Market Focus: Why Kuala Lumpur is an Increasingly Attractive Property Market

Posted in Before You Buy

While Hong Kong, Singapore, Shanghai and Bangkok boast all the dynamism and glitz commonly associated with the modern luxury lifestyle in Asia, Malaysia’s relatively chilled capital Kuala Lumpur is viewed as a safe haven in troubled economic times. Throw excellent regional travel connections, unrivalled tropical vacation opportunities and outstanding dining into the mix, and it’s easy to see why KL is increasingly an attractive destination for high-end property investment from across the region.

Much like neighbouring Thailand, however, Malaysia is suffering from a glut of unsold homes, in this case due to overbuilding, demand mismatch and currency depreciation in recent years (the ringgit has dropped 16 per cent in value against the US dollar since 2014). According to data released by the Malaysian Ministry of Finance in October, the number of unsold properties across the country stood at 54,078 units at the end of the first quarter of 2019, valued at 37.2 billion ringgit (RM37.2 billion, about HK$70 billion), with residential units accounting for the bulk.

“The property market in Kuala Lumpur and Malaysia appears to be bottoming out, although it will take some time before the market sees any significant growth,” says Sarkunan Subramaniam, managing director at property consultants Knight Frank Malaysia. “The market is expected to improve gradually with support from various government initiatives.” These include a lower price threshold for foreign buyers of high-rise property in urban areas from RM1 million to RM600,000 in 2020.

That said, the Malaysian property market – and particularly that of KL – has witnessed an influx of investment in 2019, mostly from elsewhere in Asia, for multiple reasons, with premium properties pulling in a substantial share. Anxiety arising from anti-government protests in Hong Kong has resulted in local capital flowing into Southeast Asia, with Malaysia viewed as an especially dependable refuge from instability.

A unit at the YOO8 serviced residence at 8 Conlay, scheduled for completion in 2021.

Other factors include healthy Malaysian GDP growth of 4.7 percent in 2018, and confidence buoyed up by pro-investment policies of the new Pakatan Harapan government, voted in that same year. On the whole, however, simple, no-nonsense bang-for-buck considerations have been key to KL’s growing attractiveness for overseas cash.

With Hong Kong, Singapore, Shanghai, and Beijing all now boasting some of the most expensive residential property prices not just in Asia but worldwide, humble Malaysia – according to data recently released by international property consultant CBRE – currently rests in 24th position on the global average house-price list. CBRE’s Global Living 2019 report states that the average price for a “prime property” in Hong Kong now tops US$6.8 million, while in Singapore it would be in excess of US$1.2 million. The average for such a home in KL is less than US$500,000.

“This makes luxury property in Kuala Lumpur and Malaysia very affordable for investors from these regions,” says Danny Broadfield, CBRE’s associate director, International Project Marketing Asia.

Subramaniam at Knight Frank, meanwhile, defines a premium KL property as “generally priced above the RM1 million mark, or above RM1,000 per square foot on built-up area. Currently, the cumulative supply of luxury property totalled approximately 57,000 units, or circa 10 per cent of the total supply, in Kuala Lumpur.” 

Kelly Hoppen-designed bedroom at YOO8 serviced residence.

Looking at branded residences operated by hotel chains (popular examples include The Residences at The St. Regis Kuala Lumpur and Four Seasons Private Residences), Subramaniam adds that there are in the region of 2,400 finished units in central KL alone. “In the near future, another 2,000 units are expected to be completed,” he says. “These new branded residences are generally priced above RM2,300 per square foot.”

With nearly a quarter of Malaysia’s total population of more than 30 million being ethnically Chinese, and the proportion leaping to more than 40 percent in KL, investors from mainland China and Hong Kong feel especially welcome in the city, and so they are the most enthusiastic outside buyers of KL homes. The national government has further encouraged this phenomenon with fast-track residency visas for the wealthy, most notably through the Malaysia My Second Home (MM2H) programme. 

“You have a similar time zone, a world-class airport in Kuala Lumpur International Airport, good road connectivity and rail systems, great food, people and culture, all teamed with Mandarin-speaking locals,” enthuses Hong Kong-based Broadfield. The SAR is less than four hours away from KL by air, with Bali being under three hours and Singapore less than an hour’s flight time, or seven hours by rail.

Indeed, though recent years have been challenging for local developers, according to Global Living 2019, “The luxury, high-rise segment [in KL] is largely a foreign investors’ market … High levels of existing supply in this market may moderate launch activity in the in the near future, as the current inventory is being absorbed. These dynamics also mean that prospective buyers of luxury property are currently at an advantage, with many investment opportunities available.”

Although there are low-density pockets of high-wealth-individual homes scattered across Kuala Lumpur (see Damansara Heights, Desa ParkCity, Taman Tun Dr Ismail and Imbi, among others) luxury residences tend to be clustered in the city centre, most notably in the high-rise district known by the acronym KLCC. This sprawling, multipurpose “city within a city”, is characterised by statement architecture (most notably the iconic Petronas Twin Towers), five-star hotels (including the Mandarin Oriental Kuala Lumpur, Grand Hyatt Kuala Lumpur and InterContinental Kuala Lumpur, among others) and upscale designer-driven shopping malls.

Other areas to consider include neighbouring Bukit Bintang, U-Thant and Ampang Hilir, immediately east of KLCC. Encompassing the city’s embassy enclave, these areas also provide doorstep access to quality-lifestyle amenities such as spacious, leafy parks of orchid gardens and choreographed fountains, international schools and top-flight medical care, convenient municipal transport infrastructure, varied nightlife, even the prestigious Royal Selangor Golf Club.

Steve Leung-designed unit at YOO8 serviced residence.

The high-end residential property currently generating the most buzz in KLCC is 8 Conlay, a mixed-used freehold development on Jalan Conlay, its three towers – the tallest rising 68 stories – set to become the loftiest residential structures in all of Southeast Asia when they are completed in 2020 and 2021. Two of the towers will comprise the YOO8 Branded Serviced Residence, with more than 1,000 one, two and three-bedroom units ranging in size from 700 square feet to 1,308 square feet. The third tower will be the Kempinski Hotel and Residences.

This ambitious, US$1.3 billion complex is a design-driven collaboration between RSP Architects Kuala Lumpur, the Philippe Starck co-founded interior-design firm Yoo, and Bangkok-based landscaping experts Trop. Clearly tugging a forelock in the direction of 8 Conlay’s most likely buyers, the development draws aesthetically on the yin-yang concept and the Chinese character for the lucky number eight.

Residential units in 8 Conlay’s Tower A, with creative input from Hong Kong interior designer Steve Leung, feature distinctively Asian flourishes, while Britain’s Kelly Hoppen offers a more minimalistic approach through two distinct interiors concepts, Urban and Spring, in Tower B. YOO8’s Water Lounge on level 26 of Tower B features a 25-metre pool, rainforest-inspired ripple pools and pod-like cabanas. The multi-level Green Refuge “park in the sky” accessed from the 44th floor evokes Balinese rice terraces and features a jogging path.

Priced at less than US$800 per square foot, YOO8 comes in at a fraction of the US$2,000 required for similar luxury at 98 Wireless in Bangkok, or the more than US$4,000 needed for a Yoo Residence home in Hong Kong’s Causeway Bay. According to developer KSK Land, non-Malaysians currently account for 75 per cent of YOO8’s buyers, with half of those coming from Hong Kong and mainland China.

For those who cannot wait, one of the most sought-after luxury condominium developments already completed in KL is Le Nouvel KLCC, its striking glass facade liberally decorated with lush greenery details and rising over Jalan Ampang, one of the oldest and most prestigious thoroughfares in the city. At the time of writing, a 2,110-square-foot, three-bed unit in Le Nouvel KLCC, with white marble flooring, Poggenpohl-designed kitchens and Miele appliances, was up for grabs for RM5.48 million.

Le Nouvel KLCC

The 2016 creation of Pritzker-winning French architect Jean Nouvel – who collaborated with such design luminaries as lighting guru Hervé Descottes, interiors specialist Koichiro Ikebuchi and landscape artist Patrick Blanc – Le Nouvel KLCC houses 195 light-filled homes (including one to four-bed apartments and a small number of penthouses) over two towers rising 43 and 49 levels, with a pool deck on floor seven and a panoramic Sky Bridge on level 34 housing inviting lounges and fine dining.

Other luxury favourites in the vicinity include popular service-residence tower Banyan Tree @ Pavilion, The Face Platinum Suites and Tropicana The Residences, the latter occupying the 25th to 53rd floors of a sleek, 55-storey tower designed by Chicago-headquartered architectural giant Skidmore, Owings & Merrill, the company that’s also behind Dubai’s Burj Khalifa and New York’s One World Trade Centre. The property is managed by Tropicana Corporation Berhad, and shares space with the upscale W Hotel below.

Heading away from the city centre, to the leafy and affluent suburb of Damansara Heights, freehold development Aira Residence is a fine choice for luxury buyers who prefer to keep a lower profile. In the words of its developer, this luxurious condominium complex of 105 units – designed by an international team jointly headquartered in the Netherlands and Singapore, and completed in 2019 – offers  “the choice of either immersing themselves in urban activity or retiring to the privacy and peacefulness of their own homes”.

Aira Residence

Aira Residence’s 105 residential units, ranging in size from 2,679 to 7,730 square feet, were priced at launch between RM4.6 million and RM13.5 million. In keeping with the tranquil, natural environment, the complex is equipped with a rain harvesting system, bio-ponds, energy efficient lighting, and low emissivity glass coatings that minimise UV and infrared light, thereby reducing solar heat transmitted to interiors. 

“In an attempt to differentiate the product offerings, we now see more developers incorporating eco-friendly initiatives and aesthetic features with unique architecture design into their projects,” Subramaniam says of current market trends. “Luxury properties with higher product specifications can be seen as a catalyst to enhance the image of an area while also having a positive impact on real estate values.” 

Looking to the future, the general view of KL property experts is that new supply of luxury residences in the Malaysian capital is expected to be limited in coming years, or to come online at a slower rate than previously.

“As with many developing countries, the priority is to introduce physical and technical improvements that will bring Kuala Lumpur up to par with other advanced cities,” says CBRE’s Broadfield. “Above all, Kuala Lumpur is a modern city that retains a relaxed lifestyle and has plenty of future potential. With demand for luxury properties from overseas investors high and limited new supply, this will have a positive upwards pressure on property pricing.”

Gary Jones

In Bangkok, the Luxury Property Sector Is Booming

Posted in Market Report

On the tail of a construction boom lasting the best part of two decades, Bangkok now suffers from a glut of condominiums, with Bloomberg reporting in May that some 65,000 new apartments were added to the Thai capital last year alone, an 11 percent increase on 2017. 

Although it’s been claimed that there are now as many as 450,000 residences sitting unsold across the sun-drenched “Land of Smiles”, and snapshots of more-ordinary properties are yellowing sadly in real-estate agency windows from Hat Yai to Chiang Rai, one sector of the market remains in fine fettle, mainly through demands of the domestic market, but also supported by a steady influx of foreign capital.

That sector is luxury. 

“The luxury end is pretty resilient, though the mid and lower end of the market has fallen off, certainly compared to last year,” says Tim Skevington, managing director at Richmont’s Luxury Real Estate, which represents Christie’s International Real Estate in Bangkok.

Skevington is speaking in early August, from an exclusive gathering to celebrate the grand opening of Banyan Tree Residences Riverside Bangkok, a luxurious freehold condominium tower comprising 133 luxurious units over 45 floors, all overlooking the Chao Phraya River. A large turnout is expected.

“Particularly Thai people but also potential buyers from overseas,” says Skevington, who has more than 15 years experience in Bangkok’s high-end residential market. “That’s an indication of where we are. There’s still a lot of interest in the higher end in Bangkok.”

Thailand’s economy has wobbled in 2019, and tightened borrowing rules kicked in earlier this year. The result is what Bloomberg has dubbed “tepid” demand across the Bangkok property market as a whole (with developers reporting an overall new-project take-up rate of just 55 percent). The steamy City of Angels, however, is still one of the most attractivedestinations on the planet for high-end homes.

There are multiple reasons for this, says Apichart Chutrakul, CEO of leading full-service real-estate developer Sansiri PCL, which is behind some of Thailand’s most sought-after addresses. They range from high build quality and the creative input of megastar designers to a plethora of value-added services and amenities that increasingly come as standard. 

Most attractive of all, however, is the fact that gateway prices are a fraction of those in Hong Kong or Singapore. 

As a rule of thumb, Skevington says luxury properties in Bangkok should be considered those with buy prices upwards of 250,000 baht per square metre (roughly HK$5,920 per square foot). “And then we have super-luxury, which would be from around 350,000 baht [about HK$8,300 per square foot],” he adds. “That’s where we and Christie’s are positioned.”

Real estate consulting firm CBRE, meanwhile, defines “premier” residences as those requiring 300,000 baht per square metre, with about two-dozen Bangkok developments fitting the top-end bill at the close of 2018.

Sansiri recorded overall sales of US$1.5 billion that year, up 25 percent from 2017, and the company is currently bullish. Its sales target for the three years from 2019 is US$5 billion. This year alone, Sansiri will launch close to 30 new projects worth US$1.5 billion. It now boasts four super-premium properties in its Sansiri Luxury Collection. 

That fab four includes the company’s first branded condominium project, Khun by Yoo. With construction to be completed in November, its 27 storeys will house 148 residential units ranging from one-bedroom apartments (440-570 square feet) to ultra-luxurious penthouses (3,165-3260 square feet). Interiors described as “playful” come courtesy of legendary French design whizz Philippe Starck, and the average buy price currently hovers at about 380,000 baht per square metre (HK$9,000 per square foot).

“Top-tier buyers can achieve a high degree of design, service and personalisation at prices that are approximately four times less than Hong Kong,” Chutrakul says, singing Bangkok’s praises. “All within one of the world’s most popular and vibrant cities, and a global gateway.” 

Also in Sansiri’s Luxury Collection are Regency-styled, single-house development Baan Sansiri Pattanakarn and prestigious 45-storey condo tower The Monument Thong Lo, which features bespoke trimmings by Bohemian hand-blown glass specialist Lasvit. 

In 2018, the most desired of 77 units in the collection’s 98 Wireless — Sansiri’s 25-storey, beaux arts-inspired residence, with interiors by New York-based designer Anne Carson (formerly interiors guru for Ralph Lauren) — were being offered for as much as 700,000 baht per square metre (about HK$16,575 per spare foot), making it the priciest residence in the Big Mango.

While Thailand is no stranger to occasional financial turmoil, it’s frequently argued that, with tourism being a major driver of the economy, buyers here enjoy a coincidental level of protection when investing long-term in Bangkok’s more exclusive properties. While the Southeast Asian kingdom can be knocked down, its natural charms mean it always bounces back.

According to Mastercard’s Global Destination Cities Index, Bangkok has been the world’s most visited city every year since 2015 (ahead of London and Paris). International arrivals last year hit 38 million; 41 million are expected this year. The more high-net-worth of these visitors, perhaps lured by Thailand’s intoxicating brew of gorgeous weather, convenient regional access and high-end bang for the buck, might jet home with a shiny new home in the portfolio. 

Ease of condominium purchase, says Chutrakul, is another convincing factor. “In other major cities in Asia,” he argues, “it’s almost impossible to obtain freehold land in prime locations, whereas Thai property law allows foreigners to buy and own up to 49 percent of the total area of a condominium on a freehold basis.”

Skevington’s years of experience tell him that the largest percentage of foreign buyers in Bangkok luxury are from Hong Kong, with Singaporeans traditionally taking second place, only recently to be eclipsed by mainland Chinese. “Hong Kong interest has been steady for many years,” he says. “Singapore has been more up and down. Mainland Chinese are more recent buyers. The rest are mainly from Asia, but also from all across the world. But the majority are still Thai.”

Foreign purchasers account for as much as 30 percent of Sansiri’s sales, with investors from Hong Kong and mainland China making up the lion’s share (even with China’s economic slowdown and capital controls limiting cash outflows), followed by buyers from Singapore. But purchasers in Bangkok real estate are increasingly choosy and not every luxury property is a sure-fire winner. 

As prime downtown land becomes ever more scarce (land prices in the city centre jumped 30 percent in 2017 alone) and the market becomes more selective, location is key. The most obvious port of call for the savvy luxury buyer is what Chutrakul calls Bangkok’s “Golden Triangle” of the Siam district, Sukhumvit Road and Lumphini Park. Home to 98 Wireless, this sprawling downtown area accommodates most of the city’s premium real estate – far too many options to list here in total.

In-demand developments include the recently completed Nimit Langsuan, a super-luxurious 53-floor landmark, just north of Lumphini, with 187 freehold residences ranging from 840 square feet to around 6,460. Nearby Magnolias Ratchadamri Boulevard is a mixed-use development overlooking the racetrack of Royal Bangkok Sports Club. It houses 316 residential units in a sculpted 60-storey tower (homes at Magnolias Ratchadamri Boulevard are leasehold, with 50-year terms, meaning lower buy prices than at Nimit Langsuan). The building will also house Southeast Asia’s first Waldorf Astoria hotel.

Longer-in-tooth is Marque Sukhumvit, a freehold condominium complex beside the Emporium shopping mall on Sukhumvit Road at Phrom Phong. Completed in 2017, Marque contains 149 units with 3.4 metre-high ceilings; the plushest also feature private plunge pools.

Just one stop east on Bangkok’s convenient Skytrain sits the Thong Lo neighbourhood, home to Sansiri’s The Monument Thong Lo and Khun by Yoo. Thong Lo has transformed in the past decade to become Bangkok’s most happening entertainment zone, chock-full of stylish eateries, Instagrammable bars and nightclubs, cute coffee joints and boutique hotels. 

Tela Thonglor, completed last years and developed by Gaysorn Property (from the same group of companies responsible for the chic Siam shopping mall Gaysorn), is another condo complex to include on the shopping list. “Thong Lo is attractive to investor buyers looking to rent out, because there’s a lot of tenant demand in that area,” says Skevington.

Unlike many other cities internationally, Bangkok was unfathomably slow in exploiting the waterway that meanders through its heart, but that’s also changing. Three new ultra-luxury branded residences have recently debuted on the Chao Phraya’s banks: the aforementioned Banyan Tree Residences Riverside Bangkok, Four Seasons Private Residences Bangkok, and The Residences at Mandarin Oriental Bangkok. And keep your eyes peeled for Magnolias Waterfront Residences, which will be the city’s first residential-only super-tall tower. 

Skevington says Bangkok’s riverside traditionally lacked the facilities and mass-transit convenience of more downtown locations such as Siam and Sukhumvit, but that’s no longer the case. “Just outside the Banyan Residences is the brand-new Gold Line monorail [to begin operation next year], and Iconsiam shopping complex has opened next door,” he points out. “Until quite recently, the riverside lacked these amenities and was quite difficult to get to, but all of that is changing.”

Skevington believes luxury buyers are considering what they will do with a Bangkok property, and choosing locations to suit. “Many luxury residences are bought for ‘lifestyle use’ — as a holiday home or as a pied-à-terre, or for their friends to use,” he says. “With that type of purchaser, a lot are now looking at the riverside. I’d say investors are looking at city-central locations, and lifestyle users are leaning towards riverside.”

Bangkok

After location, it should be noted that Bangkok in the 21st century is a mature luxury market. While the quality of facilities, fittings and finishes remains paramount to a property’s success, a state-of-the art fitness centre, pool and sauna, and the inclusion of top European brands such as Bulthaup, Franke, Dornbracht, Hansgrohe and Bang & Olufsen, no longer cut it in turning the most discerning heads or opening the fattest wallets. 

As well as securing the services of A-list designers Starck, Carson, Gert Voorjans, Lorenzo Castillo, Hutton Wilkinson, Mary Fox Linton and others for the Sansiri Luxury Collection, Chutrakul says the current trend is for the finest residential properties to supply “luxury bespoke services” and “curated experiences”.

To this end, Sansiri — which will collaborate in a residential project with Tyler Brûlé’s lifestyle brand Monocle in coming years — has partnered with concierge specialist Quintessentially. This has allowed the developer, Chutrakul says, “to deliver high levels of personalisation to residents, such as securing tickets to the most exclusive sports and entertainment events, seamless hotel and travel arrangements, reservations to the most exclusive restaurants and anything you can think of that’s legal and moral”.

Gary Jones