Singapore Business Times, April 15, 2008

In the past five to six years, demand for properties in the vicinity of the Kuala Lumpur City Centre (KLCC) has increased so much that thousands of high-end residential units have been built or are in the pipeline to meet the demand, Pauline Ng writes.

In 1995, before the Petronas Twin Towers came into being, the KLCC area had only six developments and some 928 units of high-end service residences, according to CH Williams Talhar & Wong. By last year, the number will have ballooned to 27 developments and 8,000 plus units. Over the next three years, another 6,000-plus units are expected in the market, CH Williams says.

But to the still bullish, the latest land acquisition in the area will be further proof that there is indeed still more upside, Ng says. In the first week of April, reports emerged that conglomerate YTL Group had acquired a plot of land measuring slightly less than an acre on Jalan Stonor in the KLCC area for some RM2,000 per square feet (psf), beating the previous benchmark of about RM1,500 psf.

According to Affin Securities, this shows the excitement over the high-end property market is still present despite concerns over the looming US economic recession and recent election setback suffered by the ruling Barisan Nasional.

Zerin Properties chief executive Previndran Singhe agrees. He expects the next price benchmark for the KLCC area to hover around the RM2,500 to RM3,000 psf mark, with the ‘really good’ ones – such as the under-construction Four Seasons hotel-cumapartment complex by Ong Beng Seng – fetching as much as RM3,500 psf. Singhe believes the KLCC area would only reach its ‘market equilibrium’ in three years.

Land prices in KLCC area were around the RM600 psf mark three to four years ago before the upswing in the property cycle. However, only 28% of chief executives polled by CH Williams believe non-landed residential properties are at the peak of the property cycle, although the general survey did not focus solely on the KLCC area.

Even successful Singaporean developers are making a beeline for Malaysia “because they feel the market has not peaked yet, and the country with its bigger population is still in a growth cycle,” Singhe says.

Foreigners account for about one third of new units purchased, and property consultants point out quite a number are happy not to rent out their apartments but to keep them for occasional use and for capital appreciation. This could ease some of thedownward pressure on rental yields when more units come on-stream, Ng says.