Opportunities in the KL property market

/ EdgeProp Singapore |

May 24, 2023 3:20 PM SGT

The crowd at the seminar on the KL property market jointly organised by EdgeProp Singapore and UEM Sunrise (Picture: Samuel Isaac Chua/The Edge Singapore)

SINGAPORE (EDGEPROP) - At a seminar on the Kuala Lumpur (KL) property market jointly organised by EdgeProp Singapore and UEM Sunrise on May 20, visitors thronged the grand ballroom at Hilton Singapore Orchard, where the event was held. The three-hour seminar saw speakers presenting to an attentive audience which predominantly comprised Singaporeans interested in investing in Malaysian property.

The strong turnout at the seminar could indicate a growing optimism among Singapore buyers in the Malaysian property market. This comes in tandem with a recovery in Malaysia’s housing landscape over the past two years following the Covid-19 pandemic. In 2022, Malaysia saw over 389,000 properties transacted at a total of RM179 billion ($52 billion), representing a 29.5% and 23.6% increase in volume and value, respectively, compared to the year before.

Speaking at the seminar, Kenny Wong, chief marketing officer at UEM Sunrise, acknowledges a turning point for Malaysian developers post-pandemic. “We’ve learned a lot in the past two to three years, especially in terms of the changing preferences of buyers. We are now coming back to the market, creating homes that are a lot more attuned to the needs of buyers today as well as going forward,” he says.

UEM Sunrise also showcased its newest development in Kuala Lumpur, The Minh — a freehold luxury condo comprising two towers with a total of 496 units in the Mont’Kiara area. Seminar attendees were able to view a scale model of the development and learn more about the available residences, which are priced from RM1.4 million for a 1,607 sq ft, three-bedroom unit.

Visitors viewing the scale model of The Minh, UEM Sunrise’s latest development in the Mont’Kiara area (Picture: Samuel Isaac Chua/The Edge Singapore)

Positive catalysts in KL luxury market

Amy Wong, executive director for research and consultancy at Knight Frank Malaysia, notes that within the varied landscape of the Malaysian property market, the luxury, highrise, residential segment in KL is expected to see a ramp-up in activity, with more supply coming into prime neighbourhoods such as the KL city-centre (the area surrounding the Petronas Twin Towers), Mont’Kiara, and Bangsar. Between this year and 2025, the supply of luxury condos in KL is projected to grow by 16% per annum.

Wong adds that prices for luxury condos have generally continued to hold steady. Using a sample of four completed high-end condos in different prime neighbourhoods, she notes that prices at all the condos have trended upwards, albeit at varying paces. In the city centre, Pavilion Residence (in Bukit Bintang) and Dua Residency (on Jalan Tun Razak) have seen prices inch up by 1% to 2% since 2012, while Serai (in Bangsar) and Seni Mont’Kiara have seen prices surge by 13% and 8% respectively over the same period.

Nonetheless, Wong believes that several positive catalysts provide a brighter outlook for the KL market as a whole, especially the expansion of KL’s public transport network. In March, the MRT Line 2, which runs from Kwasa Damansara to Putrajaya Sentral, commenced operations, while the proposed MRT Line 3, projected to complete in 2028, will further enhance accessibility in KL, especially in areas such as Mont’Kiara, Sri Hartamas, Dutamas and Setapak.

As the KL property market regains momentum, property developers are fine-tuning their offerings to better cater to owner-occupiers, Wong points out. “It’s no longer just about building four walls. Owners are increasingly looking for better-quality homes that also include ESG (environment, social and governance) elements,” she observes. Correspondingly, she anticipates the higher-quality offerings in prime neighbourhoods to resonate with expatriates returning to the market.

Unique offering

This is certainly true for The Minh. In positioning the product, UEM Sunrise opted for a distinct concept anchored on Indochine design as a means of standing out. “We wanted to make sure the property is the most unique in the market and represents UEM Sunrise’s DNA in resort hospitality living,” says Mardiana Rahayu Tukiran, the company’s chief development officer.

With six units on each floor, the development is focused on ensuring privacy, with most units having a bungalow concept without shared walls. All units are three-bedders generously sized between 1,607 and 3,010 sq ft. The development also offers various facilities such as multiple pool areas, indoor and outdoor playgrounds, a lounge, a reading room and a tennis court.

Mardiana highlights that The Minh was designed with the demographic of the Mont’Kiara community in mind, which includes a large pool of expatriates who are attracted to the neighbourhood’s location close to the city centre, its cosmopolitan lifestyle offerings, and its clean and safe environment. She adds that properties in the neighbourhood continue to see healthy rental demand, with Mont’Kiara condos generating rental yields of around 4% to 5%.

Mardiana Rahayu Tukiran, UEM Sunrise's chief development officer, speaking at the event (Picture: Samuel Isaac Chua/The Edge Singapore)

Considerations for foreign investors

The current minimum purchase price for foreigners buying property in KL stands at $1 million. Adrian Un, CEO of SkyBridge International (a Malaysia-based property education and investment company), notes that the threshold remains lower than Selangor, where a minimum purchase value of $2 million is applied.

Un shares that Singaporeans can typically obtain housing loans from Malaysian banks with up to 85% financing on the property. He adds that banks tend to favourably view loan applications from working professionals that have been employed for at least a year, with a minimum income of RM10,000. Self-employed individuals or business owners may also qualify for loans, subject to banks assessing the individual’s net personal assets.

Currently, average interest rates on housing loans in Malaysia are hovering between 4% and 4.15%. Un also highlights that Singaporean investors (Muslim or not) have the option of obtaining an Islamic loan from Malaysian banks, so long as their income is not generated from prohibited industries such as gambling, alcohol, or the distribution of pork-related products.

Adrian Un (centre, wearing blazer) speaking to some seminar attendees (Picture: Samuel Isaac Chua/The Edge Singapore)

Islamic loans, which are based on a profit model rather than interest, have several benefits vis-a-vis conventional loans, opines Un. This includes the absence of lock-in penalties, where borrowers have to pay a fee for redeeming their loan before a particular time frame. In addition, Islamic loans usually cap the rates banks can charge at around 10% to 10.75%, which helps safeguard borrowers in the event of a financial crisis that causes a spike in interest rates.

In terms of tax considerations, Un highlights that Malaysian property purchases are subject to stamp duties, with a tiered rate applied at 1% for the first RM100,000, 2% from the next RM400,000, 3% for the next RM500,000 and thereafter 4% for RM1 million and above. Properties in Malaysia that are disposed of by foreigners are also subject to a real property gain (RPG) tax on the profit made on the sale. Foreigners are charged an RPG tax of 30% for disposals made within five years and 10% for disposals made in the sixth year onwards.

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