Is it time to buy properties near the newly proposed LRT extensions?
The availability of public transportation will drive property values up. That statement is a given, but just how far up will property prices go? iProperty.com takes a quick look at property prices near the newly announced Light Rail Transit extensions to see gauge the impact.
The government announced that two of Klang Valley’s light rail transit (LRT) lines, the Kelana Jaya and Ampang LRT lines, would be extended by 17km and 17.7km respectively. The proposed extensions would benefit Lembah Subang, Subang Jaya, USJ, Putra Heights, Bandar Kinrara and Puchong once it is completed, which was estimated to be by 2012.
A proposal was submitted by Syarikat Prasarana Negara Berhad (SPNB), a wholly-owned government company under the Ministry of Finance Inc. to the Department of Railways for approval of the proposed locations. As of late February 2010, it has yet to be approved but it was anticipated that by SPNB that it could be ‘anytime soon’.
According to the proposal, the Kelana Jaya LRT extension will link the existing Kelana Jaya Station to Putra Heights, passing through Subang Jaya. The proposed locations for the stations in the extension are as below:
Kelana Jaya/Lembah Subang
- Subang Depot
- Dana 1 Commercial Centre
- Kelana Jaya Centre Point
- Subang Jaya KTM
- SS15 Subang Jaya
- SS18 Subang Jaya
- USJ 7
- USJ 8
- USJ 14
- USJ 21
- Alam Megah 1
- Alam Megah 2
Meanwhile, the Ampang LRT extension will extend from the existing Sri Petaling Station to Putra Heights via Puchong. A total of 12 stations will be introduced and they are:
Old Klang Road
- Bukit OUG - Awan Besar
- PPR Kg. Muhibbah
- Bandar Kinrara 1 & 6
- Bandar Kinrara 2 & 5
- Taman Bukit Kinrara & Bandar Kinrara 3
- IOI Mall
- Tesco Bandar Puteri
- Rakan Muda
- Batu 12
- Puchong Perdana
- Puchong Prima
- Kampung Tengah
The Putra Heights station will serve as an interchange station between the Kelana Jaya extension and the Ampang extension. Five stations along the Kelana Jaya extension will have Park & Ride facilities while seven stations along the Ampang extension will have it. Park & Ride is a programme where commuters who use the LRT service can park their cars at select venues for a flat fee.
The LRT advantage
Properties located within the proximity of LRT stations enjoy fair capital gains and higher rental yields, as long as they are located within a fair distance away. Residential properties that directly face the stations, however, are not as desirable as the units further in. There is also concern of traffic congestion around the area. Properties will have no advantage if they are located close to LRT lines with no stations nearby.
Chan Ai Cheng, general manager of S.K. Brothers Realty (M) Sdn Bhd opined that the proximity of LRT services is definitely a plus point to properties nearby as it is a convenient and fast alternative mode of transportation.
She said, “Presently in Petaling Jaya (PJ), we can see the number of buyers outweighing the number of units in the market for sale at the Amcorp Service Suites. Owners there are most happy with the returns as some are as high as 15 per cent per annum based on the current rental rates and their purchase price.
“Those who purchased the units in the secondary market are still enjoying above 8 per cent per annum returns. Millennium Square in Section 14 PJ has also enjoyed good occupancy. A project completing soon, Paramount View being located next to the Paramount LRT station will stand to benefit from the from the easy access to the LRT services.”
Ai Cheng added that the Amcorp Service Suites had enjoyed capital appreciation. The developer’s price was RM270 per sq ft and today’s price is RM550 per sq ft. Rentals when it completed was RM1,200 per month for a fully furnished unit but today’s asking rentals are RM1,800 per month.
Ai Cheng advised that property buyers having LRT service close by will enhance values but the property must be the right distance away.
“Should the property be located too close, then the noise factor and aesthetics may be affected. You want to be just the right distance away,” she added.
She further added that the main factors property buyers look for always come back to location, affordability and the type of property. She opined that public transportation is important to a select group of people as not all use public transportation to commute, whether they are owners themselves or potential tenants.
Joseph Kong, real estate agent from Putra Realty shared the same view that properties near LRT stations have its advantages.
He said, “It (LRT stations) will improve property value and rental demand. People prefer LRT service to bus service as the former is more predictable and practical. We have customers who ask about the availability of public transportation and it is an important question. Meanwhile, property investors are looking at areas with LRT stations as they generally have higher rental yields.”
Kong shared that property prices have improved like for Bangsar South’s new commercial area and the recent announcement that there will be a new walkway joining to Pantai LRT station is a boon. He added that rental rates at Amcorp now fetch RM4 to RM4.50 per sq ft, which is good as it is an old property.
Kong added, “Two to three years back, PJS, which is located right next to Amcorp Mall, was selling at about RM450 to RM500 per sq ft. Now prices can go up to RM650 per sq ft. Another example would be Menara UOA in Bangsar which is located relatively close to LRT. In the last three years, there was a capital gain of 30 per cent. Back then, you can buy a unit at around RM700 per sq ft but now prices are going at about RM900 to RM950 per sq ft. As for properties located near LRT lines, their values will depend on the availability of feeder buses.”
According to Kong, the announcement of LRT extensions had drawn higher interest in Putra Heights, Subang Jaya and USJ properties. He further added that prices have also gone up in those areas.
“It is a good time to buy properties in the areas with the proposed LRT extensions now, barring any about turn by the authorities. By the time the stations and tracks are seen being built, property prices would have gone up much higher and it will be too late,” advised Kong.
Meanwhile, prices of properties in USJ and Subang Jaya area have jumped up very much as according to Onesimus Kam, general manager of Assure Properties. USJ is one of the specialty areas of the real estate agency.
Kam quoted a few transacted examples, “Back in June 2009, a basic non renovated 20ft x 60ft terrace unit (in USJ) was selling for RM235,000 and below. It recently transacted for RM290,000. In USJ 13, a unit with an extended kitchen was selling for RM250,000 to RM260,000, two months ago it was sold at RM310,000. A basic 22ft x 75ft unit in USJ 11 was selling for RM360,000 to RM370,000, now it is going for more than RM400,000.”
He gave a few more examples of which prices generally appreciated 20 per cent and more. He further commented that the reality of the sudden increase of prices had not sunk in yet, and everyone, bankers included, were surprised.
“The increase in property prices started close to Hari Raya last year which was after the announcement of the LRT extensions. Some property owners of Rhythm Avenue serviced condominium in USJ 19 have decided to hold back their sale after the announcement too.”
Kam commented that while prices of properties near the proposed LRT extensions have gone up, their rental values have remained the same. He said that this is because the rental market is only affected by the current situation and the LRT extensions are not built yet. However, rental prices will go up when the stations are completed.
He said that it is always a positive when there is LRT near property and he hopes that the government will deliver as promised.
Kam cautioned that although having an LRT service near is good, there are two sides to the coin. He said, “We want it to be near but not right in front. Properties right in front of stations are not in demand and those that are just within walking distance are ideal. Residential properties that are facing highways and LRT stations should be allowed to convert to commercial as their demand are low.”
What’s going on in the property market so far?
Ai Cheng, Kong and Kam were upbeat when asked on their views of the property market in 2010. Ai Cheng said that certain locations, type of development and developer will always enjoy good take up.
She added, “In the secondary market, established neighbourhoods like Damansara Heights and Petaling Jaya will continue to hold its value and remain resilient. As for properties in the KLCC, they appear to be on an upward trend.”
Kong shares a similar view as he said, “The property market is good and it is based on location. Prime areas will always enjoy high demand for example landed properties in Petaling Jaya. Areas neighbouring Petaling Jaya like Subang 2, Sri Damansara and Kota Damansara will also benefit from this demand.
He said, “Six months ago, prices of some terrace houses in Bandar Utama were about RM530,000 to RM560,000. Now they are going for about RM700,000. Hence there is a spillover effect on the neighbouring Kota Damansara and prices of similar homes are going for RM500,000 to RM600,000.”
Kong also anticipated that properties in Subang Jaya, USJ and Sunway will start to pick up. He commented, “For the past 10 years, prices have not changed much, but it will now due to the many colleges in the area and the proposed LRT stations.”
Meanwhile, Kam said that the reintroduction of the Real Property Gains Tax (RPGT) did not have much effect on property owners.
Kam said, “Now that the guidelines are clearer, there are no more worries for property owners. They now sell higher to cover the RPGT cost. There is a pass on effect where the seller passes the cost to the buyer and the buyer then passes it on to the banks. At the end of it, the banks benefit more.
“It is a good year so far and prices of a lot of properties have gone up. There is room for pries to go up further.”
Kam quoted some examples like Indah Residences where prices went up around the same time as property prices in USJ. He said that 22ft x 70ft double-storey terraces were priced about RM310,000 to RM320,000 in June last year and prices went up to RM380,000 near Hari Raya before shooting up to around RM448,000 recently. Another example given was a renovated house in Kemuning Utama where it was struggling to be sold before Hari Raya at about RM480,000 to RM495,000 but was recently sold for RM670,000. He said that basic units there are going for about RM600,000 now.
“Prices of properties near Subang Parade in Subang Jaya are also seeing good rental returns. A Subang Avenue 1021 sq ft fully furnished two-room condominium unit was just rented out for RM2,600 per month. The owner was offered RM400,000 by a buyer but did not want to sell. A medium floor unit there can range from RM360,000 to RM370,000 and if we take the rental of RM2,600, that’s a rental yield of 8.6 per cent.
“Properties along the Subang Parade stretch like Subang Avenue, Saujana Residency and Empire Gallery are good helped by the colleges nearby, blue collar workers around the area and the KTM station there. Furthermore, there is a proposed LRT station to be built in the area.”