As compact condo units continue to mushroom, are they gaining the popularity perceived by the industry? Is there increasing demand to encourage the development of even more small sky units?
Whether you are driving in Kuala Lumpur or Selangor, it’s hard to miss the sight of new condos emerging or billboards advertising the latest strata projects along the way. Each year brings more high-rise structures reshaping the skylines, tempting buyers with living spaces in the sky.
Rapid urbanisation, growing population, changing lifestyle preferences and dwindling land availability may have contributed to the high-rises mushrooming in these two areas.
While typical units come in family-size built-ups, it is no longer uncommon to find smaller units with one or two bedrooms, or even none – as in studio units with an all-”rooms”-in-one concept with no clear demarcation for the bedroom.
However, how has the market responded to these smaller abodes? Are small-size sky units gaining the popularity perceived by the industry? Is there increasing demand to encourage the development of even more small-size units?
Methodology
We conducted an analysis of transacted high-rise units from 1990 to 2023 in KL and Selangor to determine the trend in demand based on size. These two areas have been selected because of their significant share of the Malaysian high-rise market, accounting for more than half (66.25%) of the total 1,478,391 high-rise projects in the country as of September 2023.
The residential properties included in this analysis are condominiums, apartments, serviced apartments and Small-office Home/Flexible/Versatile-office (SoHo, SoFo, SoVo), but excluded flats. The properties were also grouped from smallest to largest to show the most transacted size groups over the years.
The trend forecast for 2025 is derived by applying the double exponential smoothing, a method to make future predictions based on the existing trends present in the data gathered.
Based on data gathered from EdgeProp analysis and the National Property Information Centre (Napic), both KL and Selangor indicated that transactions have trended towards smaller and smaller units over the last decade. Median built-up of condos transacted in KL dropped from 1,140.98 sq ft in 2010 to 1,102.66 sq ft in 2020. Similarly, during the same period, median sizes in Selangor have seen a slight reduction from 950.03 sq ft in 2010 to 905.25 sq ft in 2020.
It is forecasted that, based on transaction, the median built-up of new condo in KL is expected to continue shrinking in 2024 and 2025. Conversely, in Selangor, it appears likely to maintain at slightly above 900 sq ft.
The downward trend in KL’s condo size can probably be attributed to the scarcity of land and high land cost in the capital city. Meanwhile, for Selangor, developers could be focusing on smaller unit offerings to make them more affordable.
(Note: The median provides a point of central tendency, representing the statistically middle-sized houses at the different points in time. While the median can be used to reflect where the bulk of market activity lies, thereby signaling shifts in the market, it is limited as there is not enough data available to form the entire picture.
For example, a decreasing median size does not definitely mean a decrease in demand for all large-sized units. For example, in Chart 2 below, units >1,501 sq ft were gaining more traction in the KL market between 2010 and 2020. That means the decrease of median size was mainly due to the decreased share of transactions of 1,001-1,250 sq ft and 1,251-1,500 sq ft units and the increased transaction share of 751-1,000 sq ft units.
However, although using the median enables us to tell us the general market trend, it is not enough for us to come to a conclusion of how each size type performs in the market. This is why bar charts of the breakdown of transactions for each size range are included below (Charts 2, 3 and 4).
In conclusion, the median size changes throughout the years is a signal and an indicator of the housing market, but not necessarily housing demand, as the latter is also determined by the supply. For example, even when there is demand for larger-sized units, such demand may not be filled if there is no supply.)
Since 1990, the 751-1,000 sq ft and 1,001-1,250 sq ft condo size groups have been the two most transacted categories in KL. Notably, between 2010 and 2020, transactions for the 751-1,000 sq ft range rose from 23% to 27% to become the most transacted size among the five categories in 2020. On the other hand, during the same period, the 1,001-1,250 sq ft size group showed a drop of 6%.
As for Selangor, the 751-1,000 sq ft condo size group remained dominant over the years. In the last decade, this category showed a significant increase of 10% in transactions.
This upward trend for the 751-1,000 sq ft condo size group in KL and Selangor can be attributed to the greater acceptance of smaller housing options, especially for urbanites, who are likely drawn to their practicality and ease of housekeeping and maintenance, not to mention the ease of mortgages. Moreover, these compact units are usually located in popular areas with complete amenities and accessibilities, which are another draw factor. Furthermore, the lack of private space is normally made up with the providence of well-planned common spaces.
Despite the decreasing median built-up size in KL high-rises, the >1,501 sq ft category has also seen an upward trend, with the percentage of transactions rising by 3% over the last decade.
From the chart, interest in large-sized units started to pick up in 2005 and has since experienced a steady growth up to 2020. This demand could be attributed to land scarcity and the high cost of landed homes in the capital city, resulting in more people choosing to live in large condo units instead.
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Source: EdgeProp.my
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