Will KL Real Estate Continues To Flourish?

As always, there are sceptics, and there are optimists. If one were to talk to any of the major real estate developers or property experts about the prospects of properties surrounding KLCC (Kuala Lumpur City Center) where no other than the famous Petronas Twin Towers being the central focal point, they would most likely draw to the same conclusion, that is, KLCC properties will continue to flourish, despite the potential global economic slowdown, US sub-prime crisis and Malaysia's political uncertainties. Some experts admit that there could potentially be a slowdown in KLCC's property market too, but it remains to be one of the most exciting real estate markets globally.

As for the sceptics, here's the matter of fact, prices of KLCC high-end properties have risen by an average of 50% to 100% over the past one to two years! Therefore, it's no longer a question of if but how far can it go!!

Recent property transactions in KL seem to further bolster the excitement ahead. YTL Corporate, a major conglomerate, bought a piece of freehold land valuing at RM2,000 (USD625) per sq feet at Jalan Stonor, near KLCC. Another developer, Sunrise, dubbed the "king" of condominiums due to their strong brand name establised in Mon't Kiara, has today proposed to buy a piece of freehold land fronting KLCC at RM2,588 (USD809) per sq feet! The said land is currently housing the large commercial building Wisma Angkasa Raya. It's also interesting to see that both transactions happened after the March general election!

It is also worthy to mention earlier this year, German-based Union Investment Real Estate AG bought en bloc an uncompleted 41-storey office tower in the city from Bandar Raya Development for slightly more than RM439 million (USD137m). The other noteworthy one was by Kuwait Finance House, one of the most aggressive foreign players in the Kuala Lumpur property market. It bought buy half of the yet to be built 45-storey Menara YNH from YNH Property for RM920 million, setting then a new benchmark of RM1,230 (USD384) per sq feet.

Hot on the heels is the announcement by KL City Hall (DBKL) the approval for upcoming development of more skyscrapers around KLCC comprising office blocks, hotels and serviced apartments over the next few years. Among them is a a skyscraper soaring to about 60 storeys to be built as an extension to the Petronas Twin Towers. It will be located next to the Mandarin Oriental Hotel. Others include a 60 storey building at KL Sentral, 40 storey building at Stadium Merdeka and the 70-storey building next to Twin Towers housing a hotel, service apartment, condominum and retail.

Well, that's great but the question is, is this sustainable or could this be a potential bubble in the making? In my opinion, much depends on how the Malaysian Government, relevant authorities and the property developers market KLCC properties as a global brand. After all, being the "best kept secret" is not going to augur well for anyone. It fair to say that past marketing efforts had been rather futile until 2007. In addition, further liberalisation of investment policies have to be continuously fine tuned in an efficient manner, so that it eases the process of buying properties in the country. The Malaysia My Second Home Campaign has been rather successful but needs further improvement and consistency in implementing policies. Also, the country has to be continuously benchmark against other more developed as well as emerging property markets out there so that Malaysia will remain relevant and continue to gain competitive edge over the others.

If the above can be achieved, I am sure it will be a rewarding journey for those who make the early jump. However, potential can only be fulfilled when concerted efforts are being put in place, which is not this country is reknowned for in terms of past efficiency and effectiveness.

It will be nice to see Malaysian properties competing against the best of the world!