KL suburb continues to do well

SITUATED 15km south of Kuala Lumpur, Bandar Baru Seri Petaling, also known as Sri Petaling, was a rubber estate before it was developed and launched in 1977 by Petaling Garden Sdn Bhd, now a wholly-owned subsidiary of I&P Group.

In the 1980s and 1990s, the suburb was known as a “rubbish area” because of a large landfill located nearby, which was cleared before the 1998 Commonwealth Games. The earliest houses located on its Jalan Wan Empok roads were sold for between RM40,000 and RM60,000 back then.

Fast-forward to today and the 620-acre township boasts over 5,900 houses that are being transacted at RM500,000 to over RM1 million and a bustling commercial precinct in Jalan Radin Bagus that is well known for its F&B offerings.

Similar to neighbouring residential developments such as Happy Garden, OUG and Kuchai Lama, Sri Petaling’s early development was spurred by its close proximity to Old Klang Road, the first major road in the Klang Valley, says JS Valuers Research and Consultancy Sdn Bhd director Chan Wai Seen.

iProp Realty Sdn Bhd’s managing director Victor Lim, who had landed his first job in Sri Petaling back in 1993, witnessed its transformation from a sleepy backwater into the popular address it is today.

“Back then, Sri Petaling was quite secluded with only a small access road connecting it to the KL-Seremban highway. Also, because of the landfill, many did not want to live there, so the houses were very affordable,” he recalls.

“Later, when more highways and access routes from Sri Petaling to the neighbouring suburbs were built, things became more convenient and the population grew. Sri Petaling experienced a boom from the 2000s and it is now densely populated with a vibrant commercial segment.”

Sri Petaling even has its own mall — the Endah Parade Shopping Complex — which has become synonymous with the area. The mall had a Carrefour hypermarket in 2009 that was subsequently sold to AEON Co Ltd. It now has a hypermarket that is operated by AEON Big.

Along with the Shah Alam Expressway and Maju Expressway, which opened in 1997 and 2007 respectively, Sri Petaling is also accessible via the New Pantai Expressway and Middle Ring Road 2. Its nearest LRT stations are Sri Petaling, Bukit Jalil and Bandar Tasik Selatan.

“In addition to improved accessibility, Sri Petaling is much sought after because of the scarcity of land in the city, which has caused fringe developments to become prime residential areas,” says JS Valuers’ Chan.

“I think landed properties in Sri Petaling will continue to enjoy appreciating values while the shop­offices will be able to generate good rental yields in the medium to long term.”

The residential landscape

Though most of its properties are leasehold — with some leases having only 62 years left to run — Sri Petaling remains an attractive option to property buyers because of its strategic location and reasonable prices, says Landserve Sdn Bhd executive director Tan Kim Seng.

While Sri Petaling is almost fully developed, the neighbouring suburbs are seeing a flurry of activity with such upcoming developments as Paradigm KL in OUG by WCT Holdings Bhd, Residensi Hijauan Lumayan by Danau Lumayan Sdn Bhd, Exim Group’s The Rainz in Bukit Jalil and Bukit Jalil City by Malton Bhd and Kuala Lumpur Pavilion Sdn Bhd.

It was reported in theedgeproperty.com on
March 1 that Bukit Jalil City’s third and final phase of freehold serviced apartments that is planned to be launched in September will be priced above RM855 psf — a benchmark in Bukit Jalil that was set by Bukit Jalil City’s previous phase, The Park Sky Residence, which was launched last year. iProp Realty’s Lim, however, believes the apartments will cost around RM1,000 psf.

Tan and Lim concur that the higher selling prices in the neighbouring developments have boosted the prices of properties in Sri Petaling. At the same time, lower prices in the area have given it an advantage in the current soft market.

Chan notes that properties, especially landed, in Sri Petaling are in high demand because they are more affordable than those in the surrounding areas. “I think the landed properties will continue to enjoy value appreciation in the medium to long term,” he says, adding that while terraced houses are popular, semi-detached houses and bungalows may be harder to sell in the current market.

According to Tan, the prices of landed properties in Sri Petaling have appreciated 5% to 25% per annum over the past five years, thanks to the more expensive properties in the neighbouring residential areas.

He notes that typical 1-storey terraced houses with a land area of 1,733 sq ft and built-up of 976 sq ft were going for an average of RM500,000 last year, up from RM390,000 in 2010, while the average prices of 2-storey units with a land area of 1,755 sq ft and built-up of 1,360 sq ft rose to RM850,000 from RM500,000.

Meanwhile, 2½-storey terraced houses that cost RM800,000 in 2010 are going for RM1.1 million today. The average prices of 2-storey detached and semi-detached houses are RM3.5 million and RM2.5 million respectively, up from RM2.5 million and RM1.1 million five years ago.

Tan explains that 1 to 2½-storey terraced houses are very popular in Sri Petaling, particularly those located in the newer residential zones of N and P, some of which are gated schemes.

Rents for terraced houses start at RM1,300 per month for 1-storey units, RM1,500 for 2-storey units and RM1,800 for 2½-storey units, which translate into yields of 3.1%, 2.1% and 2% respectively. Meanwhile, rents for 2-storey detached and semi-detached houses are RM4,500 and RM3,500 respectively, giving yields of 1.5% and 1.7%.

Lim remarks, “The yield for landed residential properties in Sri Petaling is not that great — at around 3% to 4% per annum — because though house prices have increased as much as 50% in the past five years, the rents have not risen.

“Moreover, in terms of yield, Sri Petaling is competing directly with Bukit Jalil, which caters for expatriates as well and has the Pavilion Bukit Jalil and Paradigm OUG nearby. In contrast, Sri Petaling caters for the low to medium-income group.”

Nonetheless, he notes that the yields of landed homes in Sri Petaling are more or less on a par with those across the board as the prices of such homes in general will continue to rise while rents remain more or less the same. Condominiums, on the other hand, will give slightly higher returns due to their lower prices, he adds.

In Sri Petaling, high-rise residential properties are in high demand because they are affordable, even though some of them are slightly older developments, says Lim, adding that the more popular condominiums are Endah Regal, Endah Ria, Endah Promenade and Endah Puri (all developed by Soon Tiek Development Sdn Bhd, a subsidiary of PJ Development Holdings Group), which are located adjacent to each other, and Endah Parade.

“Compared with condominiums located near the city, those in Sri Petaling are cheaper, although their prices have appreciated a lot — 50% to 60% in the last five years — and yields are slightly higher at around 4%,” Lim says, adding that condominiums in Sri Petaling are popular with families and those with a budget of less than RM600,000.

According to Tan, the prices of condominiums in Sri Petaling have risen 15% to 25% per annum over the last five years, except those of Endah Promenade, which is newer and more popular. The latter has recorded a 5% price growth each year since it was completed in 2011 because the developer price was much higher.

With the size of its condos ranging from 980 to 1,270 sq ft, Endah Promenade’s prices are from RM500,000 to RM650,000 or RM488 psf to RM512 psf. The subsale price, upon the condominium’s completion in 2011, was RM400 psf before it reached RM500 psf last year.

Tan notes that at Endah Ria, prices range from RM425,000 to RM540,000 or RM380 psf to RM440 psf. Sampling only the bigger units of 1,400 sq ft, he says these were going for RM290,000 or RM200 psf in 2010.

Rents for condominiums in Sri Petaling range from RM1,700 (Endah Villa) and RM1,800 (Endah Ria, Endah Regal) to RM2,100 (Endah Puri) and RM2,900 (Endah Promenade).

Apart from being more affordable than the landed homes, Sri Petaling’s condominiums also offer numerous facilities and security services.

“Like similar established developments in general, Sri Petaling’s residential property segment shows stable growth,” Tan remarks.

According to him, Sri Petaling still offers properties priced below RM500,000, such as Sri Endah Apartment, whose units have built-ups of 646 to 936 sq ft and which cost RM105,000 to RM350,000. Meanwhile, 2-storey low to medium-cost terraced houses with a land area of 753 sq ft are going for RM400,000 to RM430,000, 1-storey terraced houses with a land area of 1,650 sq ft cost RM500,000 and Endah Regal and Endah Villa units are priced from RM430,000 to RM480,000.

The commercial precinct

There is high demand for the shopoffices in Sri Petaling’s thriving commercial precinct in Jalan Radin Bagus, though the area is notorious for its traffic jams, remarks Tan.

Still, the vibrancy of the older rows of shops does not extend to the recently completed 3 to 4-storey shopoffice in Business Zone J9 (developed by I&P Group), some of which are still vacant. Another phase of the commercial development is coming up next to these units.

Chan says the newly completed shops may take some time to see activity due to the prevailing market condition while Lim says “it is now a matter of filling them with people”.

“Due to the sudden increase in commercial properties in Sri Petaling, there is currently an oversupply, but given time, I believe the new shops will all be occupied,” Lim adds.

He notes that the 3-storey shops are going for
RM3 million to RM3.5 million while the older commercial units are priced at RM2.5 million.

“In 2010, the asking prices for the older shops were between RM1.6 million and RM1.8 million, depending on the location,” he says.

Tan says that the average transacted price of the 3-storey shops had grown to RM3.8 million as at 2015 from RM2.5 million in 2010, recording a 10% appreciation per annum in the past five years.

The rental yield of the shopoffices is 4% to 4.5%, which, according to Lim, is comparable to that of similar commercial properties nearby.

Lim notes that the average rent for an intermediate 3-storey shop is RM12,000 to RM15,000 and much higher for the new corner units that come with lifts.

Amenities in Sri Petaling include a wet market, community hall, mosque, driving range, hotel and Endah Parade. Apart from LRT stations, the area is near the Tasik Selatan bus terminal and the Bukit Jalil Golf and Country Resort.

Chan says, “Sri Petaling is almost fully developed, like the surrounding areas. While it has amenities and public transport, it would be good to consider including a hospital, library and other public amenities to improve the place further.”

Lim hopes that the authorities will look at ways to alleviate the traffic congestion in Sri Petaling, such as improving the road system. Alternatively, he says, more people should consider using public transport.

Paving the way for more developments

Sri Petaling’s morning market, which had operated in Jalan Radin Anum 1 and Jalan Radin Tengah since 2007, was moved to the ground floor of a multi-storey car park in Jalan Radin Bagus nearby early this year in order to make way for upcoming developments.

During a visit to Sri Petaling in April, we noted that the market’s site was boarded up and displayed a notice that said the parcel belonged to the mayor of Kuala Lumpur.

According to Landserve Sdn Bhd executive director Tan Kim Seng, the 113,528 sq ft or 2.5-acre parcel was sold by Dewan Bandaraya Kuala Lumpur (DBKL) to Yayasan Wilayah Persekutuan for RM30,484,401 in October 2014. Two months later, in December, the latter sold it to I-Con Empire Sdn Bhd for RM35,484,011.

“The last transaction was at RM312.50 psf, which I think is a fair price,” Tan notes.

A search on DBKL’s one-stop centre website shows that the said parcel with lot number 37890 has obtained a conditional approval for an application by Yayasan Wilayah Persekutuan to change the land use from residential to commercial and develop a mixed-use development comprising two 49-storey blocks of serviced apartments with 957 units, three levels of shops, eight levels of parking as well as common facilities.

Sri Petaling’s Residents Association chairman Tan Tai Tong remarks that the said parcel had been reserved for a wet market and hawker’s centre, and that the residents were not notified of any change to the land use by the local authorities.

“In principle, DBKL shouldn’t have sold the land but developed on it a modern wet market and hawker’s centre to house all the roadside stalls. Our association has received more than 1,500 signatures against the public parcel being sold for private and commercial use,” Tai Tong says, adding that the residents are puzzled that the land, which was sold to a third-party company, still bears a notice that states the parcel belongs to the KL mayor, and insists on an explanation from the authorities.

Multiple attempts have been made to seek clarification from DBKL and Yayasan Wilayah Persekutuan on the said parcel but both parties have yet to respond. Meanwhile, Landserve’s Tan says the notice could have been placed prior to the transactions.

Recently, I&P Group indicated to City & Country that it had plans to redevelop the Sri Petaling driving range, but details have yet to be confirmed.

As for the morning market, a Mr Loo, whom we met at his stall at the morning market and who claims to be the chairman of the Sri Petaling Morning Market Hawkers Federation (Persatuan Penjaja Pasar Pagi Sri Petaling), says the morning market’s relocation is permanent and that the move was a good idea as the market stalls were now able to trade in a covered and enclosed area.

“We don’t need to put up the umbrellas for our stalls now and also the market is much cleaner as Alam Flora has been contracted to clean after marketing hours,” he remarks.

Another market trader, who wanted to remain anonymous, says her business has declined 40% since the relocation.

The chairman of Sri Petaling’s Residents Association says “the residents are unhappy that the multi-storey car park in Jalan Radin Bagus is being used for the wet market because there are more than 200 blocks of new 3 and 4-storey shops in the area and demand for parking is very high.”

This article first appeared in City & Country, a pullout of The Edge Malaysia Weekly, on May 16, 2016. Subscribe here for your personal copy.