| Two Tales of KL City |
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| Sunday, 21 December 2008 17:14 | |||
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Kuala Lumpur’s city skyline is getting more exciting with glitzy, high-end condominiums coming up. However, abandoned buildings still litter the city, providing an anti-climax to KL’s ambitions. Take a walk around Kuala Lumpur and you’d notice two tales of the city. In the heart of Kuala Lumpur city centre, luxurious residential developments and branded residences, like Norman Foster’s The Troika and The Binjai at The Park, stand tall, testifying that demand for glitzy residential address are still very much being sought after by Malaysia’s elite and the well-to-do despite the global economic slowdown. “They have to be well-established high-end location like KLCC, U-Thant, Kenny Hills, Damansara Heights and Bangsar. It also depends on location and the quality of its construction and fittings,” Chris Hahn, Savills Rahim & Co’s manager for overseas business development, says. Demand so far has been steady with several new, high density condominiums like Pavilion Residences, One KL and The Oval coming up in KLCC. In the U-Thant (also known as “Embassy Row”) district, low density luxurious developments that are taking place include The Penggawa Residences, 9Madge, The Gallery @ U-Thant and Iringan Hijau. Meanwhile, other parts of the city are still littered with abandoned commercial and residential projects – an eye sore that provides a reminder of fly-by-night developers in the 90s. Very often, they would consist of medium range residential developments, mostly greenhorns in the industry, jumping onto the property bandwagon to entice unsuspecting buyers. When the 1997 Asian financial crisis hit the city, these developers would vanish along with buyers’ money, leaving many frustrated without any legal recourse. “In the 90s, Malaysia went through a period of upmarket sentiment. A lot of people were buying properties. People were less cautious and more trusting of developers. Very often they would have glitzy showrooms to entice them. The laws were not tightly regulated then. There was also less awareness amongst the public on consumer protection,” Matthew Yeoh, managing director of DRI Group, says. Yeoh is a trained lawyer who provides legal and real estate services to foreign investors looking to buy properties in Malaysia. Fast forward a decade later, the Malaysian government has launched a three-pronged attack in its bid to win back investors’ confidence: Firstly, by tightening loopholes in its laws and regulations. Secondly, by implementing the Malaysia My Second Home policy (MM2H) and thirdly, by waiving away its Real Property Gains Tax (RPGT) until further notice. One such law that has been tightened is the Housing Developer’s Control and Licensing Act that covers all residential projects. Under this act, developers are required to make provision for a project account that has to be opened with a commercial bank. The law requires all developers (especially projects under construction) to deposit consumers’ money into this project account. In the instance that the monies need to be withdrawn, developers will need to obtain green light from its project architect or consultants. This will give consumers a certain degree of protection against unscrupulous developers. The Malaysian government has also implemented the Malaysia My Second Home (MM2H) policy in its bid to encourage more foreigners to make Malaysia their second home, hence leading to property purchase. This policy is open to citizens of all countries recognised by Malaysia regardless of race, religion, gender or age. Applicants are allowed to bring their spouses and unmarried children below the age of 18 as dependants. Those aged below 50 will need to open a fixed deposit account of RM300,000 while those above 50 are required to open a fixed deposit account of RM150,000. However, this policy seem to suffer from perception problems as it is seen as attracting retirees rather than high net worth individuals. “It’s not meant for retirees, it is opened to anyone above the age of 18. This program is an enhanced version of the former " Silver hair" program which was targeted at retirees,” Victoria Chai, Savills Rahim & Co’s marketing executive for prestige living, clarifies. “As a foreign investor you don’t need to go through MM2H to buy properties. It only benefits people who want a second home. The benefits are the multiple entry visa and tax free car but you can’t work here. That kind of favours retirees more,” explains Hahn. Moreover, some licensed agents of MM2H policy have aired their grievances saying that the Malaysian government is not doing enough to raise its awareness in foreign markets. “As a MM2H licensed agent, I feel disappointed because our government has not really spent enough money to promote and create awareness on such a marvellous programme we have,” Y B Loi, managing director of YBL Resources, says. Nevertheless, some developers like Tijani 2 North’s Bolton are using the MM2H policy actively as part of their marketing drive to attract foreign investors. “MM2H would be attractive to those foreigners who would like to reside in Malaysia for longer stay and benefit from the lower cost of living, being able to bring in their own personal car without the need to pay import duty, excise duty and sales tax and also it allows participants to employ a foreign maid. MM2H does help to attract some of these foreigner investors especially the older ones to consider purchasing property in Malaysia,” Chan Wing Kwong, Bolton’s executive director, says. Tijani 2 North is located in the gated community of Kenny Hills, an iconic address with a rich history of personality and prestige. So far, its take-up rate has been encouraging with 100 percent of its duplex sold and 96 percent of its block E condominium sold. Recently, Bolton opened the last 28 units in block D for sale. However, other developers like 9Madge’s Landlovers, Katana II’s Katana Developments and The Binjai on The Park’s Layar Intan, are not placing their bets on the MM2H. “I don’t think it is necessary because it is not a mass development. We are a very niche market. But if anybody comes in using this scheme we will not stop them. It is not our target audience in general,” Son Keum Chan, managing director of Landlovers, says. So far, 9Madge, which will be ready for completion by next year, has sold eight out of 23 units out, through its own marketing initiative. “Our buyers are sophisticated so this policy does not really apply for the high-end market,” Sherman Lim, director of Katana Developments, says. Katana II is still under development with no units launched yet. However, for its Katana Residences, 30 of its units are fully sold. Likewise, Layar Intan is marketing The Binjai on the Park, based on its own merits. “The Binjai on the Park is marketed on its own value proposition - its unsurpassed location, unobstructed views of the Petronas Twin Towers and the 50-acre KLCC Park, being part of the Kuala Lumpur City Centre development (facilities and amenities easily accessible including hospitality services), its international appeal and so on. It is the only strata titled development in KLCC available for sale, that is, this is the only opportunity to own a piece of KLCC,” Eddy Wong of DTZ Nawawi Tie Leung residential says. So far, The Binjai on the Park, remains the most sought after address in Kuala Lumpur according to consultancies Savills and DTZ with a 30 percent take-up rate. This luxurious condominium is part of the ongoing development of the KLCC masterplan whereby residents will get to enjoy privileged access and benefits of these surrounding facilities. Capital appreciation is expected to hit the roof. “The Binjai on the Park is a ’collector’s item’, a trophy property. We would not want to project an ’expected capital appreciation’ figure but needless to say, once the 171 units are fully sold, it would be market forces that determine the sub-sale prices,” Wong predicts. “The Binjai on the Park bears testimony to a passion that drives the delivery of tangible results, rather than producing mere blueprints. Pursuit of quality irrespective of time underscores our confidence to offer the actual product in line with our commitment in catering to our customers’ expectations on par with developments within the KLCC precinct," Hashim Wahir, director of Layar Intan, says. The Malaysian government has also waived away the RBGT. This waiver enables foreign investors to dispose off their properties and enjoy its profit without being taxed by the Malaysian government. Yet, despite the fact that Malaysia has the most attractive laws in the region that favours foreign investment in its property market and its value-for-money high-end developments, Kuala Lumpur is losing out to Singapore, Hong Kong, Bangkok and Shanghai. According to Malaysia’s Regroup Associates’ figures, the average price per sq ft for high-end residences in Kuala Lumpur is US$500 to $600 while those in Singapore, Hong Kong, Bangkok and Shanghai are at $1,900, $2,000, $300 and $470 respectively. Perhaps in its bid to strengthen the various measures it has implemented, the Malaysian government recently launched the Malaysia Property Incorporated (MPI) in October this year. So far, MPI has planned roads shows and conferences in Britain, Japan and Middles East to be rolled out at the end of 2008. Till then, market watchers will have to wait with bated breath to see if the Malaysian government has finally found the perfect formula to place Kuala Lumpur on par with Singapore, Hong Kong or even Bali. Malaysian real estate laws and regulations.
KL’s Most Wanted Addresses
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