RM1,000 psf could soon be the new benchmark for residential property developments in PJ

IT IS not a question of whether the value of residential property in Petaling Jaya will hit RM1,000 per square foot, but more a question of when.

Recently, while attending a property event in Ipoh, Christopher Boyd, executive chairman of CB Richard Ellis (CBRE) Malaysia, commented to the audience that it is only a matter of time before residential property prices in PJ will top RM1,000 psf.

Intrigued by what was said by Boyd — a veteran in the property industry with over 30 years in Malaysia and another 12 years of practice in the UK, Australia and Singapore — we have been looking out for signs when such a phenomenon will likely occur.

Several recent developments appear to propel property prices to that level. Obviously, we can’t just look at residential projects alone, but also property developments that affect demographic changes and factors that affect property developments.

Catalyst: Tower 4 and Tower 5 of Jaya33 Cybercentre will have 350,000sq ft of lettable space out of the gross of 500,000sq ft when completed in December this year.

Section 13

Thursday’s launch of the latest phase of the Jaya33 commercial development in PJ Section 13, known as Jaya33 Cybercentre, appears to be another catalyst. Although this development is all about leasing “hyperoffice” space and not a residential development, the ramifications are manifold.

Just before the launch, Jaya33 marketing director L.C. Toh and general manager Tan Kok Leong explained why their project was no ordinary office building development.

The two 22-storey buildings — Tower 4 and Tower 5 — will have 350,000 sq ft of lettable space out of the gross of 500,000 sq ft when completed in December this year. The first two storeys will be retail space of 23,000 sq ft in total and the next six storeys will be parking space. The development site for the two new towers spans 2.2 acres.

Good investment: Jaya33 marketing director L.C. Toh (right) and general manager Tan Kok Leong.

A data centre, which is located on Level 9, 10 and 11 of Tower 5, will offer 57,000 sq ft of space that will meet Tier 111 Data Centre requirements. Said to be the most sophisticated centre of its kind in PJ, it is equipped with its own 33kva substation and a dual source of power intake supplied by Tenaga Nasional Bhd. This means that there are fail-safe measures to protect critical, high-tech operations crucial to multinationals, especially corporations dealing with information and communications technologies.

Rental rates are RM8 psf for the ground floor, RM6 psf for the first floor and between RM7.50 and RM8 psf for the data centre. The general office space rental rate is RM4.50 psf.

“To put in a 33kva substation is no small peanuts,” said Toh. “And the additional upgrade to a dual power source means an additional RM8mil investment. The entire development cost for Tower 4 and Tower 5 amounts to RM185mil.”

She added: “We are looking at what the market needs rather than following others. For example, when we coined the term, ‘hyperoffice’, everyone else followed suit.”

Controversial: The site of the PKNS building in PJ has been earmarked for re-development.

Jaya 33 Sdn Bhd has teamed up with MyTelehaus Sdn Bhd to develop the data centre at Jaya33.

With over 30 years of experience in developing data centres, MyTelehaus is also a “wholesaler” of data centre space in the country.

Tan pointed out that the Government’s Economic Transformation Programme has 131 Entry Point Projects and Jaya33 Cybercentre is one of MyTelehause’s data centre locations. The development of data centres is part of the national strategy to position Malaysia as a world-class hub for such centres. The cybercentre will also be compliant with MSC requirements as the application for MSC status is in the final stages of approval.

What developments like this mean is that when such buildings are successfully leased out, the spin-off economic effects will be apparent. How the location of regional headquarters — targeted by the leasing agents of Jaya33 Cybercentre — affect the residential property market in PJ will be pretty obvious. And there are already property projects under way to capitalise on such a scenario.

In progress: The latest phase of development of the Damansara Uptown commercial centre has commenced.

PJ State

But not everyone in PJ welcomes the mushrooming of property developments or re-development. For instance, objections from PJ residents’ associations against “massive” projects seem to have stalled the re-development of the PKNS (Selangor State Development Corporation) headquarters involving a 9.85-acre site in Section 52 or PJ State. But then again, this project has also been mired in other controversies.

But things seem to be moving along with the V Square project on 2.6-acre site in Section 14 and the 33-storey PJ Exchange office tower, also in Section 52.

And back in PJ Section 13, an industrial zone, which has increasingly seen factories replaced by commercial properties, the latest phase of the Jaya One mixed development seems to be progressing well, with only 15% of the 400 retail, residential and office units left for sale. Specifically, there 43 residential units, 16 office units and eight retail units still available.

The residential units are in the form of 240 serviced apartments within two blocks. The units are selling at between RM600 and RM650 psf.

Damansara Uptown

Meanwhile, at between RM750 and RM800 psf, the 380 serviced apartments at the new Uptown Residences development in Damansara Uptown is another upscale project.

Unlike many leasehold sites in PJ, such as those in Section 13, this project is on freehold land and is undertaken by Dutamasa Sdn Bhd, a subsidiary of the See Hoy Chan group.

The apartments in Uptown Residences span two residential towers and come in size of 1,600sq ft, 1,900sq ft, 2,200sq ft and 2,500sq ft. The Family Tower will have 206 units while the Lifestyle Tower will have 174 units. The expected date of completion is by December 2014.

In tandem with the rise of Uptown Residences will be the development of a 400,000 sq ft mall and five commercial towers, which are said to be the future locations for multinational corporations such as Deloitte, FedEx, L’Oreal, Lenovo, Symantec and Unisys.

See Hoy Chan has also awarded CapitaLand’s subsidiary — The Ascott Ltd — a contract to manage 200 “serviced residences” under the Somerset brand. The property will offer furnished apartments ranging from studio units as well as one- and two-bedroom units with a fully-equipped kitchen. The Somerset Damansara Uptown Petaling Jaya is expected to open in 2016.

Barrier

Tracking the prices of residential property developments in PJ, it appears it may not be long before the psychological barrier of RM1,000 psf will be breached. It wasn’t that long ago that KLCC condo prices were below RM1,000 psf.

And even as we ponder such a scenario, developers are already revising their valuation figures and yields. But will the earning capacity of property buyers in general, especially young wage-earners — increase in tandem?

By The Star Online

Source : http://thestar.com.my/metro/story.asp?file=/2012/5/19/metrobiz/11313581