Luxury residences recovery in expensive KL neighbourhoods

Properties in KL prime areas are seeing a 4% rise in capital value YTD


High-end properties in expensive neighbourhoods in Kuala Lumpur (KL) are showing signs of recovery after reeling for months as overbuilding and excessive offerings see demands and value of such units stifled.

Properties in the central business district and KL prime areas like Mont Kiara, Bukit Bintang and neighbouring KL City Centre (KLCC) have dropped in value as new units flood the market.

The exit of expatriates following the oil industry slump since 2014 had added to the sector’s agony, as rental rates fell and demands become scarce. Some of the units even went under the hammer for 20% less than the purchase value.

But, JLL Property Services (M) Sdn Bhd (JLL Malaysia) said properties in Mont Kiara, Bukit Bintang and the KLCC area had witnessed a 4% rise in capital value year-to-date (YTD).

Associate director of research and consultancy Veena Loh said the growth indicated of a moderate growth in the near future.

“Given the lacklustre market sentiment since 2014, this is actually the first time that we are seeing a turning point for luxury units,” she said last Friday.

The country’s economy ran to an average of 5.7% for the first six months of the year, injecting confidence into the property sector, which had been suffering due to gluts especially for the high-end units.

Loh said residences around the these expensive neighbourhoods command about RM3,000 per 0.09 sq m and which normally attracts foreign buyers.

Loh said that there is a possibility that developers would introduce more units within this segment from next year onwards if the economy continues to grow between 5% and 6% in 2018.

“As opposed to what many are thinking, we are still having stocks coming in — though more subdued — from now to 2020,” she said.

Loh said the ringgit’s depreciation had also made prime residential properties in KL more attractive compared to Jakarta, Indonesia and Manila in the Philippines.

According to the consulting firm’s third quarter of 2017 (3Q17) data, Mont Kiara and Hartamas fetch higher average rents with current capital values at RM764 per 0.09 sq m. The unsold rate had also dropped to 2% compared to 2.5% in 2Q17 due to the delay in completion on a number of projects.

The market expects 2,037 units to be completed by 4Q17, which would bring the total to 6,252 units for 2017 — doubling the 3,388 units launched in 2016.

Meanwhile, the overall demand for office leasing has stabled in 3Q17 with rising interest from various types of businesses, including technology firms.

“We observed that rents are firming up on the back of the increased confidence in the market.

“Buildings that were positioned with Multimedia Super Corridor (MSC) status are reaping benefits from the MSC status freeze earlier this year,” said JLL Malaysia MD YY Lau.

JLL Malaysia’s latest research showed bloc office transactions in 2017 have exceeded 2016. Other major deals include Selangor Dredging Bhd selling its headquarters Wisma Selangor Dredging for RM480 million, and AmanahRaya Real Estate Investment Trust buying Vista Tower for RM455 million.