Malaysia remains an attractive investment destination in the region, with its stable property market and relatively lower entry prices that continue to offer reasonable returns
by NG MIN SHEN / pic by HUSSEIN SHAHARUDDIN
AS THE capital of Malaysia, Kuala Lumpur (KL) is known for its towering skyscrapers, crowds of every colour, food in every corner imaginable, friendly faces all around. It’s no wonder that both city and country at large are known as a haven for tourists and a beloved home for locals.
Yet, it isn’t just the beauty of the city that enthralls. It’s also the attractiveness of its property sector that entices investors to the jewel of Malaysia.
As a property development and investment destination, KL has it all. Its prime location, investment-friendly government initiatives, transit-oriented spaces, rapid economic growth and abundance of skilled workers make it one of the most ideal locations in South-East Asia and Asia Pacific for investors.
This is evident in the burgeoning expansion of the property sector which has risen to become one of the largest income drivers in the capital, as well as the country at large.
In terms of location, KL is well primed, being less than an hour’s flight away from Singapore and two hours from Jakarta, Indonesia.
It’s also in close proximity to trading hubs such as the Straits of Melaka, while its sunny all-year-round weather negates worries of natural disasters and logistics issues.
The ringgit, which last year emerged as one of the most promising currencies in the region, has long been a pulling factor for investors, tourists and locals alike. Helped by a rebound in exports and the better than expected economic growth last year, the currency is poised to continue drawing good returns for investors, as domestic consumption continues to pick up.
According to property consulting firm CBRE-WTW, KL is poised to continue to attract foreign investments and become a choice of location for multinational companies (MNCs), lending support to demand for office space.
Its 2018 Asia Pacific Real Estate Market Outlook report on Malaysia noted that the advancement of digital mobility and high adoption rates on technological applications globally have led to changes in the workspace, including global business services (GBS) and tech-based startups.
“Major GBS customers are from developed economies such as the US, the UK, Japan and
Asia-Pacific countries. MNCs in Malaysia are also starting to turn to SSO (single sign-on) with major distributions in Cyberjaya, numerous Multimedia Super Corridor (MSC) commercial zones, Technology Park Malaysia and others,” it said.
Demand for office spaces in prime and well-connected areas remain strong, particularly buildings in good condition and those accredited with MSC and Green Building statuses.
“More US and Chinese companies were seen launching their first South-East Asian headquarters in 2017, as the Asean region offers growth potential due to its favourable demographic endowment and alignment with foreign investors’ visions,” CBRE-WTW said.
In the residential segment, both the high-rise and landed sub-sectors continue to be in demand, with upscale developments to lead the trend as buyers become more selective.
KL’s condominium market is mainly focusing on established and matured areas close to the city centre. Properties often feature ample facilities and amenities with prices starting from
RM700 per sq ft, according to CBRE-WTW. Central KL, which includes the Golden Triangle and the fringes of the Golden Triangle, is generally viewed as a commercial hub targeted for investment purposes, while Mont Kiara and Sri Hartamas are more suit able for living.
“Some 32% of high-rise residential units are priced at between RM1,001 and RM1,500 per sq ft, with the segment expected to increase in 2018,” the report said.
Condominium sales in KL have continued to see improvements, relatively unchanged occupancy rates in recent years and continuous new launches, despite the relatively soft market backdrop.
The ease of public transport in the city also lends to its attraction. Options for commuters include the light rail transit, mass rapid transit, monorail and KTM Komuter, as well as various buses and shuttles. Uber and Grab have also become popular choices for shuttling back and forth within the hustle and bustle of the city of KL.
Existing retail spaces in the city centre have remained resilient in terms of occupancy and rental rates, though the retail landscape continues to evolve, bringing with it challenging market conditions.
The influx of tourists into Malaysia is also a boon for the retail and hospitality industries. Tourist arrivals climbed 4% to 26.75 million in 2016 from 25.72 million in 2015, drawn by the cultural richness of the country, as well as recent relaxation of visa requirements and the affordable currency.
Property consultancy Knight Frank Malaysia Sdn Bhd in its Malaysia Real Estate Highlights report for the first half of 2017 said Malaysia remains an attractive investment destination in the region, with its stable property market and relatively lower entry prices that continue to offer reasonable returns.
The recent rebound in the domestic economy, coupled with the strengthening of the ringgit and the stable employment market, are also feathers in KL’s cap. It’s not difficult then to envision its skyline expanding in the very near future, as the world awakens to the investment value and returns of its property segment.