Is a glut looming in the high-end home sector? While some are apprehensive of the possibility, with the many ongoing developments, others say the interest in multi-million ringgit condominiums and landed residences will become a growing phenomenon that will continue to drive the property sector.

Avenue Securities analyst Chan Ken Yew said with 5,000 luxury apartments planned around the KLCC vicinity in the next three to five years, naturally there would be some worry of an overbuilt situation.

''However, my view is that the limited land bank in this area will not allow a situation of unlimited supply although it may take some time for all the units to be finally absorbed by the market.''

He said there was also a growing interest among foreign buyers, including expatriates and those who qualify for the Malaysia, My Second Home programme, for such expensive city apartments.

''Increasingly Malaysians are buying properties for investment with good annual return of at least 8% to 10%, through capital appreciation and rental income and this will drive demand,'' Chan added.

Sunrise Bhd managing director Datuk Michael Yam is confident the luxury home sector would continue to do well.

He said on the assumption that supply of high-end properties averaged 2,000 units per annum in Kuala Lumpur, this represented only just over 1% of the total demand in Malaysia or 5% of the estimated 40,000 annual demand in the Klang Valley. ''It would be a poor reflection of the state of the economy of Malaysia in general, and Kuala Lumpur in particular, if its growing population of half a million a year is unable to create adequate wealth to afford or upgrade to fill 2,000 high end homes annually. Also one must be reminded that high-end homes in top-end residential address in Kuala Lumpur probably number less than 10,000 units,'' Yam said.

He said good quality high-end landed homes generally derive yields of between 5% and 7% while well-located luxury condominiums could yield more than 12%.

Source : The Star 19/09/2005