Kuala Lumpur’s Urban Push Attracting Luxury Hotel Brands

An expanding urban city skyline is the subject of the new Kuala Lumpur Hotel & Hotel Residences Market Update by C9 Hotelworks and Horwath HTL. With Malaysia forecasting 28 million visitors in 2018, the country’s economic growth is on an upward trajectory bolstered by strong exports and rising domestic spending.

This positive sentiment is represented in the report’s data that shows Kuala Lumpur’s luxury hotel demand now outpacing supply growth. Another key trend is in the real estate sector with hospitality brands joining with property developers and achieving 25-35% pricing premiums.

Our market research shows that hotel affiliation is correlated to real estate pricing premiums. The luxury hotel residences at Ritz Carlton, Four Seasons, and St. Regis offer various layouts of significantly bigger size units, from one- to five-bedroom duplex units and are seeing strong interest from end-users who are looking at the convenience of a development with extensive facilities, services and prestige of a hotel brand. 

We are seeing a new trend of upscale and midscale brands into the sector, which will in turn be opened to a broader range of property buyers. Meanwhile, upscale or midscale hotel residences provide a limited choice of unit configurations from one, two and three-bedroom units only. Given less barriers to entry by property developers in this segment, highlighted by lower underlying land cost, this type of offering is expected to gain stronger traction across Kuala Lumpur’s expanding cityscape. 

Other key trends include the quality of the surrounding area and accessibility are critical factors buyers consider. The Petronas Twin Towers and KL Tower remain significant viewpoints that add demonstrated value to property offerings. 

Fully-furnished units are preferred by foreign buyers who focus on recurring rental yields. A number of hotel residence projects provide fully-furnished properties or an increasing number of global high net-worth individuals is diversifying Kuala Lumpur’s traditional geographic source markets profile. Foreign buyers are entering the market both at the top end and entry levels. We expect the most movement in upscale or midscale hotel residences with a growing appetite for smaller units at lower absolute pricing points. 

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