Top performers in Subang Jaya’s residential market

THE story of Subang Jaya, Selangor started some 40 years ago. The affluent township was once a rubber plantation until Sime Darby Bhd began the development of the 583ha township. Its first phase was completed and opened in 1976.

“SS12 and SS14 are probably one of the earliest phases to be launched in Subang Jaya,” says LaurelCap Sdn Bhd executive director Stanley Toh.

Subang Jaya neighbours other established suburbs in Selangor such as Petaling Jaya, Puchong, Shah Alam and Putra Heights. It is easily accessible via several major highways such as the Federal Highway, Lebuhraya Damansara-Puchong, New Pantai Expressway and Lebuhraya Shah Alam.

There are numerous schools in Subang Jaya such as SMK Subang Utama, SK Subang Jaya, SJKC Lick Hung and international schools which include Sri Kuala Lumpur and Fairview International School. There are also many colleges and private universities such as Inti International College Subang, Taylors University and Sunway University.

Focusing on the terraced homes in SS12 to SS19 and in Taman Wangsa Baiduri, TheEdgeProperty.com’s research on terraced houses in Subang Jaya found that the highest transacted price recorded was at RM469 psf in 4Q2015. This represented a 15.8% y-o-y growth from RM405 a year before. Prices have maintained at just below RM460 psf since the peak. The latest data in 1Q2016 by TheEdgeProperty.com showed that terraced houses in Subang Jaya were transacting at RM447 psf on average, a slight drop of 2.91% from RM460 psf a year ago.

According to Toh, the first terraced homes that were launched in 1976 were priced below RM50,000 per unit on average.

“Today, they are priced between RM700,000 to RM800,000 for a 22ft by 75ft double storey terraced house. Since its inception, I would say prices have grown about 14 times,” Toh notes.

“Historically, when Subang Jaya was developed, the majority of purchasers and occupiers were from other states other than Selangor. Those days, Kuala Lumpur folk considered Subang Jaya to be a distant suburban area tucked between Klang and Petaling Jaya.

“Nowadays, the majority of people living in Subang Jaya are the second generation of families who initially invested in Subang Jaya in the early 80s,” Toh adds.

One Sunterra Properties Sdn Bhd principal Sara Lai concurs, saying that there is a mix of young to mature families and tertiary students who are staying and renting homes here.

Top performing areas in Subang Jaya

Terraced houses in SS15 saw the highest transacted price on a psf basis at RM531 in 2015. This was followed by terraced houses in SS19 and SS17 at RM498 and RM442 psf, respectively. On an average transacted price basis, terraced homes in SS15 recorded the highest transacted price at RM963,385, followed by terraced homes in SS17 and Taman Wangsa Baiduri, which transacted at RM924,900 and RM843,333, respectively, in 2015.

According to GMAC Realtors negotiator Adrian Tan, areas such as SS15, SS19 and SS17 stand out as they are located near educational institutions, shops as well as the Light Rail Transit (LRT) line. The LRT extension line started operations at the end of June this year.

“SS15 and SS18 have an LRT station each. With more amenities, the perceived value of an area increases. Also, SS15 is the only neighbourhood which has access via a link bridge to Aeon & Subang Parade shopping centres, especially for houses along Jalan SS15/2A and SS15/2B. Certain tenants and residents favour this,” says Tan.

“Certain stretches of SS17 and SS15 have pedestrian link bridges leading to the LRT station, thus improving walkability between these two neighbourhoods and accessibility for residents in SS17 to the popular commercial area in SS15,” Tan notes.

As for SS19, the double storey terraced houses there attract buyers as it offers smaller and more affordable homes of 16ft by 65ft.

“SS19 is also known as the classier part of town, located on a slightly higher land and known for its serene and peaceful bungalows,” Tan notes.

Prices stable despite slowdown in market

All three property experts agree that prices for terraced homes are still holding despite the current property market slowdown.

According to Toh, with the slowdown, it may take a slightly longer time to sell a house compared to three to five years ago but there is no let-up in sales enquiries.

“Pricing is still holding up and has not dropped. The main delay or obstruction in the sale of houses in Subang Jaya is the strict lending policies,” says Toh.

“Many potential sales have been cancelled due to unfavourable borrowing terms or outright rejection for the loan,” GMAC’s Tan adds.

LRT factor

On June 30 this year, 12 new stations were added to the Kelana Jaya LRT Line ending at Putra Heights, which is an integrated station with the extended Ampang Line. Of the new stations, two are located at SS15 and SS18.

“The impact of the new LRT line extension was seen earlier when Prasarana Malaysia Bhd was awarded the contract at the end of 2010. We have seen prices soar by double digits y-o-y in 2011 and 2012,” says One Sunterra’s Lai.

“However, we have yet to see significant impact to property prices here with the recent completion of the LRT line extension. This could be due to the weak property market sentiment and slower economic growth,” she offers.

Meanwhile, Toh notes that the extension line is a major boost to property values in Subang Jaya in the long term as it will reduce traffic congestion and enhance connectivity throughout the Klang Valley.

“For example, between 2013 and 2014 (before construction commenced on the SS15 station) the shophouses along Jalan SS15/4D were hovering at about RM3 million. Presently, the asking prices are between RM3.5 million to RM4 million. The terraced houses situated along Jalan SS17/3A, SS17/3B and SS17/3C within the same period were transacted between RM600,000 to RM700,000. Currently, the asking prices are RM850,000 and above,” he notes.

GMAC’s Tan says the current feedback on the LRT is mixed as the line has just started operation and there are still issues to be ironed out.

“Most complaints cite the expensive fare, the lack of parking and the first mile/last mile problem. Nevertheless, just by having an LRT station near the neighbourhood improves the perceived value of a property,” says Tan.

“To have perceived value translated into real value, we would need actual demand to trigger a demand pull effect to drive up property prices — and this is only possible if the usage of the LRT is improved and the public in general appreciate and value the LRT service in terms of improving living standard, reducing congestion and improving transit efficiency at a proper exchange of cost,” he explains.

Rental market

According to data from TheEdgeProperty.com, the indicative rental yield of terraced homes in Subang Jaya is about 4.5%.

“The rental market is very strong in Subang Jaya. There are always students all year round attending different programmes (American, British, Australian education system). They have different intakes and holidays so there is a constant flow of students coming in,” says Tan.

“The expected rental is around RM2,000-RM2,500, and a yield of about 3% based on a RM900,000 house. However, if you are willing to rent it out by the room you can fetch about RM500-RM600 per room in areas near the colleges. Especially for those on a budget, a room rental is always cheaper than renting an apartment or condo,” Tan adds.

“In SS15, the rental market caters mainly to students, whilst in areas such as SS19, SS17, SS18 and SS12, they cater more to working adults or young families,” says LaurelCap’s Toh.

Asking prices and outlook

According to data from TheEdgeProperty.com, terraced houses in SS17 currently command the highest asking price at RM1.55 million, followed by terraced houses in SS12 and Taman Wangsa Baiduri with asking prices of RM900,000 and RM790,000, respectively.

“Prices for terraced houses will remain flat in the short term, with homebuyers having the potential to bag some good deals now,” says One Sunterra’s Lai.

Toh agrees. “Although the current economic situation is not encouraging, in the short term, the prices of properties in general within Subang Jaya will remain stable. Hence, for property investors and homebuyers, this is a good time to buy. In the long term, the property market will recover and prices will start to rise. Based on the 10-year property cycle, the next boom should be within 2018 to 2020,” Toh offers.

Have prices peaked for terraced homes in Subang Jaya? Toh and GMAC’s Tan do not think so.

“Landed houses in a good area are a rare breed nowadays with more focus on high-rises due to the scarcity of land in city centres and competitive land use. Most of the recent landed developments are launched much further away from main cities like Bukit Rimau, Dengkil and Semenyih and compared to these areas, Subang is much more favourable,” says Tan.

“At the moment the prices of terraced houses are stable in Subang Jaya at between RM650,000 to RM850,000. There is still room for potential growth because as long as demand exceeds supply, prices will increase. In addition, most Subang Jaya properties are freehold in nature. Hence, it gives certainty to house owners or investors that their property will be secured for generations,” Toh concludes.

This story first appeared in TheEdgeProperty.com pullout on Sept 30, 2016, which comes with The Edge Financial Daily every Friday. Download TheEdgeProperty.com pullout here for free.