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