Selangor’s Kajang moves with the middle classes

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KAJANG, Selangor, is fondly called “Satay Town” by food-loving Malaysians because of its famous barbecued meat skewers. It may be 21km from Kuala Lumpur but that doesn’t stop city foodies from making their regular pilgrimages there. Kajang is thought to have been founded in 1807 after the end of the Klang War between rival clans. It was later made the district capital of Hulu Langat because of its central location.

Kajang owes its rise to the coffee estates in the area in the 1890s, and now houses many exclusive gated residential estates that cater to the upper-middle class.

As an established area with ready amenities, Kajang town and the adjacent Bandar Sungai Long township are seeing renewed interest from homebuyers, including for its new high-rise developments that are setting new benchmark prices in the vicinity and giving a boost to the local secondary housing market.

Based on theedgeproperty.com’s analysis of transactions in the 12 months to the third quarter of 2014 (3Q2014), secondary prices of non-landed residential properties in Kajang and Bandar Sungai Long rose steadily since 2013. The average transacted price reached a peak of RM227 per square foot (psf) in 3Q2014, up 17.7% year-on-year (y-o-y) from RM193 psf in 3Q2013. This followed a growth of 12.9% y-o-y in the preceding year.

With the Mass Rapid Transit (MRT) Sungai Buloh-Kajang Line due for completion in 2017, Kajang will become an increasingly viable place to live in. The area is set to have three MRT stations, at Saujana Impian, Bandar Kajang and Jalan Reko.

According to DTZ Nawawi Tie Leung Property Consultants Sdn Bhd managing director, Eddy Wong, the Kajang/Bandar Sungai Long area benefits from the spillover demand arising from the escalation of property prices in the capital Kuala Lumpur. Bandar Sungai Long has enjoyed a spurt in prices since early this year when Universiti Tunku Abdul Rahman (Utar) shifted its students to Bandar Sungai Long with the completion of a new campus block.

Upcoming non-landed residential developments include Saville @ Kajang, MKH Boulevard (both by MKH Bhd) and Jadite Suites (by Gamuda Land), while future developments to look out for include Tropicana Heights Kajang (by Tropicana Corp Bhd), Kajang 2 (MKH) and Nadayu 92 (by Nadayu Properties Bhd).

Catering to the mass market

Even with numerous upmarket gated neighbourhoods, the non-landed residential properties in the Kajang/Bandar Sungai Long area still fall mostly within the mass market segment.

Based on theedgeproperty.com’s analysis of transactions in the 12 months to 3Q2014, the average transacted price per unit stood at RM215,000, with 34.8% of transactions being in the RM100,001 to RM200,000 price range. The neighbourhood remains fairly affordable, with 97.5% transactions occurring below RM500,000.

By average transacted price per unit, the most expensive condominium was Flora Green in Bandar Sungai Long, at RM550,000. It is located right at the edge of the Sungai Long Golf and Country Club and most units offer panoramic views. The smallest unit is 1,755 sq ft.

The second-most expensive condominium is Evergreen Park Cypress, with an average transacted price per unit of RM465,000. Also located in Bandar Sungai Long, it is clustered among Evergreen Park Acorn & Hazel and Evergreen Park Scot Pine condominiums. Evergreen Park Cypress has the largest units in the area, with a typical 3-bedroom, 2-bathroom unit being 1,453 sq ft.

Meanwhile, the cheapest projects are led by low-cost flats at Taman Asa Jaya, Taman Kajang Utama Apartments and the Kajang Mewah Flats, with an average transacted price per unit of between RM36,000 to RM56,000. These are usually compact walk-up flats. For instance, units at Taman Asa Jaya are especially small, with typical 2-bedroom units measuring 484 sq ft.

On a psf basis, just over half (50.4%) of transactions fell within the RM201 to RM400 psf bracket in the 12 months to 3Q2014. In the same period, 49.3% of transactions were under RM200 psf.

However, newer condominiums appearing on the market are aimed at richer middle-income buyers. Located in Taman Bukit Ria, Tiara Parkhomes is the most expensive project on a psf basis with an average price of RM369, at least 12% higher than the next-most expensive. Recent launches nearby are Saville @ Kajang and Mewah 9 Residence, both projects by MKH Bhd.

The second-most expensive address on a psf basis is mixed-use development Pearl Avenue in Sungai Chua, with an average price at RM328 psf. Similar to Tiara Parkhomes, Pearl Avenue was completed end-2013 and offers similar facilities targeting middle-income buyers. Meanwhile, those looking for a quiet environment would find Greenview Residence at Bandar Sungai Long, with average transacted price of RM314 psf, a good option. This hilltop condominium commands views over the town, with a typical 3-bedroom unit being 1,366 sq ft.

Low-cost flats and walk-up apartments can be found at Taman Asa Jaya (74 psf), Taman Cheras Prima (RM93 psf) and Taman Kajang Utama (RM93 psf).

Prices seem to have risen further since 3Q2014. According to Wong, the current average transacted price of recently completed non-landed residences in Kajang/Bandar Sungai Long is around RM450 psf, for a typical unit built-up of 1,000 sq ft.

“The most expensive in terms of price quantum is Pearl Avenue at RM700,000 for a 2,241 sq ft penthouse, or RM313 psf. The typical sizes are 1,100 sq ft and 1,800 sq ft,” Wong adds.

Older existing properties have benefitted the most in terms of capital appreciation. According to theedgeproperty.com’s analysis, the highest growth in capital values in 3Q2014 can be observed among the affordable apartments led by those in Taman Kajang Utama and Taman Cheras Prima, where average transacted prices increased by 34.3% y-o-y and 32.6% y-o-y, respectively. Both are walk-up apartments with low starting capital values, which indicates that even modest gains in capital values generate higher relative growth.

In the middle-income segment, Casa Villa condominium in Sungai Chua grew 28% y-o-y to RM215 psf. Prices here were boosted by the recent completion of the adjacent Pearl Avenue, which has shops at the ground level. Condominium units at Pearl Avenue were valued at RM328 psf in the same period.

Wong estimates the annual capital appreciation for non-landed residential properties in Kajang at 10% to 12%.

As of June this year, rental yields of medium-cost apartments in Kajang appeared to be the highest. The best performers were Plaza Indah at 7.6%, Sri Camellia at 7.1% and Sri Ria Apartments at 6.4%. These apartments are located at Taman Sepakat Indah, close to the commercial areas of Sungai Chua.

Over at Bandar Sungai Long, yields of condominiums are fairly decent, ranging from 4% to 5.9%. The rental market here is driven by the student population at Utar.

An affordable alternative

Some of the earliest development schemes in Kajang were bungalows in Country Heights Kajang (by Country Heights Bhd), terraced houses and semidees as well as Mewah Court Condominium at Taman Bukit Mewah (by MKH Bhd).

Other developers in the area are Gamuda Land, Trans Loyal Development Sdn Bhd, and TLS Group.

According to Wong, Kajang and Bandar Sungai Long offer condominiums catering mainly to medium and high-income families.

“The areas are about 80% occupied, mostly by locals, half being Malaysian Chinese. Although traditionally owner-occupied, more investors have been buying up existing stock for rental income,” he says.

Wong sees the short-term outlook for both areas as positive because existing stocks have good take-up rates. However, he thinks that infrastructure would need to keep pace with population and development growth, for example, an upgraded drainage and irrigation system to overcome flash floods.

The areas are connected by major highways such as the Kajang Dispersal Link Expressway (Silk), Kajang-Seremban Highway (Lekas), Cheras-Kajang Highway, and North-South Expressway. Apart from the MRT, amenities in the area include medical facilities (Hospital Kajang, Kajang Plaza Medical Centre and Kajang Specialist Hospital), and educational institutions (Kajang High School, Convent High School, SMK Yu Hua Kajang, SMK Sultan Abdul Aziz Shah Kajang, Utar, Universiti Tenaga Nasional, National University of Malaysia and Nottingham University).

“People have the perception that Kajang town is further away from Kuala Lumpur city centre compared with Bandar Sungai Long. Having said that, a town’s distance from the city is not the sole determinant of its property prices. In fact, Bandar Sungai Long and Kajang are neighbouring areas just a short distance apart. What matters more is how the town was developed to provide a pleasant place to live,” Wong says.

According to Metrohomes director See Kok Loong, Bandar Sungai Long has better town planning compared with Kajang, with its amenities close to one another.

Meanwhile, he says the recent proposal by Kuala Lumpur City Hall to impose a congestion charge on private motorists entering the city may cause homebuyers to choose to stay in outlying and self-contained suburbs such as Kajang and Bandar Sungai Long.

iProp Realty managing director Victor Lim notes that an increasing number of homebuyers are considering the option of investing in Kajang and Bandar Sungai Long because they are relatively more affordable compared with property in Kuala Lumpur.

“One of my staff who recently purchased property in Kajang said that the cost of living there is relatively cheaper [than in the city], although travelling to work in the city takes longer. The highways available and the upcoming MRT line will be a huge help in this regard,” Lim says.

Furthermore, with land becoming scarce for new property developments in the Klang Valley, Wong says people are looking for alternative places to invest in. “Kajang and Bandar Sungai Long are definitely up and coming property hot spots with much potential in store,” he says.

This story first appeared in The Edge Property pullout on Oct 16, 2015, which comes with The Edge Financial Daily every Friday. Download The Edge Property here for free.

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