Hong Kong and Chinese investors eyeing Kuala Lumpur

If you think Singapore is where all the hot money is flowing in, think again.

According to IP Global’s founder and managing director, Tim Murphy, Kuala Lumpur has emerged as a hot property destination, alongside London and New York, among Hong Kong’s savviest investors.

Investors’, particularly those seeking to diversify their portfolios with affordable, midrange property, see Kuala Lumpur as a long-term and relatively secure investment destination.

Unlike Singapore where the recent cooling measures were aimed directly at speculators, Malaysia’s property market is driven by owner-occupiers and domestic consumption.

Coupled with Malaysia’s economy which is expected to grow 5.3 percent in 2011, these factors have increased the profile of Malaysia as the prime investment location in Asia.

Driving demand, says IP Global, is its stable property market and relative affordability.

Chinese buyers favouring Kuala Lumpur

Kuala Lumpur is also on Chinese investors’ radar after China hiked its lending interest rates recently to cool its red-hot property market.

Property prices in the country have soared to unaffordable levels pricing out many Chinese investors.

This has made them look for properties elsewhere in Southeast Asia.

With more cooling measures expected to be announced in Singapore, ahead of the next general elections, Kuala Lumpur has become the next destination of choice.

An oversupply in the city’s condominium market has also made it attractive to Chinese buyers as there are plenty of units to choose from.

Some launches, expected to take place post-Chinese New Year, will include YTL Land’s Capers in Sentul East as well as SP Setia’s RM6 billion KL Eco-City project which will comprise office and condominium towers.

Prime properties in Kuala Lumpur can yield rental returns of up to 10 percent, much better than the 3 percent interest rates Chinese investors get from local banks.

What about Singapore investors?

While Chinese and Hong Kong buyers are looking to Kuala Lumpur, Singapore investors are unlikely to buy second homes there.

This is because the recent cooling measures have hit Singaporeans hard.

Those who wish to buy resale public flats (also referred to as HDB flats) will now have to dispose off their overseas properties within six months.

While I applaud the Singapore government’s move to bring down home prices to more affordable levels, they should not penalise Singaporeans.

Rather, such rules should only be imposed on permanent residents.

Improvements

Timing has now favoured Kuala Lumpur but more can be done to make the city even more attractive.

Top on the list is improvements to its train system to ensure a more seamless journey and thereby relieving traffic congestion.

I do note that Kuala Lumpur City Hall (DBKL) has made an effort over the years to upgrade KL Monorail and Rapid KL.

Still, I find them not too user-friendly as some KL Monorail stations, like Raja Chulan, lack escalators.

Others, like its Bukit Bintang station, defy planning logic as it requires you to go up a staircase, cross a bridge and then go to the other platform just to exit the station.

Just my two cents’ worth from the eyes of a foreigner.