Selangor remains the hotspot state
By Yanika Liew
Key players in the property industry remain confident of Selangor’s continued status as a prime investment area, with no signs of the trend changing. Selangor’s prominence was well-recorded even during the pandemic, when in 2021, property transactions saw an increase of 10.7% in volume in comparison to 2020, according to the National Property Information Centre (Napic).
“Selangor was the top contributor to both volume, 24.5%, and value, 34.4%, of transactions while Kuala Lumpur ranked the second highest in terms of contribution to the value of transactions, with 12.6 % share. This has shown that the residential sub-sector continued to propel the overall residential market in Selangor,” Real Estate and Housing Developers’ Association Malaysia (Rehda) Selangor chairman Datuk Zaini Yusoff said.
Selangor, alongside Kuala Lumpur, forms a significant part of the Klang Valley area, with major commercial and business activities focused on Kuala Lumpur and its immediate surroundings. Its strategic location, near ports, railways and business hubs, lead to well-developed logistics infrastructure and job opportunities.
Part of the fact is that Selangor is the country’s most populous state with a population of about 7.0 million people. Knight Frank Malaysia research and consultancy senior executive director Judy Ong pointed out that as of 2022, the state accounts for 21.6% of Malaysia’s total population of 32.7 million.
According to Savills Malaysia Sdn Bhd group managing director Datuk Paul Khong, the Klang Valley growth corridor acts as Malaysia’s main economic backbone, with a supply chain that ranges from the commercial offices in Kuala Lumpur city to the industrial factories and warehouses at Port Klang.
The traffic surrounding Kuala Lumpur and the difference in property costs between the city-state and Selangor is a large motive behind Selangor’s popularity as it proves to be the more affordable option. Napic’s House Price Index cited the average terraced house in Selangor to be RM556,483 as compared to Kuala Lumpur’s at RM876,447.
“Buying property in Kuala Lumpur as an investor is going to be very expensive with no guarantee of significant returns due to the pandemic situation. Selangor, on the other hand, offers more opportunities for future growth in price,” Zaini said.
He pointed to developing townships such as Bukit Beruntung as one of the best places for retired expatriates to settle for a life of peace and quiet, without sacrificing any of the modern life comforts, with other nearby locations like Cheras, Shah Alam and Puchong holding similar charms.
“Many companies are locating their headquarters in Selangor from the KL city centre due to cheaper rentals and operation costs. Although prices are cheaper in these areas than Bangsar and Mont Kiara, the limitations set by the new housing laws on property purchase by foreigners may offset this,” Khong said.
According to the Department of Valuation and Property Services (JPPH), Selangor accounted for 26% of residential property transactions in the country during the first half of 2021, followed by Johor (14.4%) and Kedah (17.7%).
While the Kuala Lumpur city centre held the highest capital value for developments, the aforementioned relative affordability pushed both developers and home buyers further and further away. There has been an increase in residential developments in the outskirts of the city, however, this must also be followed by the relevant supporting infrastructure and amenities.
Urbanisation, infrastructure, technology
There are multiple factors to the state’s popularity, especially in the recent Covid-19 period, which boosted technological advancements further, including, Khong pointed out, catalytic transportation and infrastructure projects, such as railways, highways and 5G networks.
“We foresee Selangor to remain as the top favourite to all categories of property investors due to its natural inherent and strategic locational factor complimenting the KL City Centre. This is further enhanced by various economic reasons such as relatively lower costs of living, cheaper rentals and competitive capital prices,” Khong said.
These factors have further driven up the decentralisation elements amongst office dwellers and homeowners for a better work-life balance in Selangor.
“Selangor is a big state and developments will continue to move and radiate outwards from the main Klang Valley Conurbation and the KL city centre,” Khong said.
As developments move outwards, more infrastructure is being built to support Malaysia’s urbanisation, townships have become more connected. Khong pointed to areas such as Kuala Lumpur, Petaling Jaya, Subang, Shah Alam, Klang and Port Klang, which saw thousands of commuters daily, linked together by mega highways and new expressways, making all parts of the state highly accessible.
“Moving further out of KL, we continue to see Rawang as a hotspot for on-going and upcoming master-planned township developments, led by branded developers of Guocoland, Gamuda, BRDB, Mah Sing, Scientex and Low Yat Group,” Khong said.
“To the south side of Selangor especially in the Puchong localities, we are also witnessing several new master-planned townships in the making led by EcoWorld, Tropicana, IJM, Ayer and LBS,” he added.
No chance of shifting trends
Khong pointed out that Selangor’s hotspot status was here to stay, with Zaini providing a resolute no to the possibility of a shifting trend, especially with the vision of the state government to transform Selangor into a liveable smart state in Asean by 2025.
“The concept has continued to gain popularity and attract more people to choose Selangor as their destination to work and stay. The adoption of digital technology becomes an important living tool for all generations. Rehda Selangor will continue to support the state government to achieve the Smart Digital Infrastructure, Smart Government, Smart Economy and Smart Communities aspirations,” Zaini said.
These would likely be centred around popular locations in Selangor considered evergreen locations, such as the SS2 and SS21 areas, Damansara Utama, Damansara Jaya, Bandar Utama and the Tropicana Golf and Country Club vicinities. Khong pointed out that growth has continued to extend further and beyond into areas like Sunway, Puchong, USJ and Bukit Jalil vicinities and more.
“Locations such as Kajang-Semenyih and Klang (Bandar Bukit Raja), Damansara Perdana, Kota Damansara, and Bandar Setia Alam are still the top popular hotspots for property. These places offer attractive rental yields and capital appreciation, which bodes well for a long-term investment strategy,” Zaini said.
“The soon completed Dash highway will improve the travelling time from places like Elmina and Denai Alam, is another area of interest of buyers,” he added.
In addition, there have been innovative new ideas in the property industry surrounding township development, such as the theme park concept, illustrated in Gamuda Cove and Gamuda Gardens. These ideas aim to offer a unique living experience to its investors and homeowners, taking into account a creative master plan, landscape, and concept.
“Districts of Petaling, Sepang and Hulu Langat are the popular hotspots for buyers and accounted for about 65% of the total sales under the Home Ownership Campaign (HOC),” Zaini said.
Following the country’s transition to the endemic phase of Covid-19, coupled with the reopening of its international borders, Ong noted that Knight Frank foresees more economic activities moving forward, with the expectation of improvement for the country’s property market although there are downside risks associated with the oversupplied market in certain sub-sectors, locations, rising inflation and geopolitical tensions, among others.
“The government is urged to offer more property-related incentives in the upcoming Budget 2023, which is set to be tabled on October 7, to boost the property market and ease the cost of doing business,” Ong said.
Guide to investing in Selangor
When it comes to investing in property, most people think of residential landed properties, but the property market encompasses other subsectors, such as the commercial and industrial sectors, which are seeing a similar increased interest as the economy recovers.
“While residential property is often a first-timer’s choice, the purchaser should also consider other types of properties. Many investors cite rental income as a reason to invest in housing, but commercial properties could offer better earning potential,” Real Estate and Housing Developers’ Association Malaysia (Rehda) Selangor chairman Datuk Zaini Yusoff said.
“Other options are retail investments or industrial properties. The attraction of industrial real estate assets is that as far as leases go, rental periods tend to be longer than for residential units and usually require less upkeep and initial outlay,” he added.
Factors that affect the decision of purchase are location, security, distance to the workplace, and the developer of the property itself.
“Within Selangor, buyers are highly recommended to acquire choice properties in well-planned and strategically located townships and also consider products built by branded developers. Landed properties with ease of access to inter-district and interstate highways or those who prefer high-rise residences but located closer to city centres with Transit Oriented Development (TOD) benefits. Transportation nodes and amenities including retail outlets and schools are all unique selling points,” Khong said.
He noted that first-time homebuyers should enjoy the full benefit of the current stamp duty exemptions under the i-Miliki initiatives for properties priced up to RM500,000, and 50% exemptions for properties priced between RM500,0001 and RM1mil, together with the various home-ownership incentives extended by developers.
“Seasoned institutional investors may consider venturing into the warehousing, logistics space and also data centres in response to the rise of e-commerce and the need for dedicated buildings to support the growing demand for shared data services, data storage infrastructure, cloud computing and business-IT operation continuity plans,” he added.
Of course, Zaini impressed on the importance of the purchaser themselves. Those looking to invest would find an easier time with a good financial standing and repayment record, as banks will more likely offer a higher Loan-To-Value (LTV) for a better rate for the mortgage.
“(The) purchaser shall take note of fees such as the Sale and Purchase Agreement (SPA) fees, stamp duties, down payment, and property agent fees among others while making the purchase,” Zaini said.
“The cost of maintaining the home after moving into is another area that purchaser shall be aware of. Things like renovation, maintenance fees, quit rent and parcel rent can add up to more than you expect,” he added.
As always, investors should conduct market research before buying their chosen property.
Knight Frank Malaysia research and consultancy senior executive director Judy Ong said that this involves checking with relevant government bodies, state agencies and local authorities on policy-related matters as well as planning rules and regulations.
“Engage with trustworthy and registered property consultants for property-related advice and services,” she said.
Zaini added that when it comes to property, it is not about which asset type is better, but the goal of the purchaser. Whether it is primarily about asset acquisition, improving living lifestyle, value appreciation, generating income or others, purchasers should know what they want before making their purchase.