Kuala Lumpur sees 1,820 new prime residential units in Q2

These are from three projects that were completed during the quarter.

Kuala Lumpur welcomed three new residential projects, Damansara Fifty6, Trinity Pentamont and Sentral Suites, adding 1,820 units to total stock. According to JLL, low interest rates during the pandemic encouraged high sales. Consequently, 97% of units have been sold. 

The completions of two projects comprising 793 units were delayed due to labour shortages, as foreign workers headed instead to Indonesia’s new capital city.

Here’s more from JLL:

One project, Bon Kiara, was launched during the quarter. This new project is located in Mont Kiara, with a total of 410 units ranging from 2,081 to 3,075 sq ft, and catering to families seeking spacious accommodations or individuals desiring extra space for flexible usage. It also offers a pet-friendly environment and is slated for completion in 2027.

Buyers remain cautious due to the interest rate hike

The Overnight Policy Rate (OPR) increased in 2Q23 to 3.0% after holding at 2.75% for three consecutive revisions. This resulted in increased financing costs, causing buyers to reconsider large-ticket purchases.

Amidst the interest rate hike, demand was supported by foreign buyers. Local buyers remained sensitive to economic changes and have shown a preference for renting given their current cautious approach.

Saturated demand from expats contributes to rent stagnation

The market saw a slight drop in capital values as buyers looked to put purchasing plans on hold. Currently, investment activities are mainly driven by local investors, although increasing interest from foreign investors has been noted. 

Rents fell during the quarter as the local market adopted a cautious approach. This is evidenced by the population’s inclination to stay with family members and commute to work rather than renting. Furthermore, the demand generated by expats may have already reached a saturation point.

Outlook: Currency stability and incentives to impact foreign investment

With Overnight Policy Rates (OPR) expected to increase in the near future, domestic demand is anticipated to further decline compared to the previous year. In addition, the depreciating Malaysian ringgit may impact the purchasing power of buyers, causing them to hold off on purchases.

The Malaysia My Second Home (MM2H) programme that attracts foreign investment to the property market will have another review in the near term. This could further boost foreign demand for residential assets in Malaysia.

Note: Kuala Lumpur Residential refers to Kuala Lumpur's prime residential market.