Kuala Lumpur offers affordable luxury

With Asian property relatively unaffected by the recession and the regional recovery well under way, investors are considering Malaysian luxury residences, which are still at relatively affordable prices.

Robert Ang, of Savills, says that at the height of the market, from 2007 to 2008, luxury prices were up to 2,000 ringgit (HK$4,800) per square foot in Kuala Lumpur, but now they range from 1,000 to 1,500 ringgit.

He recently received an offer of 1,400 ringgit per square foot for one of the best condominiums in the city. 'Lesser-known cities, such as Johor Bahru, are at 300 to 400 ringgit, while a new launch in Penang is about 600 to 800 ringgit,' he says.

Brian Koh, executive director of DTZ, thinks valuations are lower, with average pricing for high-end condos at about 574 ringgit per square foot. However, the top segment of the market in central Kuala Lumpur averages 1,600 ringgit, while Penang is about 500 ringgit, he says.

Luxury property in Malaysia was less affected by the economic crisis than other countries in the region, mainly because prices before the recession were already reasonable compared to other markets. Nevertheless, according to Amous Lee, international investment director at Knight Frank, developers held off launches and adopted a more cautious stance.

As of 2007, an overseas influx accounted for 50 per cent of new luxury residential purchasers, up from the previous average of 30 per cent. 'Obviously, interest from foreigners has quietened down,' Lee says, noting most buyers are locals.

Traditionally, foreign buyers in Malaysia have primarily been from Singapore, Hong Kong and neighbouring countries, but in recent years, interest has increased from the Middle East, Europe, South Korea, the mainland and India, he says.