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WORDS | Sean Lightbown 60 | KUALA LUMPUR

SNAPSHOT Market Snapshot


The Malaysian capital has enjoyed a boom along with a number of other Asian cities. However, are lending limitations and market conditions fi nally catching up with it, or will Kuala Lumpur continuing performing well?

he Malaysian capital of Kuala Lumpur has been one of the country’s fastest growing markets in recent years. Figures have revealed that there were 14.3% more property transactions in the area in 2011

compared with 2010 - or 430,403 versus 376,583. In terms of value, however, the growth in value is at an astonishing 28.3% Deputy Finance Minister Datuk Donald Lim Siang Chai said: “The

property market showed a better performance in 2011 in line with the strong economic growth supported by various proactive steps by the government. “Property transactions increased to 430,403 while values rose 28.3 per cent to RM137.8bil. The fi gures are the highest recorded in the last fi ve years.” Indeed, growth has been so good that in March Kuala Lumpur was named

“The high-limit price for overseas buyers is MYR500,000. Purchases above this are subject to approval”

alongside traditional global powerhouse cities London and New York as one of the top three property hotspots. The IP Global property barometer said that the Malaysian capital experienced property price increases of up to 24% However, Kuala Lumpur’s residential property market will not be helped

by the bank Bank Negara, the Malaysian central bank, which introduced new lending guidelines in January in order to curb household debt, which currently stands at roughly 77% GDP. And the move looks set to be working, with HwangDBSVickers reporting

in April that mortgage applications and approvals were 27% and 18% lower year-on-year respectively. However, a DTZ report on the guidelines said that confi dence remains and the market will be “selectively” strong. “Although 2012 will be a challenging year as tighter lending bites

into demand especially speculative buying, nevertheless, developers are confi dent that the demand for residential properties in Kuala Lumpur will remain selectively strong, as developers focus on smaller and therefore more affordable units as well as packaging launches with the attractive Developer Interest-Bearing Scheme (DIBS),” it says.

Indeed, last month founder and executive chairman of Rahim & Co., Abdul

Rahim, said that any price drop could favour Kuala Lumpur over its near neighbour, the Chinese city-state of Singapore. “Comparing prices in Singapore and Kuala Lumpur, if you can get the same returns buying here, why would you want to invest in Singapore?” he said. The city’s airport provides a gateway for international investors to come in.

Kuala Lumpur International Airport (KLIA) is the 18th busiest in the world in terms of international passenger traffi c, and the seventh busiest in Asia. The Bernam News Agency reported that in 2011, passenger numbers rose from 16.2 million to 18.3 million … an increase of 13%. Currently 44 countries are served by the airport. Foreign buyers, however, do face some restrictions when it comes to

purchasing property in Kuala Lumpur and Malaysia in general. The high- limit price for overseas buyers is MYR500,000. Purchases above this level are placed under “the purview of State of Authorities”, with approval taking from one to two months. The Real Estate and Housing Developers’ Association of Malaysia (REHDA) have said that this could have a negative impact on foreign ownership, “The restriction might impact residential property acquisition by foreigners in the country, as the number of properties priced above MYR500,000, especially outside the Klang Valley areas, are limited,” said REHDA president Datuk Ng. “The ruling may be applicable to properties in Kuala Lumpur areas, but we should also consider other states with lesser price ranges,” Ng added. House price rises in Kuala Lumpur have, in recent years, been weak. A

4.5% rise in 2008 reflected an actual drop of 0.9% in real terms. However most recently prices have been surging, with a year-on-year growth of 11.4% recorded in Q1 of 2011, and 7.1% over the quarter. The majority of places sold in the area were apartments and condo units, which made up for 52.7% of the area’s total transactions. The average price for a house in Kuala Lumpur, according to the data, now stands at YMR487,219 … the highest in the country. Foreign purchases of second home property are promoted under the “Malaysia My Second Home Programme” under the Ministry of Tourism, which allows foreigners who fulfill criteria to stay in Malaysia indefinitely. Applications to the scheme are expected to grow by 10% in 2012. |MAY 2012

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