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Investing In Property In Kuala Lumpur: What You Need To Know

Property / Property Insider

Investing In Property In Kuala Lumpur: What You Need To Know

Malaysia’s capital of Kuala Lumpur is quietly and quickly becoming a hotspot for property investors from all over the world. David Bowden takes us on a tour of the Kuala Lumpur residential real estate market.

Written by David Bowden on 15 June 2017

The Malaysian capital of Kuala Lumpur (fondly referred to as “KL” by local residents) is often overlooked as a property investment destination. But those who choose to live there, wouldn’t live anywhere else – and the city has quietly earned a reputation among savvy international investors as a veritable property hotspot.

Apartment or condominium living and gated communities are especially popular among foreign property investors in KL, while landed property is generally less important as it is typically situated away from the city centre.

While location is a critical factor for property investors all over the world, it almost becomes a necessity in KL, as the city’s chronic traffic woes mean that living near what is important is vital. A new line on the metropolitan rail network will open in July 2017, making travel easier between the city and western suburban areas such as Bandar Utama.

Greater KL – a term that refers to Kuala Lumpur and surrounding areas in the state of Selangor including Petaling Jaya, Subang Jaya, Ampang Jaya, Shah Alam, Kajang, Putrajaya, Klang, Selayang, and Sepang – is Malaysia’s most popular property market among foreign investors.

Kuala lumpur malaysia skyline at titiwangsa park

Kuala Lumpur Malaysia Skyline At Titiwangsa Park

Property hubs

For those expatriates with school-aged children, being located near an international school saves valuable travelling time, while for young urbanites, the city centre is the best location for employment and entertainment.

Popular residential areas close to international schools include Ampang, Mont’ Kiara, and Sentral, while other preferred residential locations include Bangsar, Bukit Tunku (Kenny Hills), Damansara Heights, Sri Hartamas, Taman Tun, and Bandar Utama.

Spacious gated communities tend to be a little further from the city centre, but provide large blocks and extensive facilities with some including golf courses and parklands. Preferred gated precincts include Valencia and Sierramas in Sungai Buloh, Desa ParkCity, The Mines in Seri Kembangan, and Setia Eco Park in Shah Alam.

City on the move

KL’s skyline is dominated by construction cranes and developments that reach ever-skyward as the urban land bank diminishes. Several mega projects are under construction in Greater KL with most purposed as mixed-use – commercial, retail, hotels, and residential.

Tun Razak Exchange (TRX), with a gross development value of RM40 billion (US$9.38 billion), covers 28 hectares in the heart of the city. Construction of 26 buildings with a gross floor area of 21 million square feet will take over 15 years, but phase one will be completed by 2018.

Other mega projects in Greater KL include Bukit Bintang City Centre (BBCC), a 7.85-hectare, integrated development in KL’s “Golden Triangle” that will include residential suites, hotels, retail, parks and gardens, and will serve as an entertainment and transit hub; Bandar Malaysia, which involves the conversion of air force land in Sungai Besi; the Merdeka PNB118 Tower, a 118-storey, 682-metre skyscraper in the city near Stadium Negara, which when completed in 2019 will be taller than the iconic Petronas Twin Towers; Damansara City, an integrated city development; and Pavilion Damansara Heights, which is slated for completion in 2021.

A.T. Kearney ranks Malaysia the third best destination after India and China for offshoring, and the demand for property in KL is due to increase when more global companies recognize Malaysia as a location to bolster their regional presence.

The KL City Centre Park In Kuala Lumpur, Malaysia. View On Modern Skyscrapers.

Market analysis and outlook

Malaysia’s economic growth has been sluggish in recent years and this has had an impact on the country’s property market. According to many analysts, there is a property market slowdown with supply outstripping demand and an increasing number of high-end condominiums valued at over RM1 million (US$230,000) coming up for auction.

According to a recent report by global property consultancy Knight Frank, sales of existing condominiums in KL have declined in volume and value over the past year, and 3,185 new units came onto the market in the first quarter of 2017. However, this hasn’t stopped the launch of new developments throughout the Greater KL area recently including DC Residency, KL Trillion, Le Nouvel KLCC, Star Residences Two, Setia Sky Residences (Divina Tower), Three28 Tun Razak, Nadi Bangsar, KL Eco City (Vogue Suites), Dorsett Residences in Sri Hartamas, The Estates in Bangsar, Lucentia Residences, and Serai Bukit Bandaraya. Prudent investors may opt to wait on the sidelines in anticipation of a further decline, but with property prices in Malaysia being way below those of Singapore and Hong Kong, others would argue that there is no better time than now to invest for the long term.

The decline in the value of the ringgit against the US dollar has made Malaysian property even more attractive for foreign buyers. Another plus point is that Malaysia permits direct foreign ownership of freehold land, unlike some of its neighbours in the region.

Malaysia also has the Malaysia My Second Home Programme (MM2H) that allows foreigners fulfilling certain criteria to reside and travel to and from the country unrestricted for an extended period of time (generally ten years and renewable). Foreign homebuyers under MM2H can use part of their fixed deposit (one of the programme’s criteria) to purchase property.

The Malaysian government is reportedly considering making it mandatory for foreigners to purchase property in US dollars and raising the minimum purchase price, which currently stands at RM1 million (US$230,000) – although there is some variation on this figure from state to state.

Malaysian property prices are still among the cheapest in Asia, and the KL market in particular boasts good, long-term growth potential. Much of this is driven by local demand from an expanding Malaysian middle class, but foreigner investors stand to benefit when prices start rising again in the coming years.

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