26/11/13 Mont’ Kiara to expand further By Mira Soyza RESURGENCE: As Segambut Dalam morphs into ‘North Kiara’ eventually, the expanded Mont’ Kiara is due to experience a second wave of appreciation In the early 1990’s, a man was offered by a real estate agent a 10-acre tract of land at the Segambut Dalam Rubber Estate. With no access roads and graced by nothing but undergrowth and rubber trees, the hilly land didn’t seem at all alluring to him. When the estate agent approached him again six months later to offer him the same tract of land, he somehow agreed to view it. With very little enthusiasm, he offered a ridiculously low price which surprisingly was accepted by the seller. Within a few months, he acquired one parcel of land after another and eventually accumulated about 100 acres of contiguous plots —the land was then named Mont’ Kiara. According to Datuk Alan Tong, the founding father of Mont’ Kiara, his son Datuk NK Tong who knew very little French was the one who invented the name. Out of the 52 names brought to the table during a brainstorming session, Mont’ Kiara was the one that survived the elimination process. Once its name had been decided, the hilly ground was flattened and an access road was constructed from the traffic light in Sri Hartamas stretching up to one and three quarter kilometers towards the area. The first phase, Mont’ Kiara Pines was completed in 1993. Launched at RM190 psf and consisting of 496 units, it received an overwhelming response. The name has proven to have a certain appeal to both local and foreign investors. Mont Kiara Pines lured 90 per cent local and 10 per cent Singaporean investors and consequently forged a strong brand name. “At the time, it was customary to attract investors from Singapore so we sold some over there. When Pines was launched, the property market was just getting out of the 1986 financial crisis. Then, condominiums in Bangsar were priced at over RM300 psf so even though our price was cheaper in comparison, we had to do a lot of promotion. Otherwise, people would have had no idea where Mont’ Kiara was situated,” shares Tong. Subsequently, the second phase saw the birth of Mont’ Kiara Palma with 400 units. Back then, both Pines and Palma were the only two condos that offered four tennis courts. “The price that we launched at was very attractive at the time and the people who purchased the units bought with either the intention to stay or rent out. There wasn’t much of speculation going on, they genuinely wanted a place to stay,” he reveals. Over the years, Mont’ Kiara has established itself as a prestigious residential precinct. Located about 15 minutes’ drive from Kuala Lumpur city centre and Petaling Jaya, and equipped with amenities, it became a popular choice among property buyers. Today, Mont’ Kiara accommodates three international schools - Garden International School, Mont’ Kiara International School and the French International School. There is also an abundance of offices, an extensive selection of F&B and entertainment outlets, boutiques, convenience stores and shopping centres. With the success of the first and second phases of Mont’ Kiara, other developers began flocking in to try their luck at this new property hotspot. Fast forward a few years, new developments continue to proliferate in the area and with it, the accompanying traffic congestion. ‘The elephant in the room’ Driving away from the first tier along the stretch of Jalan Kiara 1 towards the newer area at night, it is hard not to notice the dwindling numbers of lit windows. Mont’ Kiara’s occupancy rate has long been an issue lingering at the back of our minds— the elephant in the room. According to Tee Kai Shiang, Chief Executive Officer of Reapfield Properties Sdn Bhd (Mont’ Kiara Solaris), occupancy rate of the affluent area has dropped from 80 per cent to about 60 to 70 per cent in recent years; many speculated that this is a direct result of the oversupply arising from new developments. “I have to admit that Mont’ Kiara is oversupplied but occupancy does not relate to population. Investors are the main reason a development or area cannot reach a 100 per cent occupancy rate,” Tee says. “The vacant period of a unit tends to be longer since the ownership transfer process of a unit purchased by an expatriate takes longer than a local purchase. Therefore, some units can remain unoccupied for quite some time. And because the price appreciation is good, some foreign owners don’t even bother renting their units out and are willing to sacrifice rental yield. Some leave it vacant while some rent it at a lower price.” A real estate agent specialising in Mont’ Kiara area, Jonathan Doyou explains that although occupancy seems low, it is indeed not easy to obtain a sub-sale unit especially for the older condominiums. “Since Mont’ Kiara has been around for a long time and there are a lot of transfers of ownership going on, it’s difficult to keep track of the current owners. In the current market, there is a high demand for condominiums, therefore as soon as a unit is available, it gets snatched up very quickly.” Of course, from a house owner’s point of view, this is not bad news at all. Tee also explains that most of the properties purchased are for investment purpose. Today, Mont’ Kiara’s occupants consist of 60 per cent local and 40 per cent foreign investors which primarily comprise Singaporeans, Koreans and Japanese. “Expatriates who purchased properties in Mont’ Kiara are mostly working professionals being relocated or elderly couples and these people love to travel. So, sometimes these units are not lit up because they are away travelling.” When asked about the demand of units closer towards Segambut Dalam, Tee admits that properties located nearer Mont’ Kiara obviously get higher demand than those further away and leading towards the squatters area. Inevitably, new buyers often pick first tier properties as their first choice since these are closer to Solaris and other commercial centres. The first tier location is often regarded as the ‘true’ Mont’ Kiara because the main artery of the whole enclave is located within it. The sense of prestige it engenders no doubt rubs off on the new buyers, making them immune to the more expensive price tag they have to pay. This does not apply in all cases however. The launch of Verve Suites by Bukit Kiara Properties proves that given a good product by an established developer, and in this case, the developer consists of none other than Alan and son NK themselves, buyers will still snap them up. Although located at Jalan Kiara 5 which is several blocks away from the first tier, the first three towers of Verve Suites (Blocks A, B and C) have been fully sold and handed over to the owners. The last tower (Block D) launched in 2010 is 99 per cent sold. Currently, only three units are available for purchase, and all block D units will be handed over to the owners by the end of 2013. The pivotal point In the beginning, investors in Mont’ Kiara were made up of 30 to 50 per cent repeat buyers. These investors would purchase a new unit for their own stay every time a new development springs up. In 2007, Mont’ Kiara went through an evolution — it started attracting younger and middle- income groups of investors which created a shift in the buying trend. Unlike their predecessors, these investors were actively looking out for units for investment purpose. Today, Tee explains that smaller units in Mont’ Kiara are highly sought after by these young investors. “Young investors seeking a luxurious, high-end living come here looking for properties priced at below RM1 million. If you look at the transactions of Solaris Dutamas service apartments, almost 50 per cent of them involve the smaller units.” Real estate agent Doyou affirms that smaller units receive higher demand since these are the ones within their affordability level. “The price point of current launches around other parts of KL is reaching a new high. Seeing that the smaller units in Mont’ Kiara are within the same price range and yet are situated at a more affluent neighbourhood, they opt for those instead —especially units priced between RM600,000 and RM800,000.” Chief Operating Officer of Henry Butcher Marketing Sdn Bhd, Tang Chee Meng comments that the perception investors have of Mont’ Kiara (oversupply issue) has resulted in some hesitancy in investing especially in large-sized units which are beyond the affordability limits of most locals. “However, due to its popularity with expatriates, Mont’ Kiara has enjoyed good rental demand and rental yields. As a result, those who have invested here have enjoyed not only attractive rental yields but decent capital appreciation as well.” Market analysts reveal that in the last two years, there was an increase of between 15 and 30 per cent in house prices in Kuala Lumpur and selected areas in the Klang Valley such as Puchong, Hartamas and Mont’ Kiara. Data by Reapfield Mont’ Kiara shows that transaction prices of high-rise units were averaging at RM350 psf in 2000 and by the time 2013 came by, prices shot up to between RM650 and RM1,500 psf while rental yield stands at approximately six per cent. Much like everywhere else in the Klang Valley, landed properties are highly sought after in Mont’ Kiara. In 2010, Duta Tropika which was transacting at RM3.5 million enjoyed 14 per cent price appreciation to RM4 million within three years. Meanwhile, in the commercial sector, offices in Solaris that were priced at RM550 psf experienced a steady climb to RM700 psf early this year, while the commercial rental yield averages at 4 to 5 per cent. “Buyers who purchased back in 2000 of course enjoyed the most appreciation which is 100 per cent. Take Mont’ Kiara Bayu, for example, it started out at 200 to 300 psf and now it is priced at 800 psf. That is almost four times of appreciation,” Tee reveals. So far, Mont’ Kiara has definitely proven that it is able to stand the test of time — and perception. Taking Verve Suites as an example, Alan Tong gives an insight on how Mont’ Kiara properties are faring at the moment. “With Verve Suites, looking at the three blocks that we have completed, there are 683 units yet you can’t get units for rental, it is fully occupied. We have real estate agents going into the management office asking for units for rental and the answer is, “no, we don’t have any”. Even I am quite surprised. Block C, for example, reached 80 to 90 per cent occupancy within six months. If it was back then (the launch of Mont’ Kiara Pine), 80 to 90 per cent occupancy wasn’t surprising since supply was limited. But today, with 10 other developers within Mont’ Kiara, it shows that the tenants and purchasers really like the product. The sub-sale units get snapped up really fast, they don’t stay in the market for a very long time.” Tong adds, “The economy has been good for so many years, therefore, the purchasing power has increased. Outside, the prices have gone up because of the increase in demand. The brand has been established for so many years especially among foreigners. When they come in and they like the place, they tend to recommend it to their friends. Even the embassy would suggest for them to stay in Mont’ Kiara. “Of course, the Mont’ Kiara address, which is associated with luxury and high-end lifestyle, and living within an international community, provides buyers with a sense of exclusivity and security.” Although the new developments are launched with a hefty price tag, they are more often than not delivered with premium quality. This creates a high benchmark for other developers and at the same time pushes the value of the older developments up. The properties that are lagging behind will eventually catch up as buyers that are unable to afford the expensive range settle for properties which have not appreciated much in price. Going forward As sturdy as Mont’ Kiara is, there are still several areas that could be improved. The issues of connectivity, traffic congestion (like many other parts of the Klang Valley) and the scarcity of land, although not strong enough to drive prices down, can be a hindrance in Mont’ Kiara reaching its full potential. As it is, the traffic congestion in Mont’ Kiara is a source of annoyance to the existing residents. To solve the congestion issue, there are plans to open up an alternate route parallel to Jalan Kiara between Plaza Mont’ Kiara and Lanai Kiara, leading towards Segambut which will be connecting at the intersection between MK28 and Mont’ Kiara Meridin. This new route will bypass the schools and commercial areas, simultaneously diverting traffic away from Jalan Kiara, especially during peak hours. The construction of MRT2 Circle Line that connects East Sentul, Mid Valley, Bangsar, Mont’ Kiara, Matrade Centre and Ampang, is expected to improve Mont’ Kiara’s connectivity. To be unveiled by the end of this year, the line is expected to boost up housing and rental values as well as occupancy rates of areas within proximity of the stations. In map maker Ho Chin Soon’s opinion, Mont’ Kiara will definitely reap the spillover benefit of the new line. “Mont’ Kiara hinges on the MRT2 circle line. Once the alignment and exact location of the station is confirmed, to me, it will be a game changer if and when they announce that there will be a station within walking distance from Plaza Mont’ Kiara. And then you will see the amount of new condominiums sprouting up in its surroundings.” Ho adds, “Matrade is just next to Mont’ Kiara, and there will be an MRT station on the southern boundary of the KL Metropolis side. With the increase in connectivity and accessibility which are factors that affect value, rental price will rise in tandem.” Since the Mont’ Kiara enclave is fast running out of land to establish new developments, it’s a burning question whether or not the rush to meet demand will accelerate the spillover effect further, particularly in the area of Segambut Dalam. As it is, the majority of the lands in Segambut have been acquired by property developers and there are already existing projects that have adopted the name ‘Kiara’ as part of their address. “It has been growing and has gone across to the north in Segambut where they are now calling it Kiara North. It happened to Bangsar before where at one point, the prices there couldn’t grow and when it spilled over to Kerinchi, they started calling it Kerinchi Bangsar South. And it turned out to be a wonderful place, values have gone up and those who bought there are happy with the appreciation,” shares Ho. “Mont’ Kiara has spilled over to the parts of Segambut that is easy to develop, since parts of Segambut are a little bit hilly. Property development companies own a majority of the land banks there. Right now, Segambut is already slowly being integrated as part of Mont’ Kiara. I can’t predict the future whether or not the whole of Segambut will or will not be integrated but there could be a natural progression.” Tang of Henry Butcher adopts a neutral stance on the future of Mont’ Kiara’s properties. “Land is running out in Mont‘ Kiara and the newer developments are actually located in or closer towards the Segambut Dalam area, away from the main Mont’ Kiara hub. But there is still potential to invest in Mont‘ Kiara if the project is located within or closer to the first tier, especially if the unit sizes are not too large (less than 1,500 sq ft) and if the project‘s pricing is comparable with those in the immediate neighbourhood.” On the other hand, Tee of Reapfield is optimistic of the potential absorption of Segambut Dalam into the Mont’ Kiara enclave. “UOA Group has already launched a project in Segambut Dalam with the name ‘North Kiara Hills’. I believe at some point the integration of Segambut Dalam will happen. But the location is quite different, therefore, there will be a difference in price range as well. And with the help of new catalysts, it will affect prices and Mont’ Kiara will experience a second wave of appreciation.” With the improvement in connectivity and accessibility, the availability of lands in Segambut Dalam and ample supply of retail and commercial centres, Mont’ Kiara will grow to be even more self-sufficient. Tee foresees selective condominiums in Mont’ Kiara to continuously be in high demand. “Given its steady increase in price over the years, capital appreciation might thrive but rental yield might decline,” he observes. Data from Ho Chin Soon research shows that Mont’ Kiara has had a mismatch of supply and demand situation. But for the past 20 years, it has been growing at 19 per cent per annum on a compounded basis. “Sometimes, the yield goes up and sometimes it goes down. Given the nature of supply and demand, it will work itself out in the long run,” Ho assures. NST.
Posted on: Tue, 26 Nov 2013 02:27:42 +0000
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