KL offers best value for property investors, says Knight Frank

KUALA LUMPUR (Sept 23): With attractive yields on offer besides the relative weakness of the Malaysian ringgit, Kuala Lumpur gives real estate investors the best value in terms of long-term growth prospects, according to international real estate services firm Knight Frank in its 2017 Global Cities report.

“Kuala Lumpur offers investors the best value, where with US$100 million (RM413 million) one could purchase a prime office building of over 390,000 sq ft while the yield for prime offices in Kuala Lumpur was 6.25%, as of 2Q2016.

“It [yield] is very attractive to investors and the actual capital value is attractive as well. Also, technology has proven to be a strong pull for multinational companies (MNCs) and investors to set up their businesses here,” said Knight Frank Asia Pacific head of research Nicholas Holt at the launch of the report here yesterday.

However, the consultancy forecasts that rental growth for Kuala Lumpur’s prime offices will experience negative growth at -1.1% till the end of 2019.

“In many ways, the weakest projections come down to supply, with Kuala Lumpur, Beijing and Singapore seeing a significant amount of new supply coming into the market,” added Holt.

Chief executive officer of InvestKL Corp Datuk Zainal Amanshah, who was also at the launch, said Kuala Lumpur continues to remain attractive to global MNCs, despite the economic slowdown.

“We have several business hubs for investors to choose from. Global MNCs are looking at the city’s fluid business ecosystem and cost-competitive factors as favourable advantages compared with other major cities in the region.

“Kuala Lumpur’s competitive real estate rates, cost-effective talent and generally lower operations cost are the main criteria considered,” he said, adding that InvestKL has attracted 51 MNCs with committed investments of RM5.9 billion and created more than 7,000 job opportunities.

Meanwhile, Knight Frank Malaysia managing director Sarkunan Subramaniam said Kuala Lumpur has the lowest volatility rate across Asia Pacific.

“Coupled with high yields, low volatility and with the step-up on transport infrastructure development which increases the mobility and connectivity throughout Greater Kuala Lumpur, this transformation gives Kuala Lumpur the edge and represents the best value proposition for MNCs and investors in this region,” he said.

Holt concluded that technology, urbanisation and also global monetary policies will continue to influence the real estate growth of global cities.

“In KL, we see a bit of polarisation of performance in its office market while international investors continue to be attracted by prime assets with favourable yields, especially offices located in the Multimedia Super Corridor (MSC) areas.”

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This story first appeared in TheEdgeProperty.com pullout on Sept 23, 2016, which comes with The Edge Financial Daily every Friday. Download TheEdgeProperty.com pullout here for free.