Kuala Lumpur, rising star
Asian property’s slow burner may be about to go nova, says Francesca Lombardo
by Francesca Lombardo
Suspended between the past and the future, with its many contradictory ingredients, Kuala Lumpur is a city of bewildering diversity.
The mix of ancient Mosques, Chinese, Indian temples and colonial buildings evoking the former British Commonwealth status - reflects the city complex cultural and historical heritage.
High-rise swanky buildings and offices with the Petronas towers - the tallest twin towers in the world - leading the way in shaping KL skyline, are instead the tangible signs of a city leaping in the feature.
An increasing number of tourists and expats roam around the busy streets, multiethnic restaurants, bustling markets and massive shopping malls, basking in the city all-year- round sun and savoring the exotic atmosphere.
Locals instead, a melting pot of Chinese, Indian, Malays origins, by far prefer to drive to escape the heat, as Chris Hahnn, Head of KL Savills –Rahim & Co office who has been living in KL for two years explains.
“Such distinctive difference in behavior and taste is reflected in matters of properties. Locals, who tend to have large families prefer big apartments or houses” he adds.
“A concept rather unfamiliar to westerns, particularly those who come from cities where property prices are hefty.”
As a result, there are now two distinctive property markets in Kuala Lumpur: a mid-end of the range for locals and a luxury one catered to foreigners, the latter particularly thriving in some areas of the city.
“Kuala Lumpur has attracted a great deal of foreigners investors over the past three years, particularly Chinese, Japanese, Arabs and those British and Americans who cannot afford China but still want their piece of Asia” says Simon James, sourcing manager at Property Frontiers.
One of those is Rajan, a London based professional property consultant who has recently purchased two properties in KL.
“When I invest in an emerging market the first thing I take into account is if the buying process is easy,” says Rajan.
And, Kuala Lumpur property market is very foreign investors-friendly.
Lately, the Malay government has been very active in easing up access to the overseas buyers uplifting capital gains tax since the 1st of April 2007 as well as allowing personal use of the property.
“Unlike China and other Asian countries, you can register your property and own the freehold” says Rajan.
Buyers can secure up to 80% finance; “which means highest return on investment”
Whereas a scheme called “My second home programme” , which allows foreigners who fulfil certain criteria to stay in Malaysia for a period of ten years, has lured an increasing number of expats to the country.
Sarah Snee, a freelance photographer from Cheshire (UK) has moved to KL city with her husband, a financial advisor, in September 2007.
“I am still adjusting to the new life in KL,” she says. “ I don’t like the dirtiness of the streets here and the general disregard for pedestrians. The driving is often very dangerous and finding your way using the road signs is a headache,” she explains “ but people are very welcoming and money here takes you much further. I can afford a personal trainer, a maid and plenty of beauty treatments, a real luxury back home.”
Travel, entertainment and the general cost of living is in fact among the lowest in Asia making KL an increasingly sought-after spot for tourists and investors.
“ We are considering to buy a property, whether we will remain on the long term or not. Entry price in KL is outstandingly lower if compared to other South Asian cities,” she adds
Yet, despite the country’s fast growing economy following the widespread recession, which swept Asia in the late nineties, KL property market has been overlooked for sometime.
While major south East Asian property hotspots such as Singapore, Hong Kong and Shanghais have spurred a mad investment rush, Kuala Lumpur has been timidly gaining momentum reaching a capital growth of 25 percent over the past three years according to Hahnn.
“Property prices in KL are up to 7-10 times cheaper than Hong Kong or Singapore, yet, very little publicity has been done so far on this city.” He adds.
Although capital growth has recently slowed down to a more conservative 15 % according to Property Frontiers due to the rise of luxury developments’ s supply ,the top end of the residential market still remains a lucrative bet..
With a 6.2 GDPin 2007, a strong manufacture base, a highly sophisticated IT industry and a sound financial sector, Malaysia is trailing after the fastest growing Asian economies.
“There is political stability and government is pro –business and very liberal” says Mathi Chelliah, director of the Malaysian industrial development authority .
“Investment policies in the country are very transparent. This explains why we have over 5000 international companies in Malaysia.
“With the ASEAN region which encompasses ten south Asian countries but also China and India as main trading partners, means the country is not affected by the general American economic slow down.”
The capital’s urbanization process has also been rife. KL has grown from a small town into a thriving cosmopolitan capital of 1.8 million inhabitants, luring expats and young professionals in search of work from other regions.
Still, knowing where to buy it is a key factor.
KL city centre not only remain the most sought-after area for luxury property but the one with the highest appreciation according to a recent report published by the Oxford Business Group.
Rental yield is also outnumbering other areas in the city with a 9% against a more average 6%
“ Demand from overseas investors by far outstrip supply in the heart of the city. Land is a premium here,” says Juwaad Beg at Global Investment., a Dubai based investment company.
Located in the posh Jalan Sultan Ismail Street, which along with Jalan Ampang and Jalan Tun Razak forms The Golden Triangle – the city’s business district – The Crest is a majestic development of 44 floors encompassing shops, restaurants, sport facilities and fully serviced apartments.
Prices at The Crest range from £97.000 to £135.000 for one, two and three bedroom apartments (myglobalinvestments.com)
Another address to look at is the U Thant area named after the Burmese UN secretary General (1961-1971): a green, sparsely populated area, which still retains a strong residential feel.
“U Thant has been experiencing a huge buying spring over the past couple of years, particularly thanks to its beautiful houses,” says Beg. ”Historically, it is one of the few areas in Kuala Lumpur which has not been hit by the Asian financial crisis in the 90s when capital value of real estate plunged on a free fall” says Beg.
The latest trend in U - Thant has seen ambassadors’ residences coming up for sale with property prices ranging from 1000-reingi per square foot to a max of 15.000.
“These houses are grand and luxurious but need a fair bit of work. Rather then spending money to update them, ambassadors are relocated to new residences and their houses are put up for sale” says Hahnn.
Less expensive and more catered to the long-terms investors’ taste, are properties in the upcoming areas of Sentul, Mont Kiara and Penta Hill.
Located 5 kilometers - due to completion in 2015 - at the hands of YTL a leading Malaysian developer.
“ It is still a quite deprived area and more risky in a way but ambitions here are huge,” adds Hahnn.
Sentul park, a former railway deposit is the focus of the regeneration with condos, cultural centres, offices shopping malls and restaurants built at the fringe of the park. Property prices here range from 500-800 reingies per sq.foot.
In proximity to the park, The Maple Sentul is a four blocks luxury condominium (Savilss-rahim.co.com) with prices starting from …..for one bedroom apartment.
Tipped as one of the most popular areas with international expats, Mont Kiara is an upcoming residential suburban district with good transports to the centre, plenty of recreational facilities and international schools.
Property Frontiers has on its book, Kiara 3, an off-plan development due to completion in 2010 with prices starting from ……for a ……
But the real jewel of the crown of the most upcoming areas is Pantai Hill.
More secluded and less density populated than the neighboring Bangsar, another posh address very popular with wealthy expats, Pantai Hill benefits from an easy access to KLCC, plenty of green spaces and low-rise buildings. Savills-Rahim sells ……………………………
Whether in the heart of KL or in more suburban areas, on one thing estate agents seem to agree; buy luxury.
Yet, 21% rental tax means the biggest profit lies on the appreciation of the capital rather than on rental incomes as Beg explains/
END,
www.propertiesfrontiers.com
www.savills-rahim.co.com
www.rajan.co.uk
www.globalinvestements.com