceDBS Research in a report yesterday.

“The mass rapid transit (MRT) connectivity at Kajang (ready by 2017) and the ready infrastructure with several highways have made Kajang/Semenyih the natural choice for developers to expand township developments.”

The research house said this was supported by the availability of large tracts of land and these districts recording among the strongest population growth in Selangor.

“The close proximity to KLCC and the Putrajaya federal administrative centre will ensure KL South continues to thrive.”

AllianceDBS Research noted, however, that Greater KL and the Klang Valley remain the core of the government’s Economic Transformation Programme.

“The government wants to grow the Greater KL population to 10 million by 2020 from an estimated seven million currently. This means the Greater KL population has to grow by 5.2 per cent per annum on average, much higher than the national average of 1.4 per cent.

“If the goal materialises, then this would translate into stronger demand for housing of 80,000 units per annum in Greater KL alone vis-à-vis 78,000 units completed for the whole country in 2013.”

AllianceDBS Research said the housing demand in Greater KL is likely to remain healthy going forward, adding, however, that buyers would be picky because of the steep pricing, no thanks to a slew of cost-push factors, including inflationary pressure, subsidy rationalisation and the implementation of minimum wages.

“Faced with the risk of margin compression, property developers will naturally look to landbank in areas where land cost is relatively low and there is ready infrastructure and a growing population.”

 

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