Palazzio As Reported By The Star

New condo benchmark
Monday April 9, 2007
News Monday April 9, 2007
Thestar

CONDOMINIUM prices in Kuala Lumpur continue to rise to record levels following the even more pronounced trend in Singapore. Sunway City Bhd had a successful launch of its Sunway Palazzio condominium project in the Sri Hartamas suburban area of Kuala Lumpur, which was priced at RM846 per sq ft, a new benchmark for the area. That meant its smallest unit, with a space of about 2,500 sq ft, was priced at RM2.1mil. The project launch was recently held in Singapore where over 30% of units in the first tower released for international buyers were sold, a magazine there reported last week. An official launch has not been held in Kuala Lumpur yet. This is a new level for the condo market in the city suburbs.

It was reported in this column in January that Bandar Raya Developments Bhd sold most of its One Menerung condominium in the Bangsar area at an average of RM750 per sq ft, a record in that neighbourhood. Prices in Bangsar could rise further, considering that it is a more expensive area than Sri Hartamas and the nearby Mont'Kiara area. Sunrise Bhd, the biggest developer in Mont'Kiara, should find a good reception in its upcoming launches. In its latest launch late last year, the 10 Mont'Kiara condominium was priced at about RM530psf or an average of RM2mil a unit. Buyers of the units had found a bargain as the company is expected to price its next project, eleven@Mont'Kiara, at a higher price per sq ft and from about RM3mil a unit. The rising prices would lead analysts to re-examine their forecasts, which are likely to be revised upwards, along with their estimates of the asset values of property companies. Some analysts have started to do so. CIMB Research, for instance, last week raised SP Setia Bhd's revised net asset value (RNAV) to RM7.10 from RM6.89. With that, CIMB increased its target price for SP Setia to RM10.00 from RM9.00 as it moved up the RNAV premium from 30% to 40%. The stock closed at RM7.85 on Friday. While many analysts use earnings as a valuation yardstick here, it is not unusual in developed capital markets to use asset values to appraise a stock's worth. The use of RNAV is particularly suitable where a company's properties comprise small parcels that can be sold quickly. In SP Setia's case, it is a large landowner but it has proven it can progressively sell its inventory at steady profit margins. Furthermore, bungalow land values at its Setia Eco Park have appreciated to RM110 per sq ft in its latest sales from around RM65 per sq ft when first launched in 2004, CIMB reported.


Palazzio condominium, Sri Hartamas
Last edited by nazrey; June 16th, 2007 at 09:16 AM.