Asking prices spike as KLCC property owners’ confidence returns

KUALA LUMPUR (Nov 10): The average asking price for high-end, high-rise residential properties on the secondary market in Kuala Lumpur City Centre (KLCC) has picked up strongly over the past quarter (3Q17) from the previous quarter.

According to JLL Research at a media briefing today, the average asking price has risen from RM918 psf to RM1,122 psf, translating into a 22.2% q-o-q increase.

This was also the highest average asking price recorded since 4Q12, said JLL.

“Malaysia has the most attractive residential market in Southeast Asia currently, due to the weakened ringgit.

“If you look at five years ago, prime residential property prices in Malaysia were close to those in Jakarta and Manila, but due to the weakening ringgit, we have become the most compelling place for foreign investors especially those using foreign currency to buy.

“Foreign investors also find it more appealing to purchase residential properties in KL as there are few restrictions for foreign property buyers,” said JLL Malaysia country head YY Lau.

For instance, she cited that foreign buyers are only allowed to purchase 30% to 40% of residential apartments in Bangkok, Ho Chi Minh City and Manila.

JLL Malaysia associate director, research and consultancy Veena Loh noted that the sharp increase in asking prices over the last quarter can be attributed to the improved economy and market sentiment.

“Private investment has increased by 7.4% in 2Q17 while private consumption has increased by 7.1% in 2Q17. Malaysia’s gross export is estimated to grow 17.1% in 2017. This has contributed to the property owners’ confidence, prompting them to increase their property selling price,” said Loh.

Loh also noted that most residential property buyers in the KLCC area are foreigners and expats.

“The residential projects that are launched in KLCC command very high price psf. For example, Le Nouvel KLCC has asking prices of RM3,000 psf. It is also true that when foreigners decide to buy a property in Malaysia, the first thing they ask is for property in KLCC because that is where they know,” she added.

The properties in KLCC have also seen an average compound annual growth rate of 5.88% in their asking prices, based on JLL Research’s data.

Loh also noted that KLCC is a location choice for investors looking for capital appreciation.

“However, if you are looking for an investment choice measured by yield performance, the Mont’Kiara/Hartamas areas fetch higher average rents with current capital values at RM764 psf,” she offered.

“The residential market is set to stabilise and improve thanks to the decrease in supply in KL’s prime areas and improvement in the economy which is expected to pull capital values up for residential properties in prime areas.

“Residential rents are expected to grow more moderately, given reduced tenant demand. Tenants might consider moving beyond prime locations given new transportation lines, with expatriates still continuing to be drawn to prime locations. This balance will keep rents in prime locations stable. With the recent Budget 2018 announcement of a 50% tax exemption to be given on rental income of up to RM2,000 from residential properties belonging to Malaysian residents living in the country, this will further aid the rental market,” Loh concluded.