2023 buying a house : Why property in Kuala Lumpur is high demand

Central place and main attraction

Malaysia's capital, Kuala Lumpur, attracts a lot of tourists to the country. Due to strategic locations, numerous expensive structures have been constructed. This makes it an ideal option for wealthy people and internationals looking for homes. The location is undoubtedly one of the most crucial aspects when determining the cost of any property you want to purchase, whether in Kuala Lumpur or elsewhere.

Additionally, there are roughly twenty gated communities in Kuala Lumpur, which are areas with secure and guarded entry. The city's center is often where they are found. Only some of them, however, offer real estate for sale, and some only have rental homes. Sunway Belfield, one of the most coveted gated communities in Kuala Lumpur by expats, offers properties with 2 to 4 bedrooms starting at RM688,000, for instance. A tree house, a jacuzzi, and many more luxury amenities are included in this package.

In fact, just like with rentals, prices for homes available for purchase in the megalopolis vary significantly between the city center and the suburbs for the same type of housing. The majority of the housing options in the city center are apartments, condominiums, lofts, and other studios of various standards, with costs varying in accordance with the size, view, number of bedrooms, and level of elegance of the home. KL Sentral, City Centre, Mont Kiara, Ampang, Pearl, Damansara, Bangsar, and Sri Hartamas are among the places in Kuala Lumpur that are constantly in the spotlight due to their luxury and unique aesthetic value.

Consequently, it is quite simple to obtain food if you buy a residence here, especially for those who enjoy food hunting. When visiting a new place, tourists are drawn in first by its food. Kuala Lumpur is one of the cities with a wide variety of restaurants serving Malay, Western, Chinese, and Indian cuisines, as well as other cuisines including Arabic, Thai, Vietnamese, Pakistani, and many more. The wide range of great meals and affordable rates draw a lot of travelers to this area. As a result, the home may be rented out to tourists. While many will come on alternate days, some will rent it for a while. The turnover is quite high since people always visit alternately, even though they will stay for a short period of time.

Facilities and amenities

Living in the center has several benefits, including easy access to amenities and closeness to a wide variety of stores that are frequently only a short walk away. A number of top international schools, including Taylor's International School KL, Alice Smith Primary School, and Kuen Cheng Secondary School, are located in the heart of Kuala Lumpur.

In KL, there are many ways to get around. Grabcar is most likely the simplest option. People can find plenty of Grabcars waiting to pick them up and take them wherever they wish to go if they live far from public transportation. The monorail is yet another choice (the KL Monorail operates within KLCC). There are many different lines that you can board from KL Sentral, which serves as a hub (like RapidKL or KTM Komuter).

Using the Light Rail Transit, or LRT, lines is an excellent way to get to the majority of places in Kuala Lumpur. Utilizing the LRT lines is a highly common way to get around Kuala Lumpur. The trains are up-to-date, hygienic, and air-conditioned. Since the lines are relatively long and include numerous stations, it is possible to use one of the LRT lines to travel to practically all significant commercial centers and tourist destinations. 

Additionally, trains from here travel to a variety of other locations both inside and outside of Malaysia (like Singapore or Thailand). Bus transportation is another common form of public transportation, yet it's not always the simplest because visitors sometimes don't know their way around Kuala Lumpur. If so, the bus is without a doubt the most affordable form of transportation in KL (and Malaysia in general). The Bandar Tasik Selatan bus station is where most buses leave from (here buses depart to other places in Malaysia too). You can learn more about getting around Kuala Lumpur here.

The value of properties closest to public transportation typically increases significantly more quickly than any other type of property. You won't ever have to be concerned about turning a profit, whether you intend to rent out your house or sell it in the future. One of the main criteria renters consider when choosing a house is accessibility. You'll always have a steady supply of potential tenants interested in renting your house if it's close to public transportation.

Although the long-term potential may not seem great in the new neighborhoods close to an MRT or LRT station, they are there. Properties near convenient public transportation will remain in high demand, which will draw additional business prospects. The neighborhood will quickly develop into a flourishing community with schools, stores, green spaces, and more.

Having real estate is a rather effective hedge against inflation, as we well know. Every year, the value of typical property increases by 4–8%. Better properties, including those near MRT and LRT stations, will increase in value even more than that.

Variety type of property including luxurious and futuristic outlook

In Kuala Lumpur, there are many various types of housing, including bungalows, which are single-family homes, semi-detached homes, terrace homes, apartments, and condominiums. Since they are safe and frequently feature amenities like gyms, swimming pools, and tennis courts, condominiums are typically the most popular choice for foreigners in the city.

You have the option of a furnished, semi-furnished, or unfurnished apartment, which may imply that there are no kitchen appliances or even curtain rails in the unit. While serviced condominiums are furnished, the majority of apartments are not. Depending on the location selected, serviced housing will typically cost significantly more than a regular apartment, but will typically include all utilities and amenities.

In order to have more independence and personal space, young city inhabitants may prefer to live in studio or one-bedroom flats rather than larger residences. Additionally, in Kuala Lumpur and its surroundings, developers are constructing more boutique properties to satisfy that demand. The goal is to create more upscale shared common spaces (like fitness and health facilities on the rooftop, e.g., gyms, pools, meditation lounges, media rooms, and multi-purpose halls). Buyers of smaller homes pay less for their purchases.

In Kuala Lumpur, there are a lot of units that provide a luxurious yet futuristic outlook in order to serve the international demand. Luxury properties are an excellent opportunity for overseas investment and obtaining revenues and benefits that are not available in the domestic market. One can always identify and invest in exotic areas where there are no annual property taxes or capital gains taxes on transferred assets.

This is most likely the main justification for purchasing a luxury home. Property is an asset that increases in value constantly, and at the same time, it is a "performing asset," which implies that it fulfills a functional need even as its value increases. Luxury real estate has also historically been in high demand, indicating that it is a superb investment option with potential for future returns that are multiplied.

Whether you're building a custom home, renovating a mansion, or purchasing a vacation home, investing in luxury real estate might be more thrilling than investing in securities. If you have a luxurious home, you can live in it, travel in it, or rent it out. To receive the maximum return on your investment, however, make sure you are aware of the characteristics of this asset class that build long-term value before you make a purchase.

High-end buyers and tenants who are willing to spend extra to live in these residences are frequently drawn to luxury properties. Investors may get much higher yields as a result of this. Luxury rentals can sometimes outperform the stock market. 

Steady value

According to the 2019 Property Market Report from the Valuation and Property Services Department (JPPH), prices of serviced apartments in the KL city region (Hampshire Residences, Pavilion Residences, and Platinum Suites) are trending slightly lower (5% to 14%) due to a large supply. 

The stable and reasonable pricing encourages people to invest in high-end structures in order to earn profits that multiply and climb with the passing years. Property investing is significantly less volatile than other sorts of investment in Malaysia, such as stocks, cryptocurrencies, and other high-risk ventures.

If you want to invest but still want to see some profits at the end of the day, it's undoubtedly a secure and less-risky alternative to consider. This is also the primary reason why many people nowadays prefer to invest in the real estate market over other types of investment opportunities.

The MM2H Program

The expatriation-focused Malaysia My Second Home (MM2H) programme allows foreigners to acquire Kuala Lumpur properties at a lesser price than what is typically available to them, while strictly adhering to the country's applicable rules. This is a government initiative designed to ease the transfer to Malaysia. Applicants must demonstrate that they have at least RM1.5 million in liquid funds. 

The MM2H plan's membership standards are strict, but the benefit is access to low-cost real estate. It should be mentioned that the MM2H programme is intended for those who intend to stay in Malaysia for the long term, as beneficiaries will be issued a 10-year visa automatically.

Real estate ownership, with or without the MM2H plan, also comes with a variety of additional costs and obligations in addition to these requirements. The programme is, of course, subject to Malaysian tax laws, just like any purchase of property in Malaysia.

Home loan in Malaysia

The cost of purchasing a house in Malaysia depends on a number of factors, as was previously discussed. Be aware that, under some circumstances, you may be eligible for a house loan from a local bank as a foreign resident. However, it is typically considered that foreigners must pay their own money to get the privilege to invest in or buy property in Malaysia.

You are eligible to apply for a house loan if you are a participant in the MM2H programme or own a business in Labuan. If so, the bank will determine how much the property you want to buy is worth. Based on such an evaluation, banks are often prepared to lend money to foreigners for a home, however, they frequently issue loans between 75% and 90% of the entire value of the property.

On the other hand, people who are not participating in the MM2H programme often discover that getting a mortgage in Malaysia is more difficult. The bank's approval is based on a number of criteria, including the cost of the property you want to purchase, the size of your bank account, your income, and/or your capacity to make a down payment. 

Remember that banks may conduct a property assessment before deciding whether or not to approve your application for a mortgage. This is not as often as it is for MM2H programme participants, but it does occur on occasion, whether for international purchasers or Malaysian nationals.

There are also other packages designed to assist home purchasers, such as those that have a lower interest rate. This is the case with the First Time Buyer Loan, whose goal is to simplify the acquisition of a property when the buyer is making his or her first real estate transaction. Furthermore, each bank gives house loans using unusual formulas that are suited to the demands of the customer. It's up to you to do your study and select the formula that best serves your demands.

Several online platforms, such as WISE, PropertyGuru, and Global Property Guide, offer automatic calculators to help Internet users calculate the interest rate that will be connected to your loan and the loan repayment terms. Also, keep in mind that interest rates are frequently accompanied by the letter BR, which stands for "base rate," allowing you to compare the rate provided to the Malaysian market's base rate. On average, interest rates offered by local banks are around 3 or 4%; however, lower rates are conceivable based on the formulae used and the purchasing options provided in Malaysia.

The Malaysian real estate market

Malaysia's real estate sector has been struggling for a while. Kuala Lumpur is also affected by the fact that the supply far outweighs the demand nationwide. In August 2021, the value of several unsold apartments in Malaysia's largest cities was projected to reach approximately RM18.48 billion ($4.41 billion), according to Global Property Guide, an online real estate analysis platform.

The COVID-19 dilemma in Malaysia undoubtedly played a role, but the issue predates 2020. This suggests that the coronavirus merely worsened Malaysia's housing issue. This nationwide issue has arisen as a result of the development of several high-end properties around the country during the last decade.

The Malaysian government has taken a number of actions to solve this problem. The Global Property Guide predicts that the impact of such actions would only be reduced. The government has attempted to restrict speculation and lessen the number of new construction sites, for instance, by discouraging developers, as a way of preventing overbuilding. 

For properties valued at more than RM1 million, stamp duty has been increased from 3% to 4%, while the tax on real estate gains has been raised by 5%. However, in response to the epidemic, these restrictions have been loosened to at least partially relieve developers and encourage investment, which will help the economy recover.

A terraced house currently costs on average RM400,000 in Malaysia. In order to provide a point of reference, the average cost of homes of the same kind in Kuala Lumpur is over twice as much, or around RM778,000. Although it might be a dangerous investment, the continued decline in prices is providing chances for potential investors willing to wager on a quick rebound of the Malaysian real estate market. 

The beneficiaries in this scenario are definitely those who want to move permanently or for an extended period of time to Malaysia and purchase a home there, as well as potential renters who may bargain for lower rent.