Properties in Malaysia

From the Star Online, the expensive condos are listed below:

Sunday July 29, 2007

KL’s 10 Most Expensive Condos

Excitement in the property sector over the spiralling condominium and land prices in the Kuala Lumpur City Centre (KLCC) area over the last four months, seems to be gaining greater momentum. What's happening to the prices?

Which single condominium development in Kuala Lumpur is considered to be the priciest in Malaysia? The dust hasn’t settled on this issue as two purported contenders for the title have yet to be launched.

According to KL property experts, based on current prices, the 10 most expensive condominium developments (please refer to Table A below) are all sited in the Kuala Lumpur City Centre (KLCC) area with the exception of Pavilion Residence in Bukit Bintang, which is still quite close by. However, if the yet-to-be launched Four Seasons and The Binjai developments were to be taken in account, those falling below RM1,000 per square foot would be out of the list, unless...

But the “asking price” and “transacted price” may not necessarily match. Currently, the costliest average price per square foot has been transacted at RM2,000 for the One KL project. This development is noted for its marketing strategy of one swimming pool on every floor. The tower has 35 levels.

Developers who launched their condominium projects earlier, are now frantically revising their pricing policy for their remaining units. And those who have yet to launch, are now trying to push the limits.

But all eyes are trained on The Binjai and the Four Seasons projects – touted to fetch more than the current benchmark of RM2,000 per square foot. The Binjai management purportedly “screens” prospective buyers and even require an interview. The show house has long been off-limits even to ordinary tycoons.

Cheapest

Foreign as well as local interest in Kuala Lumpur’s luxury condominium developments seem to have been spurred by the Government’s relaxation of residential ownership rules for foreigners and the waiver of real property gains tax (RPGT) recently. And what’s happening in Singapore’s high-end condominium property market is having an effect on KL.

At the 2004 press conference to announce The Binjai: (L-R) Jones Lang Wootton senior vice-president Rohan Padmanathan together with KLCCH director and group chief executive officer Datuk Ishak Imam Abas architect David Whitfield of Allen Jack + Cottier.

Demand for the “best” condo-developments is at an all-time high with record-breaking prices per square foot quoted – even for land in the KLCC area. For instance, the plot of land occupied by the Hakka Restaurant at Jalan Kia Peng was reportedly sold via tender for over RM1,300 per square foot recently – a record price.

And what do our local market experts have to say about such transactions and dizzying prices, notwithstanding the recent dip in the stock market.

Chan gets all excited when talking about high-end properties

S.K. Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng gets all excited when talking about her favourite subject, high-end properties.

“I love properties and when I go into a luxurious show unit, I get all excited. And when the sales agents take a look at my face, they think they have a sale!” says the property consultant.

But don’t let her pretty looks fool anyone, as this lady is a tough customer who knows all the in’s and out’s of a favourable or unfavourable property.

She can easily judge how much yield the property will likely generate or the percentage of capital appreciation in the shortest possible time.

Says Chan: “Technically, all KLCC condominium developments are considered to be high-end properties in terms of price and quality. Super-condos – as opposed to high-end condos – are merely super “big” in terms of size alone.

Carmen Chua, eldest daughter of tycoon Datuk Chua Ma Yu, credits her father for the opportunity to work on One KL. The condo development is currently the costliest based on average price per sq ft.

The Petronas Twin Towers are regarded as the epicentre of the KLCC area, with the surrounding lands viewed in terms of concentric bands with the first tier being closest to the towers.

For example, the first-tier condo-developments will include projects like One KL and K Residence and the second-tier will include Hampshire Park, The Meritz and Cendana.

Property agents look at the desirability of condo developments based on various factors depending on the targeted tenants for the units to be rented or leased out.

Close View: Like many of the condominium developments that have a direct view of the Petronas Twin Towers, K Residence condo prices seem to be on a continuous upward trend.

If the targeted tenant is the young and happening type of expatriates instead of family-oriented expatriates, then the condo-development should be near the bars and entertainment areas.

Land status is very important. If the development is on commercial land instead of residential land, then the rental yield will be affected by the commercial rate for quit rent and utility bills. For example, your monthly electricity and water bills will be charged the commercial rate.

The track record of the developer is equally significant. Certain established developers like Tan & Tan have their own following. These repeat buyers will buy anything they build, explains Chan.

Branded Properties

Unlike the old days, developers now will usually have done all the study they need to formulate their pricing policy. They would price their property at what the market needs now.

The Avare, touted to be a "6-star" condo development.

Also, the team of consultants engaged for the project is important. Buyers generally like “branded” properties. For instance, the Troika developers have engaged Foster and Partners and astute buyers are confident that with such a prestigious architectural firm, the condo design won’t be easily “outdated”.

Buyers of high-end condos who wish to rent out their units have to understand the expatriate rental scale. For instance, a multi-national executive transferred to KL may only have a monthly rental budget of RM5,000 and ambassadors may have an average of RM15,000. So, if you wish to rent out at RM20,000 a month, you are looking at a tenant in the top position in a multi-national! The question you must ask is who is going to be your tenant?

Is the KLCC area already staturated with high-end condo developments?

KLCC is the heart of the real estate market, and the prime property hot-spot of the nation, says Chan.

“Any city in the world – such as Bangkok, Singapore and Shanghai – have their own renowned residential enclaves. Think of Hyde Park in London and Central Park in New York. This is the best address in Malaysia!

“KLCC looks like it is saturated because of the timing of the launches – one after another. But the fact is, land is scarce.”

Most beautiful

Some projects cater to the different needs of buyers. Some buyers want good views while others prefer convenience and proximity to entertainment centres.

So when you invest in a KLCC condo, you must know the type of tenant you are targeting.

For instance, The Binjai is touted to have the most beautiful view of the KLCC Park and the Petronas Twin Towers.

Initially when it opened for registration, the price per sq ft was supposed to be RM700-RM800. The indicative price has far exceeded that today.

The other highly anticipated launch, is the Four Seasons mixed development project, sited next to Menara Maxis.

Whether a condo-development qualifies to be “high-end” depends on various factors such as:

· Price

· Location

· Large built-up and mega-size units

· Quality of the finishing

· Façade

· Grand entrance statement

· Design

· Posh Feel

· Grandeur

· Feeling of having arrived

· Royal ambience

· Views

· Height

Capital Appreciation

What should a buyer be aware, when buying a high-end condo especially in the KLCC area? Chan cites the following guideline:

· Timing of entry into a project

· Design and sizes of units

· Packaging

· Car Park allocation

Explains Chan: “If you were to buy into a project early, certain developers offer ‘early bird special’ price or an easy-to-own package deal including the 10:90 variant. This means that you pay only 10 per cent down payment and nothing more until the project is ready. You will save on interest costs. By the time the project is ready and you can rent out the condo unit and use the rental to pay your bank loan installments.

“The condo layout must be practical and there should be a variety of built-up sizes available, so that you won’t be competing with other owners if all your units are of the same size. For instance, the Idaman Residence project offers sizes of 800sq ft, 1,000sq ft, 1,500sg ft, 1,700sq ft and 2,100sq ft. Here the segregation of types is very distinct for the purpose of renting out.”

A buyer must also consider how much more capital appreciation can the property gain.

“At what entry level are you going in? If I were to buy at say RM1,000 per square foot, what’s the likelihood of the price moving upwards? What are the neighbouring launches selling at? Are they priced higher? Don’t get carried away with the show unit which is designed to seduce the prospective buyer.”

Chan highlights key features in selected condominium projects that has made the developments popular:

· Idaman Residence – choice of units with not many competing types within the development

· One KL – each unit comes with a swimming pool

· Cendana – tie-up with Renaissance Hotel KL & most buyers are repeat Tan & Tan Bhd customers

· Marc Residence & K Residence – proximity to KLCC

· The Troika – designed by Foster & Partners architectural firm headed by multiple award-winning Lord Norman Foster

· The Avare – Unique external façade of a glass-curtain walling

· Pavilion Residence – mixed-development concept

· Watch out for the Four Seasons and The Binjai.

Evaluation

But in assessing these condo-developments as a good real estate investment, one must evaluate them based on:

· Location

· Accessibility

· Neighbourhood

· Land Tenure – Freehold/Leasehold

· Land Status – Residential/Commercial

· Developer’s track record – Branding

· Team of consultants

· Unique feature

· Finishing

· Packaging

· Maintenance charges

· Car park facility

· Choice of Units (Range of built-up sizes)

· Timing of Purchase

· Layout

· Pricing – Capital appreciation and rental returns

A developer may price his or her development very high but pricing alone does not necessarily reflect nor guarantee a luxurious development. An unfortunate fact of local property development is that what you see in the show unit may not necessarily be what you get. Defects and flaws are common place.

Luxury condo-developments in other parts of KL – as listed in Table B below – may not be quite as expensive as those in the KLCC area but prices are coming “pretty close”, says Chan.

* Please see related article Lure of KLCC condos.