Neighborhood and addresses greatly influence property prices. Your address is a status symbol and gives others perception that you belong to certain socio-economic group. Isn’t this the reason why we often ask someone when we meet them, right after we learn their name – “where do you live?”.
To many discerning buyers, neighborhood plays important decision point on where to buy their houses. Great neighborhoods will make you rub shoulders with the elites and it might turn into business opportunity. Great neighborhoods most likely offer good amenities such as good schools for your children, exclusive community malls, public transportation and lifestyle that fits the elites.
As Malaysia economy progresses, the income level rises with it. Consequently, there are more people that can afford to buy homes with exclusive addresses. This has been driving the demand. In order to fill up the demand, housing developers have been building high-end condominiums and serviced residence aggressively.
Fueled by the availability of credit, low interest rate environment and increased transportation connectivity Malaysia has seen a housing boom that stretch to more than a decade. We have seen a rapid increase in supply of high end high-rise property everywhere. To certain extend it has lead to oversupply in certain areas. So, buyers please be vigilant in this overhang market as it is buyers market, and you deserve a bargain.
The most exclusive addresses
We illustrate below top 20 most expensive neighborhood in Kuala Lumpur and Selangor. Jalan Ampang Hilir, Bangsar, Bukit Tunku, KL City Center, Damansara Heights and Mont Kiara stand out to be the most elite addresses in Malaysia. You can hardly find mid-size property priced 1.25M and below. Furthermore, the built up size of the property in these areas are relatively larger than the rest. In term of income level, the neighborhood belongs to people or family with monthly income of RM 20,000 and above.
The median price and qualifying income bracket for each neighborhood
Chart below shows the expected monthly income that you need to earn if you want to own a home in respective areas.
In this analysis we are using asking price and have excluded super house with value more than 5 millions. For installment and salary calculation, we are using prudent financial rule that 1/3 of income should be for housing need. Further assumptions made are loan duration of 25 years and housing loan interest of 4.5%.
Kuala Lumpur, Putrajaya and Selangor median price by neighborhood
Below is the table format of the neighborhood data. We have included built up size and estimated monthly installment as well.
[table id=1 /]
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When it comes to up market condominium in Kuala Lumpur, Mont Kiara always come at the top of the list. Situated on the west of KL city center with 15 minutes driving time, Mont Kiara community is a melting pot of expatriates, local professionals and people from medium upper income groups. It has a list of international schools, banks, vast array of foreign-themed restaurants, classy hangouts and nightlife joints. You can view the point of interest highlights in Mont Kiara here.
Mont Kiara is nearby to highway access such Sprint, NKVE and DUKE. Commuting to work in city center only takes less than 15 minutes but access to public transportation like train station is unavailable, but no sweat, Grab ride hailing is minutes available anytime of the day. There is also walking pavement at the roadside around Mont Kiara but if you area a cyclist the road is not that bicycle friendly. Within a short drive, there is Bukit Kiara Park. It is a very nice garden with plenty of parking. It is a popular urban park among families, walkers and joggers due to its close proximity to several residential communities. It’s main feature is a large lake surrounded by jogging tracks, exercise stations, children playgrounds and picnic spots. There are also mountain bike trails for those that are into mountain bike.
One of the main advantage for family growing up young children in Mont Kiara is providing them an opportunity to make foreign friends, to experience foreign languages, foreign culture and probably start a global network from young age. Within the neighborhood, there many additional classes that the children can enroll such as art class, coding workshop and sports coaching.
The option for condominiums are plenty in Mont Kiara. It is buyers’ market and and home buyers should carefully find and select the best deal . For the purpose of this article we have grouped condominiums and serviced apartment in Sri Hartamas and Dutamas areas under Mont Kiara.
Maintenance Fee vs Density
When home owners pay higher maintenance cost they should expect better/newer facilities and lower units density as higher maintenance cost should represent exclusiveness. Charts below show the comparison of maintenance price fee per square feet and number of units in the development for condominiums and serviced apartments around Mont Kiara. It seems that Verve Suites, Kiara 163 and Arcoris have higher than average unit density per development and higher than average maintenance fee per square feet that technically make them seem like not a good deal. However there are possibly other factors that make different. Please find out further. In this article we are only providing the technical aspects of the properties.
Maintenance Fee vs Completion Years and Developers
Should older condominiums charge higher maintenance fee?
Older condominiums are likely to offer older set of facilities and less likely to offer lower total count of facilities. New condominiums area likely to offer new and modern facilities such as lap pool, infinity pool, rooftop jacuzzi and rains spa. For older condominiums, home buyers are likely to pay the maintenance of the building and facilities’ wear and tear, rather than paying for new and modern facilities. One clear benefit of staying in condominium is having nice facilities to pamper you and your family. For those that are investing and not for their own use, having good facilities in your property should translate to higher rental yield. Below are the charts for your comparison.
Mont Kiara Price vs Rental Yield%
The economic principle of supply and demand generally applicable to all businesses. However, sometimes when it comes to home buying, emotional decision decision overrules logic. As for price of condominium, the property that should be in demand are those that within financial reach of the targeted population. In this instance, for a average family size of 2 children, they probably need a home of 3 bedroom between 1,000 square feet to 1,800 square feet within the price of RM 500,000 to RM 1,000,000. However, we have seen developers are selling larger units only and higher price only development in Mont Kiara that earn rental yield below 4%. The charts below show a general trend of rightly-sized and rightly-priced condominiums fetching higher rental yields. Below, we have also illustrated mortgage financing rate for home buyers to compare with the rental yield.
Mont Kiara Asking Price vs Transacted Price Per Square Feet(PSF)
Which is the best reference price that buyers show use to compare when buying a new home? Asking price or past transacted price?
In order to assist buyers to make smarter decision we provide below the comparison of median asking price per square feet and transacted price per square feet. The transacted price per square feet is derived from past one year transaction price. We have attended a talk by Jabatan Perumahan dan Penilaian Harta (JPPH) or in English The Department of Property Valuation of Malaysia and they have indicated that there is evidence that secondary home market price is cheaper than primary (new launch) home price for certain properties. This phenomenon might be the result of the new launch offering discount and, sales and purchase price in the agreement is based on price without reflecting the discount. As such the official price reflected in the sales and purchase agreement, valuation reports and bank records can be inflated price without reflecting the discount. Another possible reason is Mont Kiara is experiencing a downward pressure in property price due to oversupply. Thus we urge buyers to be more careful and give more thoughts before buying a property in Mont Kiara. If you must buy now, you need look at both past transaction price and the average of current asking price. Please avoid Lumina Kiara at the moment as it shows asking price PSF significantly lower than the transacted price PSF and probably the worst is yet to come.
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Over the last one and half decades, Klang Valley has seen a surge in number of condominiums built. This phenomenon coincides with cheaper mortgage lending rates, access to EPF withdrawal for house down payment and installment, lengthened mortgage lending period, creative pricing and product features, rise in home and land prices and, new transport oriented developments. Furthermore, the planned High Speed Rail between Kuala Lumpur and Singapore promise a better future for Klang Valley property market as this will give spill over effect of Singapore economic strength and purchasing power. That is what happened to Paris where property value appreciated after the completion of London-Paris high speed train.
Currently, condominium is half of the property listed for sale in Klang Valley and represents the largest type of property being sold online. This means that home buyers have plenty of options to choose from and should carefully weigh their options. Please exercise caution as some of condominiums in popular areas are under pricing stress. There are pockets of bubbles and can be avoided by carefully analyzing the fundamentals.
We at Red AngPow aim to equip you with unbiased, easy to use tool for analysis and making use of technology to empower consumers to make smarter decision. Armed with decades of data analytics skills, banking experience & property expertise we are bringing to consumers the insights and technology that are previous privy to large corporate at no cost to home buyers. *We are using condominium listed online as of July 2018 for this analysis.
In this article, we are focusing on condominiums near LRT, MRT & KTM Komuter stations as these where are the most of condominiums are built. Our definition of near train stations is within one kilometer to nearest train stops.
*larger words means more frequent.
In order to make house buyers getting great information and and for us to deliver a insightful shopping experience, we have plotted current condominium listing on interactive and zoom-able map . Home buyers can glance at vital statistics at the area of choices and make comparison of the the surrounding properties in one page. It gives a bird’s eye view of insights that delivers advanced yet simple information to home buyers. At deeper level, when zooming in down to condominium your can see detail listing of the chosen properties where you can sort and according to the criteria that you choose. You can click on the link to go to the original listing by the the advertisers and property agents.
With advanced technique of Artificial Intelligence and Property Industry experience , we have built a scientifically curated listing marked with blinking lime colored dots to assist home buyers to find their dream homes or the best value for their property investment. It was done with no preferential treatment to any developers, property agents or sellers. It was built with pure facts and science with no human bias.
With our map technology, searching for condominiums nearby train stations by train lines & median price per square feet has never been easier. The first of it’s kind, easy to use and available at your fingertips.
As we can see from the maps, stops at LRT lines are most popular places for developers to build condominiums due to the fact that it pass through populous residential areas, economic centers and transportation hubs. The long stretch of KTM Komuter lines falls second in term of popularity and has the cheapest price and price per square feet. KTM Komuter passed through less affluent neighborhood and has poorer public perception in term of reliability due to frequent train breakdowns. Among the train lines, MRT is the latest addition to Klang Valley transportation system and the first line SBK was completed in 2017. Middle part to the North West part of MRT SBK line has higher property price while the South East toward Kajang offers lower property prices. There is also major upcoming township development around Kwasa Damansara and Kwasa Sentral stations that investors and home buyers are eyeing.
As evidence suggests, distance to train station has great influence to condominium price. The nearer the property to train stop the more expensive is the price per square feet and most of condominiums in Klang Valley are built within 3 kilometer radius of train stations. Thus, it is very clear that the convenience of being nearer to train stops increases property value. LRT stops has the most number of condominium around them, followed by Komuter and the least is MRT. Prices of condo near LRT train are the most expensive because it pass through strategic areas and a number of affluent neighborhoods. While MRT is new and the completion of it coincides with the softening property markets the prices around its stops are relatively lower. We foresee that prices around MRT station will catch up in the future when the economic fundamentals is on track e.g. when banks lending policy is relaxed and income of general population rise. Charts below illustrate the relationship between number of property listing online, price and price per square feet against the distance to nearest train station.
Let’s look at the histogram of condominium near train stops in Klang Valley below to understand the density of price, built up square feet and price per square feet distribution. This will give you good sense of the condominium offerings in Klang Valley. The bar represents number of condominium listed for sales while price, built up square feet and price per square feet are on the X-axis.
Price – price of most condominiums generally is between RM450K to RM1M. Condominium above RM800K are beyond the affordability of general population. We expecting softening demand for above RM800K price tag.
Built up size – built up size for most of condominiums is generally between 900 square feet to 1450 square feet. Larger size are difficult to rent out as typical renters are young professionals, couples or young family with small kids that do not prefer larger size properties.
Price per square feet – price per square feet is concentrated between RM450 per square feet to RM800 square feet. Some developments that are pricing price per square feet higher that overall average of the areas are having trouble to sell despite offering many additional features, more facilities and great design. We hope that in the future, developer do study the affordability of their potential customers before building the properties.
By visualizing the price, price per square feet and built up size in 3D, we can see a trend that the closer condominium to KLCC the higher the price is. Only LRT train line pass through KLCC and it is expected to see these expensive grouping fall under condominium near LRT station category. On the other hand there is a smaller numbers of condos near MRT stops such as Pusat Bandar Damansara and TTDI that are very expensive. Further away from KLCC as far as Subang, Kelana Jaya or Gombak you can get older condominium with double the size of KLCC condominiums and with significantly cheaper price tags but much less exclusive than KLCC and farther commuting distance for those who work in large corporations.
*Size of the bubble represent the distance to KLCC. The smaller the circle the closer it is to KLCC.
Condominium Rental Yield
This is one of the most import gauge for true economic value of home price. Unlike speculators which focus on prospective property price change, value investors often use rental yields to estimate the value of property across economic cycle. Like any form investment where we measure annual return,here we apply the same method to property. In this case, we use annual cash flow from property rentals divided by property value. This is gross yield as it does not include associated expenses of owning a property (e.g. maintenance fee etc). Whether you will be staying at that property or for investment, you must always measure this to see whether you are getting a good deal. Below is the quote from world famous investor Warren Buffet on cash flow, that stays true across all economic cycles. Among the reasons why investors like Warren Buffet is so successful is due to his ability to hold term and his rationality to assess future cash flow generated from his assets without fear and greed.
“Focus on the future productivity of the asset you are considering”… “If you instead focus on the prospective price change of a contemplated purchase, you are speculating.”
Of all the property types, condominium gives the higher rental yield % as compared landed property but lower potential on property appreciation . With this visualization, it’s easier to see the guidance of expected rental yield, the good rental yield and the bad rental yield.
The median rental yield return for both overall condominium and condominium near train station are slightly below 4%. The opportunity is that you can find condominium that can give you as high as 7% rental yields. One and half decades ago, rental yield of 6%-7% was not considered a bargain.
Charts below illustrate the relationship between distance to KLCC (size of bubbles), rental yield%, price and built up square feet of condominiums in Klang Valley. For this, we only illustrate condominiums that are near to train stations and differentiated by colors to mark different train lines. Rental yield for condo near KLCC is not great. Generally speaking, the smaller bubbles which represent condominium with shorter distance to KLCC are mostly below 4% while the larger bubbles which represent condominium farther away from KLCC offer higher than median rental yield. Looking at the second chart with different viewing angle, we can see the most expensive condominiums are predominantly come from condominiums near LRT stations because it pass through prominent areas.
Different viewing angle of the chart above.
Developers For Condominium Near Train Station
For some home buyers, developers credibility is an important factor in their decision making. Reputable developers will minimize incompletion risk and give better assurance for the quality of work. Developers are offering their products to different segment of consumers. Some are targeting young young and middle income family with more affordable price points. Some are targeting foreigners and people with high net worth. Due to softening market, nowadays many of developers are offering rebates, gifts and free sales and purchase agreement due to softening demand and affordability issues of general population.
Below are the overview of each train stops by train line types. The bubbles represents train stops, the size of the bubbles represent number of listing found online and the color represents the areas in Klang Valley that the train stops located.
As expected, the most expensive condominium measured by price per square feet are dominated by condominium near LRT stops that are in city center and Bangsar.
For condominium near MRT stops, the most expensive by price per square feet measure are Pusat Bandar Damansara and Tun Razak exchange. Please note that for condominiums near Pusat Bandar Damansara stop are divided into two areas which are Segambut and Lembah Pantai depending at which sides of the stop they are in. There affordable condominium in around MRT stops which are further away from Kuala Lumpur city center at South-East and North-West sides of Klang Valley. Click here to view the map.
Condominiums near KTM Komuter stops offer more competitive pricing as it pass through less affluent areas. KTM Komuter lines cover more land areas than the rest of the train lines and offer wider selection in term of choice of location from Batu Caves all the way to Port Klang. However this train line is perceived to be old, slower and less reliable making it the least preferred train line.
Well, it is a lot of information to digest in one article. We have to save the rest for future analysis. We will give more granular information from time to time. Thank you for reading our insights. Please subscribe to our mailing list to receive our insights direct to your mailbox.