Klang looking up

MENTION Klang to a Malaysian and food comes to mind. Bak kut teh (bone marrow soup) in an old kopi tiam, seafood at a fishing village, ikan bakar (grilled fish) by the sea, etc. But surely there’s more to Klang than that? Well, as one long-time Klang resident passionately declares: “Klang has everything!”

“We have great food of various ethnic groups, lots of shopping places, hospitals, schools … we also have nature – we can go to the beach or go bird-watching,” says Adelyn Wong, a real estate negotiator with Reapfield Properties Klang, who has made Klang her home the past 14 years.

Speaking of schools: “Do you know,” Wong asks, “that there are about 24 Chinese primary schools in Klang alone?” In fact, among the most popular Chinese private schools in the country are in Klang, namely Hin Hua High School, Kwang Hua Private School, Chung Hwa Private School and Pin Hua High School. These schools have to turn away thousands of students each year because of overwhelming demand.

“Some families actually move to Klang from Subang or Petaling Jaya so they can send their children to these schools,” adds Wong.

For shoppers, Klang offers authentic fare. Don’t go looking for a Suria KLCC-type of mall here; just enjoy the charming old shops in Klang town selling myriad goods you may not find elsewhere, or bask in the colours of Little India, touted as the largest in the country. There are inevitably shopping centres such as Aeon Bukit Tinggi, Aeon Bukit Raja, Centro Mall, Giant Hypermarket (at Bandar Bukit Tinggi and Klang Sentral) and GM Klang Wholesale City (Bandar Botanic). As one of the oldest towns in the country, amenities in Klang are plenty and well-established.

Klang lies about 30 km west of Kuala Lumpur. It has excellent access to KL city and other areas in the Klang Valley via numerous highways such as the Kesas Highway, Federal Highway, North Klang Valley Expressway and the South Klang Valley Expressway. Currently under construction is the West Coast Expressway that will link neighbouring Banting to Taiping, in Perak.

Klang is bisected by its eponymous river into Klang North and Klang South. A third bridge linking the two sides is being built. By 2020, Klang will also see the completion of the light rail transit LRT3 Line (Bandar Utama to Klang). The proposed stations in Klang are in Bukit Raja, Kawasan 17, Jalan Meru, Taman Selatan, Sri Andalas, Tesco Bukit Tinggi, Aeon Bukit Tinggi, Bandar Botanic and Johan Setia.

“Klang is one of the earliest developed areas in the Klang Valley. Although town planning was initially lacking, it is in a strategic location with good accessibility and acceptable amenities,” says research and consultancy director of JS Valuers Property Consultants Sdn Bhd, Chan Wai Seen.

The town centre, known as a royal town, looks worn and cluttered, its narrow streets and old shophouses in need of a spruce up. But it was founded centuries ago, after all. Klang is believed to be even older than Melaka.

Nevertheless, beyond the town centre, over the past decade or so, a few of the property industry’s big players, such as Mah Sing Group Bhd, Gamuda Bhd, WCT Holdings Bhd, Sime Darby Bhd, I&P Group Sdn Bhd and IOI Properties Group Bhd have created new, well-planned townships, with several offering modern homes in landscaped surroundings and security features. Growth has been rapid in recent times especially in the south.

“Klang South is more vibrant than before, triggered by new townships such as Bandar Botanic, Bandar Bukit Tinggi, Taman Bayu Perdana, Glenmarie Cove and Kota Bayuemas,” says Wong, adding that major government offices and healthcare facilities have also moved here.

Wong and her family live in Klang North, where some of the older residential areas such as Berkeley Garden, Taman Eng Ann, Taman Klang Utama and Bandar Baru Klang are located. Newer townships here include Bandar Bukit Raja, Aman Perdana and Klang Sentral.

According to real estate negotiator Alvin Lim of Access Property, these townships offering mainly landed homes have attracted homebuyers not only from Klang but from beyond it. One reason for this is that property prices in Klang are relatively more affordable than other prime areas in the Klang Valley such as Shah Alam, Subang Jaya and Petaling Jaya, “Many people can still afford to buy properties here,” he adds.

Wong concurs: “As property prices in prime areas in the Klang Valley have skyrocketed beyond the budget of most homebuyers and investors, they have started looking for properties further afield, including in Klang”.

The rise of non-landed homes

Klang’s thriving property market is dominated by landed homes. Property buyers hardly bat an eyelid at its non-landed residential properties comprising mainly of low to medium-cost apartments and mid-priced condos. But are things beginning to change?

It is interesting to note that this property type has shown healthy price appreciation lately. Analysis by theedgeproperty.com shows that the average price psf of non-landed homes in Klang was RM155 psf in 3Q2014, up 13.3% from the same period a year ago, and following a healthy 12.6% growth in the preceding year (see Chart 1). Transaction volume also remained strong in the 12 months to 3Q2014.

“It was only in the last few years when the new townships were developed, bringing more vibrancy to Klang, that values of non-landed residences began to move up,” says Wong. She cites for example, a mid-cost apartment acquired from its developer at RM98,000 in 2000, that was sold in 2012 for a mere RM107,000.

“Today, the same apartment could probably be sold at RM250k or rented out for between RM900 and RM1,400, bringing gross yields of around 4% to 6%. Apartments in mature and vibrant areas can provide good returns,” Wong offers.

She says currently mid-range condos are generally going for an average of RM294 psf, and low and medium-cost apartments for an average of RM190 psf.

According to Lim of Access Property, the more popular condominiums in Klang are located in the town centre, such as Pelangi Heights, Regency Condo and Dynasty Condo. Unit prices here average between RM300,000 and RM400,000, while rentals are around RM1,000 to RM1,700, at yields of between 4.3% and 4.5%, he says. These apartments are located near Klang Centro Mall, just off the Federal Highway.

Based on theedgeproperty.com’s analysis of transactions of the 12 months to September 2014, units in these three condos had the highest average transacted price per unit for this property type. Pelangi Heights led the field with an average RM277,000 per unit followed by Dynasty (RM270,000) and Regency (RM220,000). Pelangi Heights also recorded the highest average price on a per sq ft basis at RM240 psf.

Over in Klang North are medium-cost apartments in Taman Bayu Perdana, such as Prima Bayu, Bayu Villa, Vista Bayu and Vista Indah. Lim says units here average between RM200,000 and RM280,000. Rents are between RM800 and RM1,300. In Bandar Botanic, prices of the walk-up apartments Kasuarina Apartment and Akasia Apartment are between RM190,000 and RM280,000, and rents, between RM700 and RM1,100. “These medium-cost apartments offer yields of around 4.3% to 4.6 %,” Lim adds.

Based on theedgeproperty.com’s analysis of asking rentals, indicative rental yields for non-landed homes in Klang could be as high as 9.8% per annum, as seen in BBK Condominium, Bandar Baru Klang. The project is located next to Aeon Bukit Raja. However, it must be noted that the high yields are largely due to the low capital prices of the properties. (See Chart 2)

Serviced apartments roll in

New non-landed residential projects introduced recently (besides the affordable homes under the Rumah Selangorku schemes) are relatively high-end ones. These include The Lead Residences by WCT in Bandar Bukit Tinggi 2 and KSL Holding’s Maple Residences.

The Lead Residences offers direct access to Aeon Bukit Tinggi, which will have an LRT3 station. Units are between 855 sq ft and 1,316 sq ft, priced at around RM600 psf. According to the realtors, the smaller units have been taken up.

KSL’s Maple Residences is located in Canary Garden in Bandar Bestari, one of Klang’s latest township developments. With unit sizes of 863 sq ft to 1,264 sq ft, they sell for between RM550 psf and RM600 psf. The project is part of an integrated development which, its developer says, will feature the largest mall in Klang boasting 2.2mil sq ft of gross floor area. Maple Residences is reportedly receiving strong interest from prospective buyers.

Another upcoming serviced residence is at the Gravit8 mixed-use development by Mitraland Group. Located on Jalan Klang Banting, opposite the proposed Johan Setia LRT station, it comprises serviced apartments, retail outlets, a mall, corporate offices, small offices/versatile offices (sovos) and a boutique hotel. Gravit8 will offer smaller units of 600 sq ft to 1,000 sq ft with indicative prices from RM500 to RM550 psf.

However, Reapfield’s Wong points out that all these new non-landed residences are serviced residences. “Serviced residences are rather new to Klang. The market for this product is really untested. We just have to wait and see,” she says. She advises those looking to invest in high-rise homes in Klang to consider the factors of location, maturity of area, connectivity and amenities, developer, price, and the demography of the resident population.

Meanwhile, Chan of JS Valuers says it is imperative that any new non-landed residential development in Klang are integrated with successful commercial projects,

Considering the current economic and political uncertainty in the country, he foresees considerable challenges for non-landed homes in Klang. “Landed properties are still the preferred residential property types in Klang,” he asserts.

Nevertheless, Chan has seen strong take-up rates for affordable apartments in Setia Alam located on the fringes of Klang North, in Shah Alam. “Thus far S P Setia (Setia Alam’s developer) has done a relatively good job in maintaining these apartments. Maintenance is seriously lacking in many such properties in Klang and many have performed poorly due to poor management.

”I think it will take some time for the non-landed residential property market in Klang to be as developed and in-demand as those of prime property hot spots like Petaling Jaya or Damansara,” he says. However, he conceded that the inevitable escalating cost of land and landed homes will result in greater development of and demand for non-landed residences.

Outlook

Overall, there are many reasons to be optimistic about Klang’s property market. Housing demand is expected to continue in line with population growth and Wong notes that Klang has one of the largest urban populations in Malaysia. According to the Department of Statistics, Klang’s population in 2010 was at 832,600.

Klang is also home to Port Klang, the busiest port in the country. Because of the port, Klang is a booming industrial property hotspot. Many modern industrial areas are opening up here. It is hoped that as the port and the industrial areas grow, they will provide more jobs and businesses will thrive, says Wong. She also expects the presence of the many large property players here to contribute to uplifting Klang. Despite her earlier declaration that “Klang has everything”, there are indeed many things lacking from Klang. “It needs to enhance security [and reduce crime], have better facility maintenance and cleanliness, reduced traffic congestion ,and the Klang River needs beautification (her husband used to be able to swim in the river as a kid),” states Wong. To spur growth, Klang should also have a strong university, she adds.

Access Property’s Lim is also upbeat about the future of Klang’s property sector. In the near term, he says homebuyers in Klang will continue to choose landed homes for their relative affordability while apartments and condominiums will attract investors for their rental yields. But as Klang continues to develop, as more amenities are added and public transport is enhanced with the LRT3 line, Lim believes Klang will attract greater interest as a property hot spot.

Tap here to compare the vital stats of some developments in Klang.

This story first appeared in The Edge Property pullout on Nov 13, 2015, which comes with The Edge Financial Daily every Friday. Download The Edge Property here for free.