City & Country: Red Hot

There has been a rush for landed property in the Klang Valley in recent months, sending prices skyrocketing. Demand has surged especially for terraced houses in established neighbourhoods such as SS2, Damansara Jaya and Taman Tun Dr Ismail. Au Foong Yee and Racheal Lee have the story.

Just before Chinese New Year in February, an intermediate and basic 2-storey house in Damansara Kim, Petaling Jaya, was put on the market for RM450,000. The 22ft by 75ft property was snapped up the same day, but not before an open tussle between the first and second viewer.

According to the agent appointed for the sale, the first viewer was inside the building when the second one arrived. The latter immediately handed over a cheque to the agent to seal the deal.

That quick but brilliant decision would probably have earned the investor a cool 10% or so in capital appreciation today, a mere two months later. A similar property in Damansara Kim, says the agent, would probably fetch RM500,000 or more now.

Chloe (not her real name) and her husband have been shopping for a terraced house in the Petaling Jaya areas of SS2 and Section 17 for the last two years. The couple and their three children live in their family home in SS2 and are looking forward to their own place, preferably not too far away for convenience’s sake.

“My friend paid RM450,000 for a 24ft by 80ft 2-storey house in SS2 two years ago and my husband and I have since been looking around for a similar buy but in vain.

“Instead of easing or staying put, prices have been climbing, especially in recent months. The last I heard, the tag for the same kind of SS2 house is nothing less than RM600,000,” says Chloe.

Exasperated, she is now willing to consider Damansara Jaya, also in PJ. Last week, the couple viewed an intermediate 2-storey house fronting a T-junction (a feature some investors frown upon) from the outside. The asking price was RM580,000. After sleeping on it for a few days, they decided to make an offer for the property, only to be told that it had been sold.

“It would appear that when buying a landed house these days, one cannot even afford to stop and think. One has to hand over the cheque immediately!” a frustrated Chloe tells City & Country.

If you have not noticed how prices of landed property in the Klang Valley have spiked recently, you cannot call yourself someone who follows the real estate market.

“Somehow, prices have shot up since last September,” says the agent who sold the Damansara Kim house.

At Desa Parkcity in KL, a 2-storey renovated terraced home (land area: about 1,920 sq ft) in the gated and guarded Nadia phase is being sold for RM1.05 million compared to around RM650,000 in 2008. About two months ago, a 22ft by 60ft (built-up: 2,390 sq ft) unit was transacted at RM980,000. An agent in the area says the price increase is “normal” because house prices in the surrounding areas are going up as well. Another reason is talk that the next launch at the township in 3Q2010 — terraced homes in the Casaman phase, also gated and guarded — will be priced at about RM1.5 million.

In reality, the prices of landed property have been moving up, although not by such huge margins, over the years. The most sought-after areas are seeing more interest than the others.

City & Country research shows that units at the gated and guarded Villa Damansara (2-storey terraced; land area: 1,650 sq ft) in Section 4, Kota Damansara, are going for RM500,000 to RM550,000 each. In early 2008, they were priced at RM450,000 to RM480,000.

Meanwhile, a 2½-storey terraced house in BU6, Bandar Utama (land area: 1,650 sq ft) is on the market for RM850,000 to RM900,000. Such units were sold for between 750,000 and RM800,000 two years ago.

A basic 2-storey semidee on Jalan Athinahapan, Taman Tun Dr Ismail, was recently sold for RM2 million compared to about RM1.5 million two years ago. An agent says landed property prices in the Petaling district (Taman Tun Dr Ismail, Bandar Utama, Desapark City and the surrounding areas) have gone up tremendously over the past two years, as many buyers are attracted by the location.

“Even the property valuers cannot give you the exact value of property here. We, as agents, also have to follow the market trend closely,” she adds.

JS Valuers Property Consultants Sdn Bhd’s research and consultancy director Chan Wai Seen says a 2-storey terraced house that was built 19 years ago (land area: 1,800 to 1,900 sq ft) on Jalan Datuk Sulaiman, Taman Tun Dr Ismail, is going for about RM750,000 to RM850,000. A similar unit was available two years ago at RM700,000 to RM800,000.

According to The Edge/CB Richard Ellis Malaysia Klang Valley Housing Property Monitor, a 2-storey terraced home in Bandar Puchong Jaya was on the market for RM450,000 in 4Q2009, up from about RM420,000 in early 2008.

During the global recession, investors hoping for fire sales, like Chloe and her husband, were greatly disappointed. Similarly, positive market sentiments do not seem to apply when it comes to high-rises. Property values, which have been chased up to record highs, especially in the Kuala Lumpur City Centre (KLCC) areas, peaked around the middle of this decade. Prices retreated significantly during the global recession but have since steadied or improved from their lows.

Red hot

Hands down, the darling investment of the moment would be landed homes. While there is also plenty of interest in semidees and detached homes, it is the relatively more affordable terraced homes that are red hot.

While preferred locations and additional features like gated and guarded facilities top the list of preferences for buyers, the strong interest has spilled over into less sought-after addresses.

Landserve Estate Agency’s managing director Chen King Hoaw says prices of landed houses in the Klang Valley had been rising gradually before jumping as much as 20% to 40%, depending on the location, in recent months.

He adds that “there are no signs suggesting that the value of landed properties is not going to go up further”, and that this will depend on the economic recovery, location, development concept and product feature.

Alam Impian

It was against this backdrop that I&P Group faced a happy problem last year — overnight queues, with some of the prospective buyers losing their cool occasionally, for its landed home launches in Bandar Kinrara and Temasya Glenmarie, both in Selangor.

In August last year, when I&P launched Temasya Suria @ Glenmarie superlink homes in Shah Alam, some buyers queued up for seven days and eight nights, while at the launch of the Sentosa terraced homes in Bandar Kinrara a week later, prospective purchasers camped for 10 nights and 11 days.

In October, hundreds turned up to register for the balloting of the Sapphire terraced homes. Sapphire comprises 104 units of 2-storey houses in Phase 7A13. In the balloting exercise, 448 registrations were received.

Earlier this month, on April 3, the developer launched its terraced Canting 3 (52 units, 22ft by 80ft) as well as Ukiran (49 units, 24ft by 80ft) homes in the Alam Impian township, Shah Alam. Queues started on April 1 and by April 3, the number of potential buyers had grown to 54 for Canting 3 and 45 for Ukiran.

All the Canting 3 units (RM475,888 to RM1.03 million) were sold in five hours while 18 units of non-bumiputera Ukiran units (RM546,888 to RM1.13 million) remained unsold at press time. Bumiputera units carry a 7% discount.

I&P Group managing director Datuk Jamaludin Osman tells City & Country that there are about 10 bumiputera buyers on the waiting list for the 18 unsold non-bumiputera Ukiran units.

I&P plans to launch another 42 units of Canting 3, with a gross development value (GDV) of RM22.78 million, and 48 units of Ukiran (GDV: RM25.97 million) next month.

Last November, the developer unveiled Canting 2 (2-storey terraced, 22ft by 80ft) and Nukilan 2 (2-storey terraced, 24ft by 80ft). The 174 units, with built-ups of 2,467 to 4,410 sq ft and tagged from RM419,769 to RM1.02 million, were sold in two days.

The 1,235-acre Alam Impian has an estimated GDV of RM5 billion. The entire development is scheduled for completion in 2022.

Mad rush

Why is there such a rush for landed homes? iProp Realty Sdn Bhd managing director Victor Lim says irrespective of good or bad times, investors like property with good location and which offer value for money. “And they normally go for landed properties as the capital appreciation is higher than for high-rises,” he tells City & Country.

Another reason that has been offered for the spike in landed home prices is the higher-priced new launches, some of which have been packaged with innovative designs and features. With this, the message that is being conveyed to prospective buyers is: “Don’t wait; buy now or buy later at a higher price.”

This has sent prices on the secondary market rising in tandem. Areas that were once ignored are being looked at again by buyers, thanks to improved accessibility.

For example, for the landed homes in Shah Alam’s Setia Alam township, says JS Valuers’ Chan, the developer has been raising prices significantly for every new launch of a similar product which comes with slightly upgraded specifications.

Chan notes that new homes with features like wide backyards and greenery and security features are popular. He identifies the Petaling district, comprising areas like Shah Alam, Puchong, Subang Jaya and PJ Old Town, as the current main growth areas for landed property projects, especially for township developments.

Condo market

Demand for high-rises, meanwhile, is selective, with marketability tied to location, product and price specifics. This explains why some property launches within an area sell better than others.

“The condo market is still location-dependent but prices generally have not risen much from 2008,” Chan notes.

With rising land and construction costs, inflationary fears and low mortgage rates, it is no wonder that investors are looking at real estate, especially landed homes that have been neglected while condo prices are being chased up.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 801, Apr 12-18, 2010