PETALING JAYA: Prices of prime residential properties in Kuala Lumpur rose 2.4% in the first half of the year (1H19) amid a sluggish property market, according to Savills Research.
According to The Savills World Cities Prime Residential Index, Kuala Lumpur’s average prime residential property prices stood at US$260 (RM1,088) per sq ft (psf) in 1H19. For the 12-month period ended June 2019, prices rose 2%.
The index considered a sample of both landed and high-rise residential units in prime areas of Ampang Hilir, Bandar Utama, Bandar Sunway, Bangsar, Bukit Tunku, Desa Parkcity, KLCC, Mont Kiara and Tropicana.
For five years up till June 2019, prime property prices in Kuala Lumpur rose 13.7% while the 10-year growth up till June 2019 was 84.2%.
Kuala Lumpur’s prime property prices recorded the fourth highest growth for 1H19 in the Savills World Cities Prime Residential Index, after Berlin (4.2%), Paris (3.9%) and Beijing (2.9%). Overall, the index rose 0.4% in 1H19.
Growth in Berlin and Paris were due to low supply levels coupled with increasing demand from domestic and international buyers while cities in China saw prices rising after declines in 2H18, due to a slight loosening in housing restrictions.
Meanwhile, values in Sydney and Cape Town are declining after significant increases over the past five years. Prices in Sydney and Cape Town fell 2.3% and 1.2% respectively in 1H19.
Prices in Singapore and London also declined in 1H19 by 1.1% and 1% respectively while the worst declines during the period was recorded in San Francisco at 3% and Miami at 3.4%.
“There are numerous reasons why prime residential markets all over the globe are going through slowdown. Some of them include global economic uncertainty, government policies, increased supply and many more. At home, we anticipate that values will remain flat over the medium term, especially in Greater KL,” said Savills Malaysia executive chairman Datuk Christopher Boyd.
In terms of price psf, Hong Kong remains the most expensive at an average value of US$4,730 psf followed by New York at US$2,520 psf and Tokyo at US$2,150 psf. At US$260 psf, Kuala Lumpur’s prime residential property prices remain the cheapest among the cities surveyed in the index.
Savills expects a steadier growth trend to prevail across world city prime residential markets for the foreseeable future, with the search for security of tenure and title in cities where high-net-worth individuals wish to live and do business underpinning values.
“The world’s wealthy are expected to continue to want to hold one or more world city prime residential properties as part of their portfolio, both as a store of wealth and as a base for work and leisure,” it said in the report.
European cities are likely to see the highest rates of price growth in the short term, benefiting from Brexit, lower prices and renewed confidence in markets like Spain but in the long term, demographics, wealth generation and political stability will play crucial roles in determining changes in prime property markets worldwide.