Contributed by John Tan

In the current slowdown of the property market where prices are stagnating and has become a prolonged buyers’ market, where are the hotspots which we can still consider investing in where we can hope to get steady rental and capital appreciation?   

Along the LRT Kelana Jaya Line there are 37 stops with Kerinchi station sitting right smack in the middle of the Kelana Jaya line where Bangsar Trade Centre is also located.

Besides being located midway of the Kelana Jaya line where it has easy access to both Kuala Lumpur and PJ/Subang Jaya, it is only one stop away from Abdullah Hukum station.  

Great things are coming up for this historically sleepy station whom many may be unaware of.

*Photo credit: Low Yat discussion group

There would be a 300-metre overhead bridge linking Abdullah Hukum LRT station directly to, guess where? Why it is no other but the famed Gardens/Mid Valley Megamall!  

Mid Valley is arguably one of the top five well known malls in the Klang Valley besides Pavilion KL, Suria KLCC, 1-Utama and Nu Sentral.

The long awaited overhead bridge will be good news for KL Eco City’s offices and residences. In fact, for those who invested in the residential units such as Viia Residence, for example, should expect good rental demand as KL Eco City boasts good infrastructure with a lot of new corporate office towers which is also home to MNCs such as Ace, Gilbratar and Zurich.

What’s more is that with the imminent overhead bridge, tenants who choose to rent here will get to enjoy world class shopping and feast in the many restaurants and entertainment outlets in the 1.80m sq ft net lettable area of Mid Valley/Gardens Megamall.

Kerinchi station is also strategically located just opposite of Bangsar South where it is seamlessly connected via a 500-metre overhead bridge. It is three stops from KL Sentral where seven public transportation hubs are available and four stops from Pasar Seni where you can seamlessly interchange into MRT line 1.

Nearby Kerinchi station would be a new low dense freehold development named “Regency Suite” being constructed by CRCC Malaysia Berhad (CRCC) - the same main contractor that constructed the highly acclaimed Four Seasons Hotel @ KLCC.  

Regency Suites is arguably the closest to the LRT as it is constructed on top of the station itself, making the distance only a mere 30-metre walk within the station to reach the LRT train.  

With it being freehold and carrying a Bangsar address as opposed to its majority leasehold Bangsar South cousins (whose name has been changed to Kampung Kerinchi) with a competitive average pricing of RM1,000 psf.  

Recent launch by UOA in Bangsar South has a limited supply of freehold properties, with Southlink being an exceptional example of a new launch that carries a freehold tag.  However, the development does not enjoy a direct covered walkway to University LRT as this moment.

Other notable projects along the Kelana Jaya LRT line will be the 5th residential block of leasehold KL Gateway.   

It has the advantage of being located beside the KL Gateway mall which has a net lettable area of 325,000sq ft and a short walking distance via an air conditioned overhead bridge to the KL Gateway University located around 200 metres away.

Closer to Bangsar LRT station will be a little known freehold development named Establishment @ Brickfields.  Delivered its vacant possession a year ago, this project enjoys access via covered bridge to Bangsar LRT.

Despite located nearby to old & run-down buildings in Brickfields which is deemed unsavoury by many commentators in the online forum, Lowyat. Nevertheless the project has been doing well for short term stay and also has a high demand from long-term tenants in view of location which is one-stop away from KL Sentral with direct connectivity to Mid Valley Megamall via the Abdullah Hukum LRT station in the future.

Enough has been said by many property “gurus” about how location is important when it comes to property investments but safe to say that those investment properties located nearest to hotspot LRT stations will enjoy better tenancy and better rentals rates.  

KLCC, KL Sentral and Abdullah Hukum are important key stations as they are linked to offices, shopping & entertainment and key transportation hubs.  

Other stations which are closest to the above three key LRT stations will also be key consideration.  Beside this, the shorter the distance the property is to the LRT the better and there is a definitely a premium if the distance has a covered overhead bridge or at least a covered walkway.  

Some properties advertised as being within “walking distance” to the MRT/LRT but a closer look will reveal that it is actually 500m to 700m away and without any cover to protect pedestrians from the unpredictable weather.

Kerinchi’s LRT station that contains an upcoming freehold low density residential tower and is a mere 30m from the LRT train is arguably the closest distance to a LRT/MRT station.  

There is no need for a covered walkway or an overhead bridge as the residential tower sits on top on the LRT station itself.  

Any other considerations?

Many of the Transit Oriented Developments (TOD) are targeted for investors especially the smaller studio or one-bedder units. 90% of the purchasers are probably investors.  

In view of this, an investor needs to realise that the capital appreciation of such investments will be capped by the rental yield of the property.

Rental yield is defined annual rental, divided by the property value and multiply the figure by 100 to get the percentage.

The price of your property is related to the rent that it is able to fetch.  Assuming the average rental yield at your studio unit is 5%. If the net rental (after deducting all outgoings) is RM2K per month or RM24K per annum, the capital value of your investment is:

If the average rental yield of investment property remains at 5%, then your property value is circa RM480,000.

Of course, there are properties where people buy to stay and in such a scenario, rental yields are no longer a primary consideration.   

Hotspot areas where buyers purchase landed properties to stay and also enjoy capital appreciation can be found in Bandar Utama, Desa Park City, TTDI, Bangsar, Sri Hartamas, Mt Kiara, PJ, Setia Alam, Ara Damansara among others.  

As an investor, you need to know if the property is a buy to “rent for life” as there is not much capital appreciation or a property where the buyer will buy to stay and rental yield will not be a main consideration.  

For the latter you can buy to flip for capital appreciation.  Essentially there are these 2 classes of properties which we need to be aware of.

For buying for own stay, the writer notices that there is a preference to buy freehold landed property if it is affordable enough for the buyer.

In view of its limited supply, there is a better probability for capital appreciation as compared to high-rise service apartments but here are no more new terrace houses being developed in Kuala Lumpur due to land scarcity.  

The new launches of landed properties are located in the fringe of Klang Valley in Rawang, Cyberjaya, Kajang and Semenyih.

In my view another option for buyers who intend to purchase to stay and also enjoy capital appreciation in the longer term is to consider a townhouse which is a hybrid between an apartment and a terrace house.

Essentially, it is a plot of land shared between two units, one lower unit and the other is the upper unit and they have their own individual car-parks in front of their house.  

A townhouse is considered “semi landed” and there are also no new launches of such properties in Kuala Lumpur anymore making its supply pretty limited.

For safe bets to earn decent rental and minimum downtime for acquiring tenants, it is worthwhile considering TOD and your acquired unit being closest to the LRT station.  

Besides this, the nearer the location to central business districts (CBD), the better it attracts a lot of job opportunities which then attracts a lot of potential tenants.  

In Kuala Lumpur, there are arguably 3 CBDs.  The first is the Petronas Twin Towers @KLCC, the 2nd is Bukit Bintang and the 3rd is KL Sentral.

Happy investing!

About the writer

John Tan (Joon Hooi) works in a financial institution and is an enthusiast in the local property scene.  His hobby is to be a property commentator and he dislikes badly managed stratified properties.

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