At the end of last year, Kuala Lumpur was named the best city in the world for foreign workers, according to a survey carried out by InterNations, a network for people living and working abroad. In securing the top spot, the Malaysian capital scored highly for its work/life balance and for the friendliness of its citizens.
Markus Monnikendam, 37, who moved from the Netherlands to Kuala Lumpur in 2019 to work in app development, describes the city as a “huge melting pot” of different cultures. “[It] gives the city a vibrance, warmth — and a great food scene,” he says.
That diversity extends to people’s lifestyles and salaries, and Kuala Lumpur has by no means escaped the impact of the pandemic.
But the real selling point, according to the survey, is the availability and low cost of its housing for well-paid foreign workers. Three quarters of those questioned said they thought housing in Kuala Lumpur was affordable — compared with a global average of 42 per cent — and 91 per cent said available homes were easy to find — versus 60 per cent globally. Monnikendam agrees. “Every condominium [seems to have] a swimming pool,” he says. “And in our case, a gym and playground.”
Malaysia is one of south-east Asia’s five strongest economies — known as “Tiger Cubs” — and the country’s GDP per capita is the third highest in the region after Singapore and Brunei. However, its property prices are among the cheapest in south-east Asia.
At the end of last year, the average price for a prime property in Kuala Lumpur was $280 per sq ft, according to estate agency Savills. Demand seems to be increasing: in the third quarter of 2021, asking prices rose by more than 2 per cent compared with the previous quarter, according to PropertyGuru Malaysia.
Rents, meanwhile, have been hit hard during the pandemic — falling by about 8 per cent in the six months to June 2021, according to Savills, which places Kuala Lumpur at the bottom of its World Cities Prime Residential Index.
For tenants like Monnikendam, and his wife, who is a nurse, it means relatively affordable homes. They pay RM2,500 ($598) a month for their two-bedroom apartment in a condo building on a quiet street in Mont Kiara, a popular area with foreign residents, 9km north-west of the city centre. “Renting in KL is generally very easy,” he says, “as they keep on building so many new condominiums that there are tonnes of opportunities for places to live, and it’s easy to negotiate the price.”
For some foreign workers, it’s so easy that they move to a different area each year, Monnikendam adds. “They tend not to bring many belongings with them, so they just pack their bags and get a service such as Lalamove to handle everything for them.”
Not everyone is in the same position, however. After 10 years of steady growth, median monthly salaries fell 15.6 per cent to RM2,062 ($492) in 2020 compared with 2019, according to official data. Nabeel Hussain, deputy managing director at Savills Malaysia, says: “The economy has taken a hit — it’s been on a downward trend for 48 months, and the situation is even worse than the official figures show. That’s what the average person in the street will tell you, because that is how it feels.”
About 9 per cent of KL’s 1.76mn population are foreign residents and — although precise figures aren’t available — anecdotally, many immigrants have left in the past year or so, disillusioned with strict lockdowns and the inability to see family. And new arrivals are in short supply, with entry into the country still heavily restricted due to Covid rules (British nationals, for example, are still banned).
“Companies also cut a lot of contracts when Covid began,” says Taco Heidinga, director at LeadingRE, an international estate agency network. Hussain says: “It’s hard to fire people here, but during the pandemic there were a lot of lay-offs. It was a chance to prune staff, and the labour courts were overwhelmed.”
There’s another deterrent for anyone thinking of moving from overseas to the city. Recent changes to the Malaysia My Second Home (MM2H) programme — which has attracted some 55,000 foreigners to apply for 10-year visas since 2002 — make it too expensive for most to consider relocating there. To limit the number of foreign residents across the country to 1 per cent of the number of Malaysian citizens, the scheme now demands a minimum monthly income of RM40,000 ($9,500) per applicant — quadruple the previous amount — plus liquid assets of RM1.5mn ($360,000) and a RM1mn ($240,000) fixed deposit.
“People come here because the infrastructure is good, crime is low, and we’re outside of the typhoon line and earthquake zone. But it’s harder to live here long-term with the new MM2H measures,” says Heidinga.
“It used to operate at a price point that other countries couldn’t match, but the new threshold is so hard, it’s easier to migrate to Australia or Canada,” says Hussain.
Wealthy Malaysians have been leaving the country during the pandemic, too, he adds. “Affluent Malaysians like to live in bungalows with gardens in suburbs such as Damansara Heights, but deals at the top end, around $2mn-$3mn, have fallen off a cliff. Many tycoons, members of the establishment, have found their businesses struggling in the last year or so, they’re nervous about the new government that took over in 2018, so they have moved their money elsewhere.”
In the city centre (KLCC), near the landmark Petronas Towers, luxury condo buildings are populated largely by foreigners who tend to work in finance, or the oil and gas sectors, says Hussain.
“Rents in general have fallen by about 25 per cent since their 2014 peak. The biggest condo apartments — the 4,000 sq ft, five-bedroom units that were dependent on expat families on large relocation packages — have probably seen prices come down by 50 per cent.”
The departure of highly paid foreign workers is clear to see, says Peter, a sales manager who preferred not to disclose his real name. He transferred from Scotland to Kuala Lumpur with his job in 2014 and rents a two-bedroom condo in the KLCC for RM2,200 ($520) a month.
“There are dozens and dozens of empty flats to rent in each condo, and there are still thousands of flats under construction,” he says. Most of the migrant workers he knows, he adds, have gone on “extended vacations” to Europe or the US.
The number of complete but unsold units is known locally as “property overhang” — and it’s a huge issue. “It’s not necessarily good news for those looking to rent either, as the unit is still the property of the developer, so it’s not available to rent,” says Hussain.
According to the National Property Information Centre, 1,378 new flats were launched on Kuala Lumpur’s market in Q3 2021, but 3,863 properties were unsold — about two-thirds of which were high-rise flats.
Of serviced apartments, which have sprung up in the city in the past decade and are counted separately, 4,628 units were empty.
“Expats have left and they haven’t been replaced. Transactions have really dried up for high-end condos priced about RM1.5mn ($380,000) and above, and it’s affecting all sorts of areas, including international schools,” says Hussain.
The overhang issue is also exacerbated by the government’s recent ending on December 31 of the Home Ownership Campaign, which offered stamp duty exemptions and other financial incentives to buyers in new developments.
Some areas of the market remain resilient, however, says Hussain. “Small, mid-range, fairly central units are still selling, in new condo developments a couple of train stops outside KLCC such as Skyline in Pudu,” he says, citing small two-bedroom flats of about 600 sq ft costing roughly RM510,000 ($122,000).
Equally attractive to expats and Malaysian families are new communities — or “townships” — set around lakes and leisure spaces, such as Desa ParkCity, 18km north-west of the city centre, or EcoWorld’s Eco Sky, 10km north. “Desa ParkCity is 20 minutes from KLCC,” says Heidinga, “and it has everything there, so you don’t need to travel into the city and sit in traffic.”
Traffic is a constant gripe among locals in Kuala Lumpur. So, too, is the “cumbersome, inflexible bureaucracy,” says Peter, and the high prices of wine and beer.
But, as InterNations’ survey highlighted, there are upsides to life in KL, and not just in its abundance of housing and low cost of living for well-paid foreign workers. Income taxes are low, on a progressive rate up to 26 per cent. There’s also a high number of national holidays (23 days this year), and beautiful tropical islands lie within two hours.
“Life is easy and much cheaper than Europe,” says Peter. “It’s a food paradise, it’s vibrant, socially, and it’s like perpetual summer.”
Malaysia is the only south-east Asian country that allows foreigners to buy freehold land — but there is a minimum purchase amount of RM600,000 ($143,000)
In Q3 2021, asking prices across all four key regions, including Kuala Lumpur, showed the first positive quarterly growth since Q2 2020 (PropertyGuru/Malaysia Property Market Index)
What you can buy . . .
Terraced house, Desa ParkCity, $585,600 A four-bedroom house in the Nadia Parkfront development. The property has 2,800 sq ft of living space and is on the edge of a six-acre park. Listed with Cornerstone Xstate.
Condo, Banyan Tree, KLCC, $1.15mn A three to four-bedroom, fully furnished apartment in the Banyan Tree residential skyscraper, which has 24-hour concierge, swimming pool and private parking. On the market with Knight Frank.
House, Bangsar, $3.58mn A newly built, six-bedroom house with a pool in the suburb of Bangsar, which is about 15 minutes’ drive south-west of central Kuala Lumpur in good traffic. For sale with Knight Frank.
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