KL Golden Triangle remains attractive for foreign buyers
Knight Frank international project

However, Knight Frank says present oversupply has dampened sentiments for foreign capital inflow


The prime residential market at the heart of Kuala Lumpur’s (KL) Golden Triangle continues to attract foreign purchasers and locals from the high-income group, driven by the infrastructure dividend boom within the surrounding areas.

Property consulting firm Knight Frank Malaysia Sdn Bhd ED James Buckley said the market has seen a very good increase in prices around the extension of the mass rapid transit (MRT) line, as well as locations around the upcoming upcoming MRT Circle Line, slated for completion by 2020.

“I think we can generalise about the current oversupply situation, but if you draw down to specific locations, I think there will still be places to invest in KL,” he told reporters at Knight Frank’s 12th edition Wealth Report launch ceremony in KL yesterday.

However, Buckley noted the present oversupply and excess stocks across residential, retail, and office segments have dampened sentiments for foreign capital inflow.

He further said the prevailing mismatch between supply and demand, which is causing the property overhang, has forced investors to adopt a wait-and-see attitude as the market is undergoing a natural correction and adjustment period.

“Investors are very aware of the situation and I think we need to work through this overhang situation before we start to see more investors returning in a much stronger way,” he added.

Data from Knight Frank’s internal research team shows that Malaysia’s ultra high net-worth individuals (UHNWIs) are leaning towards over 2,000 sq ft of premium high-end condominiums priced above RM1 million.

Buckley pointed out that Malaysians are very familiar in investing overseas as it is less volatile than to invest into other sectors amid current political and economic instability.

“We have seen Malaysians being really interested in diversifying outside of the country, especially into Australia or the UK.

“At the moment, investors are looking for alternative property sectors such as student accommodation, which was pretty unheard of previously, as well as more defensive asset classes,” he said.

Meanwhile Knight Frank Asia-Pacific head of research Nicholas Holt said Malaysia’s UHNWIs’ favourite destinations for property purchases are the UK, Singapore and Australia.

“Singapore is still among the top three in favourite destinations for Malaysians to invest in properties, while Australia and the UK are mainly driven by the education, business and lifestyle aspects,” he said.

The 12th edition Wealth Report stated that Malaysia is falling behind other counter- parts in client wealth within the Asia-Pacific region.

Malaysia’s wealth distribution level declined 6% to 310 ultra-wealthy individuals with more than US$50 million (RM193.5 million) net assets, compared to 330 recorded in 2012.

Holt said 2017 was a relatively strong year in Asia Pacific and it was reflected in the growth of wealthy individuals across the region.

“Despite global headwinds including a rising interest-rate environment, the continued rebalancing of China’s economy and tensions around trade, the region is set for further growth in 2018 with wealth increasingly being accumulated through new sources of growth — including technology-related industries,” Holt said.

This year’s findings are based on respondents from 541 of the world’s leading private bankers and wealth advisors, representing about 50,000 clients with a combined wealth of about US$3 trillion.

The study incorporated the results of the Attitudes Survey, which offers an annual snapshot of issues that influence wealthy individuals’ investment decisions.

The survey also indicated a significant reallocation into the precious metal in Malaysia and China with 33% and 46% of respondents saying that their clients increased their allocations last year. The figure is above the global average of 25%.