Damansara Heights remains a property hotspot

MENTION Damansara Heights and many assume that those who live there belong to the upper echelons of society, own palatial mansions and have a high net worth. That may not be true of course, but the area has an undeniable cachet that has made it a property hotspot.

“Damansara Heights is the most coveted residential location in Malaysia today, bar none,” says Fauziana Siebel-McKenna of Zerin Properties. “Since its development in the early 1970s, the affluent neighbourhood has been dubbed the Beverly Hills of Malaysia by many. Situated just minutes away from the city centre, it is much sought after by the upper middle and upper class Malaysians as well as expatriates.”

According to Fauziana, some of the major roads that mark out the area include Jalan Beringin, Jalan Semantan and Jalan Damansara.

There is no official measurement of the actual size of Damansara Heights, but based on a rough approximation, using online tools, it covers 1,295 acres.

Houses in demand

Due to its popularity, houses in the area are always in demand, even when the property market is going through challenging times.

“Overall, the performance of Damansara Heights’ property market has remained stable, with a fair amount of transactions for both sales and rental,” says Fauziana. “The demand for properties, particularly residential properties, remains high.”

The average transacted price per sq ft for landed properties in Damansara Heights has risen substantially over the years — from RM46 in January 1982 to RM798 in January 2015.

For high-rises, the average transacted price per sq ft increased from RM488 in December 2013 to RM862 in October 2015.

Some of the notable condos in the area include Damansara City, Twins @ Damansara Heights, Clearwater Residences, Desa Damansara and Prima Damansara.

Damansara Heights is an active market for tenants, owner-occupiers and investors, says Shawn Fernandez, director of Fernstate Sdn Bhd, a real estate agency familiar with the neighbourhood.

Tenants like the area due to its accessibility, proximity to shopping malls such as Bangsar Village I & II, Bangsar Shopping Centre and The Gardens, as well as schools such as Garden International School, Mont’Kiara International School and French International School, and the availability of good quality homes, he explains.

“Owner-occupiers see it as a good area to live in and property there as a great investment. Investors like the area as yields can be attractive, apart from the potential increase in capital value.

“For example, I sold an older property with 5,000 sq ft of land in 2011 to an expatriate for RM3 million. He spent RM1.2 million to renovate the property and I subsequently secured a rent of RM19,000 per month after renovation, giving a yield of 5.3%,” he says.

He also handled a larger property, a 17,000 sq ft property, which he sold in 2007 for RM5.1 million. “It was renovated for another RM2 million, bringing the total cost to RM7 million. That property now enjoys a rental of RM30,000 per month, for a yield of 4.9%. Needless to say, both properties command far greater capital values today.”

Fernandez adds that over the past eight months, his agency has done about a dozen transactions at “prices ranging from RM4 million right up to RM8 million”. Rents in Damansara Heights can range from RM8,000 to RM30,000. “The difference depends on the quality of the property and what it offers,” Fernandez says.

Office space

When it comes to office space, Damansara Heights is home to the offices of well-known companies such as Hewlett-Packard, Fleishman Hillard and Manulife Insurance Bhd.

“Selangor Properties was the key developer there in the early days, and its portfolio today includes Menara Milenium, Wisma Damansara, Kompleks Pejabat Damansara and Plaza Batai,” says Fauziana

“Wisma Damansara was the first high-rise [office] building there, and one of the first few in Kuala Lumpur,” she adds. “The 15-storey building was built in 1970, and after this, came Damansara Office Complex in Jalan Dungun, which at the time also housed the local stock exchange.”

It is no surprise that office space in Damansara Heights is in high demand. Knight Frank Malaysia managing director Sarkunan Subramaniam says there are 24 corporate office buildings providing 4.4 million sq ft of office space. The average occupancy rate was 82% as at 1Q2016.

“Damansara Heights is strategically located midway between Kuala Lumpur and Petaling Jaya, near the popular Bangsar enclave and KL Sentral transport hub, with direct links to the Kuala Lumpur International Airport.”

Accessibility is one reason companies are attracted to Damansara Heights. Some of the expressways connecting the area include the SPRINT Expressway, the Lebuhraya Damansara-Puchong and the New Klang Valley Expressway.

“In the future, Phase One of the Sungai Buloh to Kajang MRT Line — expected to be operational by the end of the year, with two designated stations (Semantan and Pusat Bandar Damansara) — will further enhance the area’s accessibility and connectivity,” Sarkunan says.

Another factor that will have a positive impact are nearby developments. “The nearly completed integrated Damansara City by Guocoland and the ongoing redevelopment of Pusat Bandar Damansara by Pavilion Group and its JV partner (Canada Pension Plan Investment Board), offering mixed-use components, will change the landscape of Damansara Heights and provide seamless connectivity with nearby Bangsar,” Sarkunan says.

 “The rejuvenation of Pusat Bandar Damansara, together with the ongoing transport infrastructure development, will bring life and excitement to the locality,” he says.

Knight Frank’s research shows that the average rental rate for existing office buildings is RM4.85 psf per month. At the newly completed MSC and GBI-certified Menara Guocoland, the asking rent is an average of RM6.50 psf per month.

There are not many transactions for office space in Damansara Heights. In 1H2014, Bangunan Shell Malaysia was sold for RM138 million to Malaysia Co-operative Societies Commission, Sarkunan says. The 12-storey purpose-built office building with a basement carpark was completed in 1986 and is linked Wisma Chase Perdana via a common ramp.

Could the current soft economic conditions and the consequent downsizing by companies negatively impact office occupancy in the area? Sarkunan does not believe so.

The tenant mix in Damansara Heights, from a survey of selected office buildings, appears to be more varied than KLCC,where the majority of the tenants are from the oil and gas sector, he points out. In Damansara Heights, the tenants are mostly listed corporations, multinationals and service providers, to name a few.

Shoplots seldom for sale

There are several rows of shoplots in Damansara Heights, the majority of which are the standard 2 and 3-storey terraced units. An exception are the 4.5-storey shoplots in Plaza Damansara.

But a common feature of the shoplots is that they rarely come up for sale.

Shoplots can be found in Jalan Batai, Jalan Damanlela, Jalan Setia Bakti, Lorong Setiabistari 2 and Jalan Setiakasih 5, says Stanley Toh, executive director of Laurel Cap Sdn Bhd.

Depending on the location and the size, the rents for the first and second floor can range from RM2 to RM3 psf, and for the ground floor, from RM4 to RM5 psf.

“For the 2-storey shoplots, the average built-up area is 3,000 to 3,200 sq ft, and for the 4.5-storey shoplots in Plaza Damansara, it is 5,000 to 5,500 sq ft,” he says.

“There is demand for shoplots, especially those in Jalan Setiabakti, Lorong Setiabistari 2 and Jalan Setiakasih 5. However, there are no sellers, hence the value will increase in the future. Rents, on the other hand, have been stagnant for a couple of years and in some cases, have declined,” Toh says.

Fernstate’s Fernandez agrees with Toh. “Sales of shoplots are few and far between due to the lack of supply. Hardly any come up for sale while some properties are retained by the owners for rental income. For example, Permodalan Nasional Bhd owns one row of shoplots at Jalan Setiabakti, which is only for rent.”

Knight Frank’s Sarkunan says there are few recorded transactions for shoplots. One transaction, in 2013, was for a 2-storey shoplot in Jalan Setiakasih 5, with a land area of 1,560 sq ft, that changed hands for RM3.3 million. For Plaza Damansara, there were a few transactions between 2013 and 2016, with prices ranging from RM500 to RM630 psf.

Demand for Damansara Heights property is expected to hold firm despite the tough economic conditions. Upcoming developments and infrastructure works will help to ensure that it remains a preferred address.

This article first appeared in City & Country, a pullout of The Edge Malaysia Weekly, on July 4, 2016. Subscribe here for your personal copy.