Has the Kuala Lumpur high-end residential market bottomed out?
Knight Frank Malaysia believes a series of projects launched in the last six months of 2019 has assisted in the recovery of the high-end residential market in Kuala Lumpur.
The firm launched its latest report, “Real Estate Highlights 2nd Half of 2019” and it revealed that projects like Core Residence @ TRX, at the Tun Razak Exchange (TRX) in Kuala Lumpur helped the market rebound.
Core Residence @ TRX is a project by Core Previous Development Sdn Bhd, a joint venture between WCT Holdings Bhd and China-based China Communication Construction Group.
The RM1.4 billion high-end freehold project launched in November 2019 will be developed on a 1.65-acre land and features three blocks of serviced residences with 700 residential units, priced between RM1.44 million to RM2.48 million.
Last year also saw heightened activities in the Tun Razak Exchange (TRX) in Kuala Lumpur with the completion of Menara Prudential and Exchange 106.
Other notable residential projects unveiled during the second half of 2019 were Conlay, a joint development by Eastern & Oriental Bhd and Mitsui Fudosan Group, Agile Embassy Garden by Agile Group Holdings and ALIX Residences by TA Global Bhd.
Agile Embassy Garden sits on a 3.06-acre site that formerly houses the British High Commission. The three-block luxury serviced apartment project will offer 1,296 units.
ALIX Residences in Dutamas, North Kiara was unveiled in June 2019. The project features two blocks of condominiums of 35-storey and 22-storey offering a total of 364 units from 1,012 sq ft to 6,544 sq ft.
These new launches are selling between RM1,900 per sq ft (psf) and RM2,200 psf on average. The gross selling price for Core Residence averages at about RM2,200 psf while Conlay is in the region of RM2,050 psf.
Agile Embassy Garden set a new benchmark pricing of RM1,900 psf at the Embassy Row, in the exclusive locality of Ampang Hilir/U-Thant. In comparison, a project called Impression U-Thant by Yong Tai Bhd was launched in 2018 at a gross pricing of RM1,700 psf.
Knight Frank Malaysia managing director Sarkunan Subramaniam said the overall outlook for the Kuala Lumpur high-end residential market remains challenging amid the supply and demand imbalance.
Nevertheless, he expects to see more new launches and transactions in the prime areas of Kuala Lumpur city – Bukit Bintang, Ampang Hilir or U-Thant, Mont Kiara, Bangsar, and Damansara Heights or Kenny Hill.
“In addition to these prime areas, there are also some established neighbourhoods or upcoming hotspots that are drawing the attention of the upper-income population and high-net-worth individuals.
“These include Desa ParkCity, Taman Tun Dr Ismail and the upcoming financial district of Imbi, Pudu and TRX,” said Subramaniam.
The report also highlighted there is an increase in foreign buyer interest here. The buyers are from Singapore, Hong Kong, China, Taiwan, Japan, Australia, UK, USA, and several European countries.
"The local developers are aggressively marketing their high-end residential products abroad coupled with the various available initiatives and incentives to stimulate the property market. We expect to see more sales this year. This would help to ease the current glut in the high-end property segment," he said.
New legislation to boost the market
Sarkunan expects new legislation may aid in the recovery of the market this year.
There were several key policies announced under the National Budget 2020, like lowering of foreign buyer price threshold from RM1 million to RM600,000 for unsold high-rise properties in urban areas and the introduction of Rent-to-Own financing scheme.
Other initiatives by the government include revising the base year for Real Property Gains Tax to January 1, 2013, for assets acquired before the date are expected to further stimulate the market.
Sarkunan said the shifting of the base year for RPGT is likely to have a positive impact as it will potentially lower taxable gains on the disposal of properties.
"This may lead to a higher level of activities in the secondary property market," he said.