Most of the luxury units are located in the Golden Triangle, particularly KLCC area, Mont Kiara, Bangsar, Ampang, Bukit Pantai and Bukit Damansara.
High-end properties on safe ground
Appreciation in prime land prices, increase in selling prices of high-end properties and high pre-sold sales indicate that Malaysian luxury properties are gearing for a boom.
The recent trends and incentives by the government are changing the property industry structurally, with the high-end property segment taking the lead. The lifting of the Real Property Gains Tax (RPGT), easing of foreign ownership and speedy delivery systems are spurring on the interest from a largely untapped foreign market.
The government recently announced that it has targeted RM20 billion worth in properties in foreign ownership by 2010. Most property players at this point in time are still waiting for more incentives from the government in the form of reduction in stamp duty, revamping of Employees’ Provident Fund (EPF) depositors’ accounts to enable more allowance for house purchases and also relaxation to facilitate foreign investors to purchase commercial properties.
Kuala Lumpur has been designated as an international property destination and the government has earmarked 467 acres of land neighbouring Damansara Heights, Taman Tun Dr Ismail and Bukit Kiara as the country’s largest public park, slated to be in the league of London’s Hyde Park and New York’s Central Park. This ambitious project with an estimated land value of RM5 billion, is expected to make city living in Kuala Lumpur a much more attractive and pleasant experience.
According to Regroup Associates Sdn Bhd, executive chairman Christopher Boyd, “the entire housing market in the Klang Valley is about 1.4 million dwelling units for a population of 6 million, out of which half are high-rise.”
“Only a tiny portion of these high-rises fall into the luxury category and most of the luxury units are located in the Golden Triangle, particularly KLCC area, Mont Kiara, Bangsar, Ampang, Bukit Pantai and Bukit Damansara. They total about 4,146 completed units,” he pointed out.
Real KLCC sites are hard to come by and only 66 luxury units are in the top league, the crème de la crème including Troika, Four Seasons, Binjai and Avare. Another 935 are under construction and scheduled for completion in stages.
“Generally sales have been very strong and this has been supported by buying interest from very wide catchments. Currently the Koreans are in the market and I believe the Arab markets are only just getting started, pushed along by intermediaries such as Kuwait Finance House which bought over Pavilion and Oval,” Boyd revealed.
The KL top end is undervalued by regional standards and analysts concur that the upside potential is tremendous and this is echoed by the market.
“We have suffered by being branded as a “developing” country and yet we have 65 million sq. ft. office market and 36 million sq. ft retail market in the Klang Valley. We are heading towards a tourist arrival level of 20 million a year. These numbers are not small numbers and sooner or later Malaysia will hopefully be rated upwards,” he enthused.
This will be further strengthened on the back of a strong growth in the service industry growing at an estimated 7% per annum, cheap local finance and currently no RPGT nor estate duty.
“The top end rental market is relatively new but Malaysia is witnessing expatriates in the senior bracket being given allowances of around RM25,000 per month. On a property with a value of say RM5 million, this is a gross yield of about 6% per annum which is very acceptable,” Boyd explained.
Of course there will be competition for these tenants and they do not come in unlimited supply but here the lettability hinges not just on location alone, but also the quality of the building management which is of paramount importance.