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Friday, December 17, 2010

Foreign interest in high-end KL condos set to grow

FOREIGN interest in high-end condominiums in Kuala Lumpur will accelerate next year with the impact from Economic Transformation Programme's Greater Kuala Lumpur plan, property market players said.

The economic crisis in the past two years had seen a dip in foreign interest leading to a 30 per cent drop in prices.

"Going forward, we expect a return in buyer interest from Singapore, Hong Kong, Indonesia and more recently from the Middle East," said Eric Y.H. Ooi, organising chairman of the forthcoming Fourth Malaysian Property Summit at a briefing yesterday.

Prices of these high-end units in the city centre, ranging from RM1 million and RM2 million, have caught up with previous peak levels.

Foreign ownership to local ownership, which was at 30:70 per cent ratio, is expected to increase.

"Come 2011 we will be able to see whether foreign interest will be better than the past two years or to the peak in 2007/2008 when it was 50:50 per cent ratio," Ooi said, adding that there had been drop in interest from European investors.

Ooi, who is also managing director of Knight Frank Malaysia, described the Malaysian property market scene as probably one of the most attractive in the region with fewer number of ownership restrictions.

Foreign investors are attracted to the higher yield from these high rise investments at 5 per cent compared to landed properties, which provide between 2 to 3 per cent yield.

He said it would be interesting to see the property market scene when the second-tier Chinese investors from the mainland are allowed to purchase overseas properties. Already there has been a spike of Chinese interest in properties elsewhere in Australia and Singapore.

Past president of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia James Wong expects the inflow of foreign buyers to increase in 2012 with the implementation of the ETP.

"With the Greater KL and billions of ringgit in the MRT (mass rail transit) and LRT projects, we can expect to see an influx of expatriate population as seen during the last boom when the Petronas Twin Towers was taking shape," Wong said.

He added that unlike China and Singapore, Malaysia is not expected to see property asset bubble in the foreseeable future.

Wong also expects non-performing loans ratio (NPLs) to go up in the first quarter of 2011 although not at alarming rates.

He attributed it to the 5 to 10 per cent easy down payment scheme to purchase properties.

The Fourth Malaysian Property Summit organised by PEPS will be held at the Sime Darby Convention Centre in Kuala Lumpur on January 18.

It will have an overview of the property market performance and outlook for the office market, retail market, industrial market, high end condominium and REITs.

PEPS president Choy Yue Kwong said the property summit is also relevant to those who wonder whether it is the right time to sell their properties for alternative investments or right time to buy or invest or do nothing and wait for property prices to appreciate further.

By Business Times

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