This month focuses on the residential property market in Shah Alam. iProperty.com examines transaction activities and property price trends in the area for the first nine months of 2015.
The capital of Selangor, Shah Alam has seen rapid development over the years and now consists of 56 sections (Seksyen), spread out over the north, central and south parts. The city is bordered by Subang Jaya and Petaling Jaya in the east, Klang in the west, Kuala Selangor and Gombak in the north, and the district of Kuala Langat in the south.
A network of major highways connects it to other main cities in Klang Valley, namely the Federal Highway, New Klang Valley Expressway (NKVE), Shah Alam Expressway (KESAS), Guthrie Corridor Expressway (GCE), North-South Expressway Central Link (ELITE) and the Kemuning-Shah Alam Highway (LKSA).
The Kuala Lumpur city centre is roughly 25km away from the midpoint of Shah Alam (Sultan Salahuddin Abdul Aziz Mosque in Seksyen 14).
The neighbourhood which saw the highest number of residential property transactions is Seksyen 25 Shah Alam (141), followed by Kota Kemuning (132) and Seksyen 7 Shah Alam (123).
Commenting on the appeal of these neighbourhoods, James Tan, Associate Director of Raine & Horne International said that the residential properties there consist mainly of terraced homes are generally in the low-cost or medium-cost bracket. The price range in the area ranges from RM250,000 – RM380,000. Hence, it is more affordable for the masses and provide for better rental returns to investors.
Stanley Toh, Executive Director of LaurelCap Sdn Bhd said that he is not surprised that Seksyen 25 Shah Alam came out tops in terms of total transactions as the area is well connected via the KESAS highway. Besides that, it is located just opposite of the newer Kota Kemuning township.
Toh opines that Seksyen 25 buyers are a mixture of owner occupiers and investors. He sees the neighbourhood’s good connectivity as a determining factor in purchasing homes there. Meanwhile, investors find the industrial estate located just adjacent to Seksyen 25 to be a great population catchment. There will always be factory workers and staff looking for places to stay nearby, thus, the apartments and flats in the area guarantee a good rental return. In addition, even though Seksyen 25 is in the same neighbourhood as Kota Kemuning and Kemuning Utama, the properties there are much cheaper.
According to Toh, the demand for properties in Kota Kemuning is also high as also many home buyers are attracted by the well-planned township that promotes for conducive and harmonious family living. Furthermore, the township also boasts various public amenities and good road connectivity.
The demand for properties in Seksyen 7 on the other hand, is largely driven by Universiti Institut Teknologi Mara (UiTM), which is located adjacent to the neighbourhood. UiTM has approximately 168,000 students and coupled with teaching and administrative staff, the demand for accommodation is very high. Hence, Toh explained that investors are the biggest group of purchasers in the area. Moreover, Seksyen 7 is home to the ongoing i-City development, which will consist of corporate, residential and leisure hubs spread out over 72-acres.
In the period of Jan-Sep 2015, the building type that registered the highest number of units sold was Apartments/Flats (683), followed by Terraced Houses (603) and Condominiums (109).
Tan opines that apartments and terraced houses remain popular among home buyers mainly due to the affordability factor. There is not much preference for serviced residences due to their high maintenance cost and their expensive price tag.
Toh concurs with Tan that affordability is the driving force in the current market. He notes that there is still room for capital appreciation in Seksyen 25, whilst the prices for residential properties in Kota Kemuning has shown signs of plateauing. For Seksyen 7, there is a higher potential for the rental market as the yield would be much higher as compared to the other two neighbourhoods. However, the properties’ capital appreciation would not surge as high compared to the other two areas.
The total number of transactions for landed properties in Shah Alam was 725 with an average price per sq ft of RM322.
Tan commented that the table above does not truly reflect the price average as there is a mixture of low, middle and high-cost properties. However, the price trend is stable albeit with a few minor fluctuations.
Toh opines that prices will be relatively stable in the coming year, and will continue to move in a positive direction in the longer-term.
The total number of transactions for non-landed properties in Shah Alam was 843 with an average price per sq ft of RM261.
According to Toh, the gradual increase in the prices per sq ft of non-landed properties throughout the period reveals that the demand has overtaken the supply in the area. One of the challenges that might crop up in the near future would be an oversupply of serviced apartments and SOHOs in the area as there are a few projects slated to be completed soon.
Moving forward, Toh feels that there is room for appreciation in prices for apartments and flats. However, for newly completed serviced apartments and SOHOs, buyers might find it difficult to maintain the developer’s selling price (acquisition price) and choose to flip their properties at a lower price below their acquisition price.
Tan agrees with the sentiment that there is the potential for more supply of non-landed properties to come on stream as Shah Alam still has many pockets of land, thus, capital appreciation is expected to be muted. However, there is a potential.
However, there is a promise of a positive outlook for Shah Alam with the Bandar Utama-Klang LRT line extension in the pipelines. Expected to be completed in 2020, the extension will see Shah Alam having seven new LRT stations, namely, Section 14, Persiaran Hishamuddin, Bukit Raja, i-City, UiTM, and Stadium.
Disclaimer: The source of data on brickz.my is from the Valuation and Property Services department (JPPH) which officially records a property transaction once the stamp duty for the Sales and Purchase is paid. Analytics are based on the data available at the date of publication and may be subject to revision as and when more data becomes available.
This article was first published in the iProperty.com Malaysia May 2016 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine. Better yet, order a discounted subscription by putting in your details in the form below!