Time for Tropicana to shine

EVER since the Tropicana Golf & Country Resort opened in 1996, Petaling Jaya’s PJU 3, PJU 4 and PJU 5 areas (see map) adjacent to the golf resort residential enclave have been considered as part of what is now popularly known as the Tropicana enclave.

Tropicana and the adjacent Sunway Damansara are straddled by Kota Damansara, Bandar Utama and Kelana Jaya. Developed mostly by Tropicana Corp Bhd (Tropicana) and Sunway Bhd (Sunway Damansara), the area is dominated by the exclusive Tropicana Golf & Country Resort and Tropicana Indah Resort Homes, offering two golf courses and good access to the amenities in neighbouring Kota Damansara, and the New Klang Valley Expressway (NKVE).

Tropicana Golf & Country Resort is a 625-acre gated and guarded community which is now home to multinational residents attracted to resort-style living set amidst rolling green, and anchored by the 380,000-sq ft Tropicana Clubhouse with the 27-hole East and West championship golf courses adjacent to it. Meanwhile, Tropicana Indah Resort Homes is located on 409 acres of prime land with abundant natural greenery, right next to the Tropicana Golf & Country Resort. The resort development comprises over 1,700 residential units, business parks and smart schools.

The Tropicana area is now a trendy address that consists a mix of high-end residences such as bungalows, luxury high-rises with several older low to medium-cost apartments as well as terraced houses.

Property prices in Tropicana and Sunway Damansara have increased tremendously over the past decade as more people become attracted by the amenities offered in the vicinity, including higher education institutions, hospitals, commercial areas, malls and the soon-to-be completed mass rapid transit (MRT) station.

According to theedgeproperty.com’s analysis of transactions from 2012 to 3Q2014, prices of properties in both Tropicana and Sunway Damansara have moved up significantly.

The data shows that home values have been buoyed by the growing number of amenities in the area as well as in nearby Kota Damansara. One strong catalyst is the construction of the MRT line in this part of the Klang Valley.

As of 3Q2014, the average transacted price for non-landed residential property in Tropicana and Sunway Damansara reached RM539 psf, up 10.5% from RM488 psf in 3Q2013. This followed even stronger growth of 23.1% in the preceding year.

Director of LaurelCap Sdn Bhd Stanley Toh says Tropicana has been a hot pick for property buyers in Petaling Jaya due to its location.

“Generally, Tropicana and Sunway Damansara are sought-after locations in Petaling Jaya, because they are surrounded by many established and vibrant residential and commercial developments such as Bandar Utama, Damansara Utama, Damansara Jaya and Kota Damansara,” says Toh, adding that the current average transaction price psf of high-rise homes has hit RM550 to RM650 psf.

‘Yet to shine’

Although Tropicana and Sunway Damansara are mature townships with a full range of amenities, real estate agent Vincent Lim of Rina Properties Sdn Bhd does not recommend investing in the area unless buyers have strong holding power.

“I will not deny that property investors are constantly attracted to Tropicana and Sunway Damansara, but most of them are only surveying [the area]. The current property market situation in the said areas is one where supply is more than demand,” says Lim, who specialises in the area.

“There has been a real slowdown here since the implementation of the Goods and Services Tax, as buyers turn cautious and tend to wait and watch the market. I don’t think the average transacted price psf has increased very significantly since last year. This may be good news to homebuyers, but not to investors,” Lim adds.

One reason there is more supply than demand in the area is because of low rental yields, which Lim says is less than 5% on average. The area deters tenants due to the current bad road conditions as well as dusty and noisy environment as a result of the MRT line construction. The traffic congestion doesn’t help as well.

“Some of my clients are letting go of their units because they’ve failed to find tenants. One unit has been empty for the past six months. He’s selling slightly under market value now, but that is because he’s the first owner of the unit in a new development,” Lim notes.

“I will not recommend investors, especially those looking for instant returns, to get a unit here even though now is possibly the right time and right price to get one, if one has strong holding power. For those looking to own their own home, now could also be the best time to get a unit,” Lim advises.

After all, Lim describes Tropicana and Sunway Damansara as “one of the best places to live” in Petaling Jaya given the ample amenities in and around them, as well as their connectivity to several highways, such as the NKVE, Penchala Link and Lebuhraya Damansara–Puchong.

   

“Indeed, Tropicana and Sunway Damansara are nice places to live, work and play. The RM580 to RM620 average price psf is very reasonable for what they can offer. I believe anyone can tell the average price psf will definitely surge up once the MRT is completed, which will not only ease traffic flow and improve the current environment but also bring more people into the area.

“If you think Tropicana and Sunway Damansara’s property market is shining, I would say it has yet to shine, but very soon,” says Lim.

Meanwhile CBD Properties (KD) Sdn Bhd executive director Daphne Chan concurs that the current housing rental market in Tropicana and Sunway Damansara is slow, with the average rental yield at 3% to 4%.

“Generally, rental yield is low in the eyes of investors in view of the elevated property values in the area. On the other hand, investors have benefitted from capital appreciation of their properties, especially with the development of Tropicana Gardens and the MRT station,” Chan says.

She added that a few non-landed homes recorded price drops of between 4% and 13% in July last year. According to theedgeproperty.com data, as at 3Q2014, Casa Indah 1 and 2 were transacted at an average RM627 psf and RM555 psf, respectively. However, Chan observes that as of July 2015, the average transacted prices for Casa Indah 1 and 2 have dropped to RM593 psf and RM546 psf, respectively.

Both Casa Indah 1 and 2 were developed by Tropicana Corp and completed in 2006 and 2008. The two high-density condos sit side-by-side on Persiaran Surian where the MRT station is under construction, hence their current unpopularity.

However, Chan notices that overall sub-sale prices of non-landed homes in Tropicana and Sunway Damansara are slowly catching up with new project launch prices, such as Tropicana Gardens, where units are selling at over RM1,000 psf.

“There is an opportunity for buyers [in] sub-sale properties, as values are keeping pace with new project prices,” Chan says.

Tropicana Gardens is an integrated mixed-use development project by Tropicana Corp strategically located on Persiaran Surian. The project consists of shopping mall, hotel, offices and serviced residences. It is linked to the MRT station.

LaurelCap’s Toh agrees that the average price psf of non-landed homes in Tropicana and Sunway Damansara will increase. “The average price psf will hit near the RM1,000 psf mark in the near future as seen in the sale of the third tower of Tropicana Gardens, the Cyperus,” Toh says.

The Cyperus was launched in November last year. It has a total of 406 units with an average selling price of RM1,257 psf. According to Tropicana Corp, it has been 80% sold so far.

However, Toh does not deny the current low rental yields. Besides traffic congestion, more supply of high-rise homes is coming on stream.

“Apart from Cyperus@Tropicana Gardens, other upcoming projects in the surrounding vicinity are Maisson@Ara Damansara and Lumi Tropicana,” Toh reveals.

The mid-cost, high-rise residential Maisson developed by Newfields Property Management Sdn Bhd is scheduled for completion in March 2017. It has a total 1,247 units of between 500 sq ft and 1,549 sq ft. Selling prices start at RM360,000. Lumi Tropicana has 744 units of serviced residences, 68 soho units and 30,000 sq ft of retail space. The developer, Thriven Global Bhd, is planning an official launch for the last quarter of this year.

Old is gold

Toh believes the affluence of the general area will be very appealing to potential buyers in the longer term. The short supply of landed properties in the vicinity will also help raise demand for non-landed ones in the area.

“The landed properties in the area run into millions of ringgit and are out of reach for many, hence the apartments and condominiums are the next best things,” says Toh.

“I do not think the price [of non-landed homes] in the area will drop, but it will not increase as dramatically compared with three to four years ago. The MRT station will help boost rental yield slightly, in a gradual manner,” Toh notes, adding that the main investment return will still fall to capital appreciation.

CBD Properties’ Chan sees the older developments offering greater growth prospects.

“There are some popular non-landed homes, such as Pelangi Apartment, Opal Damansara and Casa Tropicana offering positive price growth ranging from 1% to 10% in the month of July 2015 due to their lower price points,” Chan notes. Also popular are Permai Apartment and Bayu Puteri Apartment, which are currently selling at RM256 psf and RM574 psf respectively, compared with RM202 psf and RM470 psf in 3Q2014, as recorded by theedgeproperty.com. Both properties are low-density, and located near highways, malls, schools and colleges.

Higher-end high-rises that are showing strong appreciation include Opal Damansara (RM600 psf) and Casa Tropicana (RM600 psf), says Chan.

Opal Damansara is a semidee-concept high-rise developed by Sunway City Sdn Bhd. It consists of 248 units of standard apartments, duplexes and penthouses. It was completed at the end of 2007. The launch price for this development was RM270 psf.

Casa Tropicana is a neo classical-inspired condominium jointly developed by LBS Bina Group, Tropicana Corp and Tropicana Golf and Country Resort Bhd. It comprises five blocks, the first four of which were completed in March 2008, and the last in May 2013. The launch price for this development was RM200 psf.

This article first appeared in property+, a section of the digitaledge Daily, on Aug 28, 2015. Get the full property+ here.

For a quick and brief analysis of the property market in Tropicana:
PROPERTY SNAPSHOT 1: Tropicana preserves exclusivity
PROPERTY SNAPSHOT 2: What’s affordable in Tropicana?
PROPERTY SNAPSHOT 3: What are developments priced like in Tropicana?
PROPERTY SNAPSHOT 4: What’s hot in Tropicana/South Sunway Damansara?