This article is the first in a series exploring property projects along a key stretch of the Damansara-Puchong Expressway (LDP). Stay tuned to Smart Investor for more updates!
By Aliff Yusri
Kelana Jaya has come a long way since its establishment as the Seaport Estate in the 1900s. Taking its original name from a competition racehorse belonging to landowner and proprietary planter WW Baily, the first clearings for the rubber estate were undertaken in 1905, with 60 acres planted with Para rubber out of a total 2,000 acres.
The Petaling Jaya suburb saw further boosts to development in 1967, with the government acquisition of 900 acres for future housing, and 1999, with the opening of the LDP catalysing connectivity across Klang Valley. Renamed Kelana Jaya in 1983 by the late Sultan Salahuddin Abdul Aziz Shah, it is now one of Kuala Lumpur’s most established satellite townships.
In particular, the stretch of the LDP extending from Taman Megah to the Federal Highway has seen a rise in developer and investor interest in recent years, with massive developments such as WCT Land Sdn Bhd’s Paradigm Integrated Commercial Development (PICD), Gamuda Land Sdn Bhd’s HighPark Suites, the Sunway Group’s Serene service apartments, Mah Sing Group Bhd’s Icon City, PPB Hartabina Sdn Bhd’s Megah Rise and the Glomac Group’s Plaza coming up along this ‘Golden Mile’ belt.
Gearing Up for Growth
Property prices in the area have appreciated accordingly, with older projects such as Kelana D’Puteri growing from a median of RM398.10 psf in Q3 2016 to RM513.07 psf in Q1 2018, according to the Valuation and Property Services Department’s secondary market transaction data, with more recent launches such as Icon City rising from RM830.26 to RM925.93 psf over a similar time period.
“Historically, the LDP has had a catalysing effect upon associated developments. If you look at its alignment, I’ve always thought of it as a dragon, with Desa ParkCity at its head and Subang Jaya and Puchong lying towards its tail. In this scenario, Kelana Jaya lies along the belly of the dragon, and the area has seen strong transaction performance, particularly with regard to single and double-storey landed homes,” says Adrian Un, CEO of property education and investment firm SkyBridge International Sdn Bhd.
“It’s a beautiful address, especially in terms of accessibility, with proximity to hotspots such as SS2, Subang, Damansara and, of course, Kuala Lumpur via the Federal. It is also well-served by the public rail system via the Taman Bahagia and Kelana Jaya LRT stations. About the only component missing is a gated and guarded development, which would add a lot to the perceived value of the neighbourhood and help it transition from a middle-class enclave to the medium upper strata.”
Malaysian Institute of Estate Agents (MIEA) past president Siva Shanker notes strong historical performances for commercial properties along much of the Golden Mile belt, particularly for shophouses in Taman Megah and Taman Mayang.
“End user activity is a strong indicator of property performance. You’ll find that shophouse tenants in the area rarely change, which means they are sustaining their businesses over the years despite high rental rates. This in turn indicates a large catchment population for the area, with established clientele and relationships,” he says.
In terms of larger trends affecting the Golden Mile, SkyBridge International’s Un remains bullish on the area’s outlook given its mature demographics, connectivity and product mix despite a fallow period for the property market, though he still anticipates short term shocks from the impending closure of Western Digital’s hard disk facility opposite Icon City on the LDP.
Looking to the Future
“We haven’t seen high volatility in terms of price, such as the fluctuations seen in Hong Kong or Singapore. From my point of view, a property bubble occurs when the market price for assets drops below the loan amount that purchasers took to acquire those assets, and with that in mind, I feel that that situation has not yet come to pass,” he says.
“However, there have been reports on the oversupply of unsold units, and I have to admit that there is a price mismatch in the market. The RM400,000 to RM500,000 tier appeals to the mass market, but looking at Generation Y, the income of millennials is not rising in tandem. This may apply to the Golden Mile as well, which is seeing an oversupply of higher-tier units currently, though this has yet to reach the psychological barrier of RM1,000 psf.”
Aside from the immediate blow to employment prospects in Kelana Jaya, Un notes that Western Digital’s upcoming closure will also affect the area’s rental segment, particularly older single and double-storey terrace homes in Kampung Tunku and Sungai Way providing accommodations to the facility’s industrial workers.
One likely scenario, he adds, is a short-term flood of these units on the market as owners seek to cut their losses ahead of the closure, with associated downward pressure on prices. However, this is balanced by the prospect of more affluent demographics gravitating to the area in the future, with benefits to its overall desirability, particularly with the prospect of more upmarket developments following major land transactions surrounding the Western Digital site.
Moving forward, MIEA’s Siva notes that traffic congestion must be addressed for the Golden Mile to fully live up to its name. “The area could develop further as an address if traffic management could be improved, as that belt of the LDP can be jammed day and night. That route is part of Kuala Lumpur’s larger ring road system, and traffic should be flowing a lot more smoothly along it, perhaps with the construction of more flyovers to ease congestion,” he concludes.