Puchong’s Southern comforts

WHILE the exact delineation of Puchong South is still up for debate, the area has undeniably gained the attention of buyers and developers in recent years.

Calling it an “imaginary location south of Puchong” in Selangor, Heritage Shield Real Estate Sdn Bhd CEO K Soma Sundram feels that although the coinage of new names for areas in established locations can give a false impression of them to prospective buyers, “the irony is that many such creative naming of areas have also helped develop them and defy the most important mantra of a good investment – location, location, location”.

Based on market convention, theedgeproperty.com includes Bandar Bukit Puchong, Taman Saujana, and Bandar Putra Permai as part of Puchong South. To the east, the area under consideration here is bounded by the Maju Expressway and includes Taman Equine and Taman Desaminium.

As the popular Puchong reaches maturity, development has begun to expand southwards, resulting in the emergence of Puchong South.

“The growth of Puchong South is spurred by the expansion of Puchong, and the development of Putrajaya and Cyberjaya. Puchong South started to grow from the late-1990s when the IT and administrative hub of Cyberjaya and Putrajaya were announced,” says CBD Properties Sdn Bhd senior executive director for Puchong, Steward Ship.

Puchong South is today very different from its original guise of plantation estates, low and medium-cost housing, and kampungs.

According to GMAC Realtors chief operating officer, Jonathan Lee, consumer demand for more sophisticated developments is pushing the growth of lifestyle projects in Puchong South.

“This is especially true for the younger generation, who are more drawn to lifestyle properties instead of the mostly standard terraced houses and condominiums found in Puchong. One of the biggest attractions in Puchong South is 16 Sierra by IOI Properties Group Bhd, which offers lifestyle living with modern designs, greenery, and security,” says Jonathan.

Meanwhile, Oriental Realty director Jastin Lee notes that the area is attractive to the working population in Cyberjaya and Putrajaya.

Jastin adds that Puchong South’s amenities and accessibility are pull factors for this market. These include AEON, Giant hypermarket, international schools, the South Klang Valley Expressway, and the upcoming Maju Expressway interchange at Seri Kembangan that connects directly to KLCC.

CBD Properties’ Ship says the better town planning around relatively fresh developments such as D’Alpina by Hap Seng Land and 16 Sierra have also added to Puchong South’s appeal.

“These developments are gated lifestyle enclaves with the convenience of modern amenities and facilities. The growing population in Puchong South is a positive sign of its acceptance by people in the vicinity,” says Ship.

Rising values

The values of residential properties in Puchong South have been trending upwards in recent years. Soma believes prices in Puchong South began to show real growth in the past five or six years. Among the catalysts are rising property prices in neighbouring Puchong itself and in Petaling Jaya; the lower property prices in Puchong South and its good accessibility have made it attractive to younger and first-time homebuyers.

Jastin estimates that the values of residential properties in Puchong South have increased by 70% to 80% in the last 10 years, while the number of transactions has doubled due to increased supply.

“When 16 Sierra linked houses were launched five years ago, they were priced at about RM468,000. Now the [house owners] are asking for above RM850,000,” says Ship.

Soma notes that initially the main launches were of landed properties but the trend has since shifted to condominiums, because developers want to maximise land use while also meeting demand for more affordable properties.

“Interestingly, there continues to be launches of landed properties although these are larger premium units. I believe this is a niche to create demand for those in the outskirts to invest in landed properties, which are not affordable to many in Puchong, Petaling Jaya and Kuala Lumpur,” says Soma.

An analysis of transactions by theedgeproperty.com shows that the average transacted price per square foot (psf) of non-landed residential property rose 6.3% y-o-y to RM170 psf in 3Q2014, following a 12% growth in the preceding year. Meanwhile, transaction volume for the 12 months to 3Q2014 rose 5.3% to 752 units from 714.

Some examples of more recent condominium developments are Zeva by Trinity Group, O2 City by Perfect Eagle Development and 3 Elements by Titijaya Land Bhd.

Oriental Realty’s Jastin says prices of new non-landed residential launches are generally between RM400 psf and RM550 psf, which is about 10% to 15% higher than the sub-sale market. Epic Suites by Bukit Hitam Development was reported to have launched with prices starting at RM490 psf, while Sfera Residence by YNH Property Bhd was launched recently at an average of RM562 psf.

“The sub-sale market is lacking in variety and features like gated and guarded facilities. Added to that is the haphazard neighbourhood planning, which were partly the past projects’ shortcomings,” says Ship.

Potential for a strong rental market

When it comes to the rental market for non-landed homes, opinions differ. Soma and GMAC Realtors’ Jonathan believe that it is not active at the moment.

“While the potential is there, Puchong still has a lot more to offer in terms of amenities and accessibility. However, as Puchong South grows, the market may become more active,” says Jonathan.

Soma says the newer area’s rental market is comparatively slower as most of the completed projects are of landed property.

“Condo rentals are also low because they are mostly for newly completed units. Rental yields will continue to be low as rentals for new units are always low,” says Soma.

On the flip side, Ship believes there is latent demand in the Puchong South rental market because of the area’s improving infrastructure.

“Rental demand comes from a mix of students and working professionals as well as the migrants from other states who choose to stay here due to the lower asking rents compared with Puchong and Cyberjaya,” says Ship.

Jastin concurs, noting that the young working adults who have just graduated will look for a more affordable place to rent.

“Students from nearby universities will be looking to Puchong South as the rents are lower. And the new condo developments in the last few years are generating more interest from investors. However, the newer developments have not had any significant influence on the sub-sale market just yet,” says Jastin.

According to theedgeproperty.com, Puchong South’s indicative rental yields as calculated from asking rents as at June 2015 are between 4.3% and 6.5%. Meanwhile, Ship puts the rental yield for landed properties at 3% to 5%.

Challenges and future growth

Although the lower property prices in Puchong South will attract savvy investors, it is more attractive to the end-user market, which is bigger due to its range of affordable products, says Soma.

“However, Puchong South will always trail the heartland of Puchong in terms of pricing, demand and growth, as it is in the third tier of the growth zone in Puchong,” he adds.

Soma sees two sides to Puchong South – one with well-planned townships like 16 Sierra, and another with small, rushed developments sprouting up here and there.

“Some developments are pressured to maximise density, and the same issues of space, greenery, recreation, lifestyle living and parking will be compromised. This will become the bane of this new growth centre. If developers can balance this, then Puchong South can be a new centre of growth. The proposed Sungai Buloh-Serdang –Putrajaya MRT Line with a station in 16 Sierra will have significant impact on this corridor,” says Soma.

Meanwhile, Jonathan feels that official recognition of Puchong South by the authorities and more strategic planning for the area will draw more interest and people to the area.

“Puchong South is still undefined. If local authorities can clearly define this area, and have proper town planning, then it will be easier for developers to build here and for more people to see the potential,” says Jonathan.

Ship believes that more lifestyle developments can make Puchong South more attractive, but traffic congestion can be a challenge as the area grows.

“Nonetheless, I see a strong future for Puchong South based on the values it has to offer in terms of infrastructure and connectivity. I foresee Puchong South as the driving force of property development in South Klang Valley in the next five to 10 years,” says Ship.

Click here to check out some properties at Bandar Putra Permai.

Related stories:
PROPERTY SNAPSHOT 1: The transformation of Puchong South
PROPERTY SNAPSHOT 2: What’s affordable in Puchong South?
PROPERTY SNAPSHOT 3: What are the prices of homes in Puchong South?
PROPERTY SNAPSHOT 4: What’s hot in Puchong South?

This story first appeared in The Edge Property pullout on Nov 27, 2015, which comes with The Edge Financial Daily every Friday. Download The Edge Property here for free.