13 September 2010

KL's Property Hotspots.

I have a special section which I dedicate to the KL Property Market. Recently, I had received quite a number of comments and emails with regards to property investment in Kuala Lumpur. I believe I am well-equipped to answer many of these questions, and in fact... one of the most frequently asked question is this...

"Eric, where's is KL's hottest Property hotspot now?"

In my opinion, the Klang Valley Property market is not facing a property bubble; but certain locations might face some difficulties in the near future. As we are faced with a much more competitive property market, I believe that one thing that the investors and buyers should be aware of - is the yield or the rental market. In certain rare cases, we would still be looking at rental yields of beyond 10%. However, as we progress further, I think a more realistic yield target would be 5-6%, not even the high yields such as 8%.

KL's hottest property hotspot now is undeniably the KLCC vicinity. Most of these places are majority high rise developments - choose places such as Jalan Ampang, Jalan Binjai, Jalan Stonor, Jalan Yap Kwan Seng, Jalan Sultan Ismail, Jalan Pinang, Jalan Perak, Jalan Kia Peng, Jalan Bukit Bintang for amongst the hottest property ever - prices are soaring and shooting sky high! With the recent opening of Pavilion to compliment the existing KLCC, this area is by far the best area to invest.

Prices of high-end condominiums are averaging at RM 1,600psf - with some ridiculously priced ones at RM 2,500 psf upwards also got. There are also some slightly older ones which are priced between RM 1,200-RM 1,400psf. Assuming the purchase property is RM 1,600psf - you will need to fetch rental prices at above RM 11 psf per month in order to get a 8% yield - which is quite impossible.

Current rental rates around the area averages between RM 4 - RM 5.50 psf for high-end residential properties. Most are available for rental - so you would need to negotiate your rates. But working backwards - the yield is about 4+ % only!

Despite the lower rental yields, I still believe that KLCC region is the best place to put your money. At even RM 2,500 psf - that is still less than USD1,000psf, still much cheaper than our neighbouring counterparts in Singapore, Hong Kong as well as Jakarta. So plenty of room to go up further!!!

The next prime area is Damansara Perdana / Mutiara Damansara. Some people may argue that Damansara Perdana might be oversaturated and overcongested. In my honest opinion, I think there is still plenty of room to explore here. Firstly, the Damansara name is such a household name - and most investors would love to be associated with the Damansara name.

Damansara Perdana and Mutiara Damansara area is located along the LDP, and importantly, it is before the toll. Most house owners gets turn off when they have to pay a toll before going home or coming out; this place is strategically located close to some of the more prominent shopping centre such as One Utama and The Curve, which makes it convenient for its owners. Comparing the rental yields here... It rents for averagely RM 2.50 - RM3.50 psf - with a selling price of RM 500 upwards, this translates to a good return yield rate of 7%. Quite a good investment return I believe.

However, do bear in mind that being so close to all these shopping centres, as well as so close to the super congested Kota Damansara also means that you have to brave the jam to get home everyday. Prices would be expected to hover at about RM 100-200 below what Desa ParkCity is fetching - so in 2 years time, it should be getting a good RM850 psf sales value.

A place that has plenty of potential for your investments to grow, while being relatively cheap is Cyberjaya. Property prices in Cyberjaya is still relatively cheap, but is on the uptrend. If you can find some good properties here - such as Garden Residences (by Mah Sing) or Summerglades - this would be a good call.

Previously, Cyberjaya has been dubbed as too far and too ulu by some people - however, with the opening of the Maju Expressway (MEX) - Cyberjaya is just barely 15 minutes away from KLCC. Without a jam, and reasonably cheap property prices (RM 300 psf upwards), Cyberjaya's property is currently a steal and I would expect it to appreciate tremendously in the next 5 years.

A place that is somewhat very hot at the moment is Desa ParkCity area. I mean, there are plenty of people out there who like to be associated with Desa ParkCity because of its upscaleness, and people come from all over the place, even the other side of the town and highways just to hang out at the Waterfront at Desa ParkCity.

Recent new launches of the Casaman as well as the Westside Condo has seen explosive sales records! With prices of RM 750 psf upwards (a big increase from its RM 550psf Northshore Gardens launch in 2007) - Desa ParkCity is becoming an investors' haven so far. However, I believe that Desa ParkCity is more for the 'appreciation value' - rather than the rental yield. Its units are fairly large, hence rental rates are considerably low (due to quantum) and hence the yields are quite stagnant at 5-6% only.

The developer is constantly coming up with plenty of events and new ideas to market Desa ParkCity much more - I would expect Desa ParkCity property prices to hit RM 1,000psf by early 2012.

Back into the Kuala Lumpur city centre area - another area that is expected to see some tremendous growth potential is the Pudu area. With the re-development of Pudu jail, I believe that the properties around the area - from Berjaya Times Square right up to the Chan Sow Lin area would be receiving tremendous response.

With land prices of about RM600-RM800 psf, I believe that figure will shoot up to RM1,200psf very soon - but that all depends if DBKL would approve high plot ratios of 1:10 for that area or not.

The above areas - plus a couple of other areas such as the Old Klang Road area and Bangsar area - being established neighbourhoods would also see a good increase in prices. After all, these areas being so developed are running out of land soon - so expect prices to go up!


Post a Comment