Marketing KL high end properties
In my LinkedIn feed yesterday was an advertisement for a very high end KL branded residence with the tag "An exceptional investment for yourself and future generations with 30% capital gain protection". Well any investment opportunity with the possibility of a 30% capital gain is certainly attractive at first sight.
But a 30% gain is nothing much if the Ringgit were to fall by 30% in the future. 😜🤠 Readers of this blog that think currencies do not suddenly plunge 30% overnight might want to consider the unhappy experience of USD based foreign property investors in Turkey. According to the Economist, the value of the Turkish lira has plunged nearly 50% against the USD in just two months.
In 2000 I bought a 3000+SF freehold KLCC condominium at Jalan Pinang for about RM500 PSF. It has a great Walkability Score -97 out of 100. And features other 5* KLCC property owners can only dream of :
It is about 100 metres from KLCC Park, just separated by a hotel car park.
You can also see a national icon - the KL Tower - from my balcony.
And it's just a short 5 minutes walk to KLCC MTR station, the Petronas Twin Towers and Suria KLCC - one of KL's top 10 malls. Another 12 minutes walk via elevated walkway takes you to Pavilion Shopping Centre, another of KL’s top 10 malls.
A restaurant literally on the doorstep, a cabana with bar side seating for cocktail parties, a fully equipped alfresco dining area with food prep facilities, two pools - not one. And much more.
After 20 years, the investment property I bought close to the epicenter of the Kuala Lumpur City Centre in 2000 has a CMV of RM750 PSF according to two KLCC area specialists I contacted in 2021. And that RM750 PSF figure is -mind you- in nominal terms, IE NOT adjusted for inflation over the past 20 years. (Economists usually adjust PSF for inflation in order to compare capital appreciation between different property markets). Yours truly uses the GDP DEFLATOR to adjust the nominal PSF figure in 2021 to compare it with PSF figure in 2000. But it is out of the scope of this post to show my calculations using the GDP deflator. You can Google “Malaysia GDP deflator 2000-2021” and calculate your own inflation adjusted PSF figures.
Over the past 20 years the Ringgit has deprecated by around 30% against the SGD. A lot of overseas property investors in Malaysia are based in Red Dot Island. Measured in SGD, my property investment has only managed to eke out a small gain over the past 20 years. My point is overseas based property investors that buy High End properties in Malaysia must also take into account the future exchange rate of the Ringgit versus their home currencies.
So much for that beloved investment adage real estate agencies like to spout, “You make your money in property investment when you buy, not when you sell”. It ain't true in Malaysia if you are a foreign buyer in a country with a strong currency. Any capital gain overseas property investors might see in a prime KL property might be erased if the Ringgit depreciates in the future when you sell. 🤠
The 1999 marketing brochure for my 5* KLCC condominium had a similar tag, “An Investment Opportunity For You To Treasure”. Well after holding my 3000+sf KLCC investment property for the past 20 years, I can’t really quite say it was an investment opportunity I have indeed treasured.
Post Script and Disclaimer
EdgeProp Analytics says the median PSF for Kirana Residence as at 22 December 2021 is RM793. My very first post in my property blog -360 KLCC- was a direct side by side comparison of Kirana Residence versus the Binjai on the Park, another 5* KLCC condominium that EdgeProp Analytics says is worth up to 3X in PSF. You can check it out at my blog 360’KLCC but note yours truly is a former Kirana MC committee member and the comparison is not 100% unbiased.
I am not a registered investment advisor in Malaysia. If you are considering buying an investment property in KL, you should consult a BOVEA registered real estate agent or valuer.
PropertyGuru has an excellent write up, “The Complete Guide to Property Investment in Malaysia” that contains useful information on the risk factors involved in property investment.
EdgeProp Analytics is a FREE financial toolkit that yours truly uses frequently to get a quick first look at investment properties. My review of EdgeProp Analytics’ excellent ( but note my caveats ) Polynomial Trendline tool and Profitability Analysis tool is posted on my 360 KLCC blog.
In congested urban centres, a high Walkability Score is a useful differentiator that property investors can employ to narrow down their choice of properties to look at. Yours truly has compiled a list of 5* and 4* KLCC condominiums based on their Walkability Score attributes, amenities, and construction quality. Please see “Green Effect Redux” at 360 KLCC.
When you combine an investment property's Walkability Score with price data (for example the CMV in RM per SF) and a subjective score for construction cost in RM per sf, you can construct your very own Relative Valuation metric.
KLCC park is just 100 metres away. Note how close are the corn cob shadows of the Twin Towers to Kirana Residence
Alfresco dining area, food prep facilities, cabana with bar side seating, the pool on 2F - Kirana Residents have access to Ascott KL's 22F pool & jacuzzi too.
