Property
Healthy outlook for Puchong
Joseph Wong 
IOI Properties is a major developer in Puchong and opened its IOI Mall in 1998
LIKE many areas regarded as hotspots when the property market peaked in 2012-13, Puchong’s popularity seems to be tapering off in the current slowdown. However, its outlook remains positive as property demand is still relatively healthy.

Puchong is a sprawling suburb spread over some 5,200ha, with its boundaries stretching from Bandar Sunway in the north to Bandar Saujana Putra in the south. On the east is the Ayer Hitam Forest Reserve and to the west are Putra Heights and Kota Kemuning.

Given its large footprint, Puchong has many property types and diverse income levels among its population.

While reasonable property prices have been the major draw point, the area does have upscale and luxury homes.

Adzman says purchasers are always on the look-out for good deals and assistance in getting loans

“Puchong comprises a mixture of lower-end value properties built in the 90s, and attention on mid-value properties started only when Bandar Kinrara was developed in the mid-90s,” ExaStrata Solutions Sdn Bhd chief real estate consultant Adzman Shah Mohd Ariffin tells FocusM.

“It was only in the last seven years that other developers started to pitch high-end developments tucked away behind older lower-end ones. It is therefore rather difficult to pinpoint areas which are performing or not performing well,” he says.

He notes that certain developments with better workmanship, effective management teams and good concepts and facilities tend to fare better.

As Puchong is a very big area, it would be unfair to judge it as a whole, says Doshi

Spread over such a vast area, it would be unfair to judge Puchong as a whole if certain pockets are not performing as well, says property investment coach and independent financial trainer Milan Doshi.

Reapfield Properties (Puchong) Sdn Bhd sales division head Wing F Lee concurs, saying Puchong’s sheer size means that the market performance of one area may differ from another.

“Puchong is huge with properties in all residential, commercial and industrial segments. It also has properties from low- to high-end segments. So it is normal for certain segments to perform better at different times,” he says.


Impact of big players

While Puchong has drawn many developers in recent years, bigger players like IOI Properties Group Bhd and SP Setia Bhd have made a bigger impact on the market.

IOI Properties’ township Bandar Puchong Jaya, with IOI Mall Puchong opening in 1998, was a major catalyst. The mall was significant as it became a drawing force, says a property investor.

In addition, the group has several other key projects such as Bandar Puchong Jaya, Bandar Puteri Puchong and 16 Sierra which have a combined gross development value (GDV) of RM5.2 bil, he says.

SP Setia’s mixed development SetiaWalk, with a GDV of RM1 bil, is another big draw for the suburb, along with its other big projects which are worth billions of ringgit, he adds.

He points out that other major players include LBS Bina Group Bhd with its ongoing RM5.5 bil Bandar Saujana Putra development and RM3.6 bil D’Island Residence.

Bukit Hitam Development Sdn Bhd, a member of TAHPS Group Bhd, has also joined the fray with its RM10 bil development in Bukit Puchong.

The Star Light Rail Transit (LRT) line extension running through Puchong to its final destination in Putra Heights has helped to keep property prices healthy, particularly those near LRT stations, says the investor.

Doshi says the opening of the Star LRT Puchong stations have helped a little to keep prices stable.

“I think the station near IOI mall is the busiest in Puchong. We need to see the peak hour crowds entering and exiting the Puchong stations to get a better feel of the LRT impact,” he adds.

According to online property portal PropSocial, many buyers in Puchong, predominantly Malays (39.11%) and Chinese (36.89%), are middle-income earners with the LRT connectivity serving as a key catalyst.


‘Dual market’ pricing

Reapfield’s Wing says Puchong’s outlook generally remains stable and healthy.

“Although we are seeing some slowdown in the number of transactions, it is due to the overall market sentiment.”

Based on past transactions, Puchong experienced two distinct sets of market values, several property observers point out. The areas on the Kuala Lumpur side tend to fare better than those in Selangor, notes one of them.

He says Puchong is under the jurisdiction of four local authorities – Kuala Lumpur City Hall (DBKL), Subang Jaya Municipal Council (MPSJ), Sepang Municipal Council (MPSepang) and Kuala Langat District Council (MDKL).

The fifth to seventh mile stretch of Jalan Puchong is under DBKL, while Bandar Kinrara to the 16th mile is under MPSJ, he says.

Bukit Puchong 2, 16 Sierra, Pulau Meranti, Bandar Nusaputra, Taman Putra Perdana and Taman Mas are under MPSepang, and the remaining areas near Bandar Saujana Putra such as Taman Dagang Mas, Koi Prima and Putra Industrial Park are under MDKL.

According to online property website bricks.my, from May 2016 to April 2017, the median price for transacted residential properties was RM389 per sq ft (psf) on the Kuala Lumpur side and RM372 psf in Selangor, and for commercial properties, RM657 psf and RM459 psf respectively.

16 Sierra in Puchong South is developed by IOI Properties

Interestingly, it is the reverse for industrial properties, with Kuala Lumpur’s median price at RM201 psf and Selangor side at RM438 psf.

According to PropSocial, from May 2015 to April 2017, the average transacted price for non-landed residential properties was RM350 psf, landed residential properties (RM79 psf) and commercial properties (RM417 psf).

It says the sharp disparity between non-landed and landed residential properties was due to the bigger number of low-cost landed properties transacted during the 24-month period.

The figures were based on 321 non-landed, 441 landed and 54 commercial units.

Sellers’ average asking price for the three property types were RM412.52, RM422.93 and RM533.17 psf respectively. The average rental listings were RM1.48, RM4.11 and RM4.69 psf respectively.


Thinner margins

ExaStrata’s Adzman says Puchong is seen as an established satellite township with growth opportunities given its good highway linkages and public transportation, namely the LRT.

“The spillover from Bandar Sunway and Old Klang Road and its location fronting the corridors between Bandar Sunway, Putrajaya, Old Klang Road and Bukit Jalil makes it a popular residential area for residents and investors,” he says.

He notes that Puchong’s rapid development has resulted in a drastic increase in supply of new residential and commercial properties at relatively higher prices.

“This has impacted the secondary market where the stock is more than five to 10 years old. It has been noted that developers have recently also been launching more affordable housing and more competitively-priced new products to entice purchasers.

“This has started to affect prices in the secondary or sub-sale market in Puchong which will dampen further due to large supply available for sale by investors,” he says.

Sub-sale prices have generally been on thinner margins lately on the back of lower volume, says Adzman.

“This is due to poorer demand and stronger buyer’s market. Difficulty in getting loans is also affecting success rate in closing.”


Opportunities for good deals

The dampened market has thrown up opportunities for buyers as some developers are giving huge discounts for completed projects or those nearing completion.

One purchaser says she secured a 19% discount for a condominium unit from a prominent developer in Puchong South.

Doshi points out that the property downturn has affected many developers and this situation “goes to show how desperate [some developers] are to close sales”.

Adzman says purchasers are always on the look-out for good deals and assistance in getting loans. “The practice has always been to give good discounts but at the same time, help purchasers to get better loan margins on the purchase prices.

“With the current lower take-up rate for new developments by lesser-known developers, they have no choice but to accommodate market requirements to sell their products by giving sweeteners,” he adds.

Wing says the recent drop in transaction volume in Puchong has made everyone jittery, but adds that the overall market is similarly affected too.

Buyers and investors should not assume that such cases are happening in Puchong , he says. “The property prices [in Puchong] are generally holding up well,” he adds.

However, Wing says buyers are fortunate to get good discounts, especially if the projects are nearing completion.

“They don’t have to wait so long for their units and also get to save interest payments during the construction period.”


New areas opening up

SEVERAL developers including Bukit Hitam Development Sdn Bhd and LBS Bina Group Bhd are launching projects in Puchong this year.

“There are some exciting new projects in the pipeline which include new landed properties. We are working closely with a developer to price them competitively in the market,” Reapfield Properties (Puchong) Sdn Bhd sales division head Wing F Lee tells FocusM.

He says developers are still bullish and those with land bank in Puchong will have the upper hand.

They include TAHPS Group Bhd which has about 242.81ha of freehold land in Bukit Puchong, LBS Bina’s 336ha Bandar Saujana Putra and 71ha D’Island Residence, and IOI Properties Bhd’s sizable land bank.

Bukit Hitam Development, TAHPS Group’s property arm , is looking to launch a landed property project in Bukit Puchong with a gross development value (GDV) of more than RM100 mil by the fourth quarter.

The development, part of its planned RM10 bil Bukit Puchong township announced in 2015, will have 140 units of gated landed houses on 20.23ha.

Bukit Hitam Development plans to develop its land into a self-sufficient township, consisting of residential, high-rise and landed properties, as well as parks, commercial type developments such as specialty shops and a healthcare centre.

LBS Bina is launching its BSP 6 serviced apartments in Bandar Saujana Putra which has a GDV of RM388 mil. It is also launching another project called Desiran Bayu in Puchong.

The opening of the IOI Puchong Jaya LRT station next to IOI Mall Puchong has boosted accessibility to the mall. This in turn also provides an opportunity for IOI Properties to consider redevelopment opportunities, says the group.

It notes that one option is a transit-oriented development, which would allow the group to optimise the mix of retail, hospitality, commercial and residential spaces on existing land bank. This will create a seamlessly integrated development to provide day-to-day convenience and connectivity via the LRT line.

The group’s Bandar Puteri Puchong township is also close to an LRT station which became operational last year, making potential new launches more attractive.

IOI Properties launched the mixed-development Le Pavillion Residences featuring serviced apartments with retail outlets in 2015, in anticipation of the completion of the LRT extension.

Areas along South Klang Valley Expressway will probably be the focus of future development, predicts ExaStrata Solutions Sdn Bhd chief real estate consultant Adzman Shah Mohd Ariffin.

“One must also bear in mind that areas such as Seri Kembangan and Bukit Jalil are coming up with major integrated townships and will be the areas which will draw attention away from Puchong.

“[However], Bukit Hitam Development still has a large land bank and is still bullish. Bandar Kinrara has a few parcels of development land left which can be developed,” he says.

This article first appeared in Focus Malaysia Issue 241.