Boom to bust

Boom to bust

		A luxury condo standing in front of Kuala Lumpur's iconic Petronas Tower. -- PHOTO: AGENCE FRANCE-PRESSE

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KUALA LUMPUR - PRICES of luxury condos that have mushroomed around the Malaysian capital's iconic Petronas Twin Towers in recent years are crashing as the global financial crisis hits.

Cashed-up Malaysians and foreign investors from Asia and the Middle East fuelled a boom in plush inner-city apartments that saw some 28 high-end buildings thrown up in the city centre.

Investors shaken by political changes INVESTORS from Singapore and Hong Kong had been attracted to Kuala Lumpur, where for a fraction of the price of an apartment at home they could snap up a condo with world-class design, tight security and unparalleled location. They were followed by buyers from the Middle East, who were similarly flush with cash and drawn to the country, which is predominantly Muslim and has worked hard to accommodate tourists from the gulf states. ... more

But the international economic slowdown has seen prices at some buildings slump by up to 30 percent, while one in five properties languishes unsold on the depressed market, industry experts said.

'The situation is not good. There have been a lot of 'wait and see' buyers since late last year and I believe this attitude is still prevalent at this moment,' said Robert Ang from property consultant Rahim & Co.

'Given the bleak economic outlook, we don't see the situation improving at least for this year,' he added.

Tenancies are also down, and landlords are offering steep discounts on rentals, nervous that the traditional flood of new expatriates during the northern hemisphere summer may not materialise this year.

Rahim & Co estimates that sale prices for top Kuala Lumpur condos, including one plush development that features private swimming pools for each of its 94 apartments, will slump between 15 and 20 per cent this year.

Prices at the glitzy 607-unit Marc building, which also houses a fashionable restaurant and art gallery and is steps away from the Twin Towers, have plummeted about 30 per cent, according to industry sources.

Apartments that were selling for 1,300 ringgit (S$542) per square foot at their peak have been knocked down to 950 ringgit per square foot, making a three-bedroom condo more affordable at 2 million ringgit.

The 110-unit Meritz building was worth up to 1,500 ringgit per square foot when it was completed in the middle of last year but now prices have been slashed to an average 1,000 ringgit, with one sale sinking to 850 ringgit per square foot.

'The question is where is the demand coming from? Even without this economic downturn, we were already concerned about what demand there would be for these luxury condos,' said Ong Chee Ting, a property analyst at Maybank Investment Bank. -- AFP