The global credit crunch and the sub-prime crisis in the US has prompted investors to look to new markets and Malaysia is one of many developing Asian countries that appears to be benefiting from investment dollars that would likely have gone elsewhere – if not for the fears of a looming recession in the United States and western Europe. The threat of a continuing, long-term downturn stateside could mean Malaysia, and Kuala Lumpur in particular, can expect this extra attention to last for some time yet.
The price of land in KL is high and shows no sign of slowing down so an increasing number of property developers with land banks in good locations are opting to develop high rise luxurious condominium projects. The selling price of such developments can be as much as RM2000-00 per square feet or more in Kuala Lumpur depending on design, specifications and location. Kuala Lumpur City Centre (KLCC), Ampang, Bangsar, Brickfields, and Mont Kiara have all enjoyed strong appreciation and are in demand among the city’s ex-pat community. Another promising area is Jalan Ceylon – the site of a new luxury condominium project by property developer Starpuri Development. The $87 million condominium is expected to be completed after a 32 month build.
Financing is available for foreign investors once potential purchasers show proof of possessing some source of income to enable repayment. For foreigners, the maximum loan normally allowed is 80 per cent and the term of loan depends on the age of the purchaser. Those looking to buy a condominium in Kuala Lumpur are currently looking at a range of between US$ 66,000 and US$ 250,000 for mid-range units.
The fortunes of the companies responsible for KL’s recent developments have differed widely, in line largely with their targeted market area. Those with a focus on high-end segment such as IGB Corp Bhd, Sunrise Bhd and E&O Property Development Bhd have seen significant earnings growth this year, while the ones with focus on the mass market, such as MK Land Holdings Bhd and LBS Bina Group Bhd, have seen earnings down sharply due to poor sales. The recent history of these companies is a clear demonstration of the shift occurring in the city’s market at present.