City & Country: Special Focus: Seremban Focus - Southward movement

THE drive to Seremban via the KL-Seremban Highway on Monday morning was easy as the roads were clear. After passing the Seremban/Labu toll, at the roundabout, we took the left exit, then headed straight and soon reached old Seremban town.

Like in most other old towns in the country, for example Ipoh or Kota Baru, the buildings in Seremban are only two storeys high and feature vintage designs that mark the year in which they were built — 1919, 1920 and so on.

The people were going about their daily errands, stopping at the banks, tailors, food stalls and the wet market. We had the chance to visit Pasar Besar Seremban, a 2-storey building with high ceilings that houses a wet market on the first floor and a food court and shops that sell clothes, souvenirs and titbits on the second floor.

According to the Department of Statistics, Seremban has a population of 536,147, which is projected to grow about 3% annually. It is estimated that the population could reach over 750,000 by 2020. Currently, Seremban and Nilai account for about half of Negeri Sembilan’s total population.

Property values

Satellite town Seremban 2 has been enjoying healthy capital appreciation since 2011. According to data, the prices of properties in Seremban 2 have been growing at 15% to 20% per annum. Siew Weng Hong of Henry Butcher (Negeri Sembilan) tells City & Country that the appreciation is due to higher new home prices.

“The rise in subsale prices is contributed by a few factors, among which are the higher prices in new launches. If you look at the Garden Homes units, which are 22ft by 70ft, they cost RM100,000 in 2011, but now they are RM150,000 — a 50% appreciation in three years.”

Location is also a contributory factor. Ku Fuziah Ku Hamzah, principal of G World Property Consultants (GWP), says residential and commercial units that have seen their values jump are situated in popular and well-located areas. “Some may say the appreciation of property values here is not as exciting as that in the Klang Valley, but if you calculate the price increase from 2000 to 2009, Seremban prices have risen around 2% to 5% per annum. This is not significant for Seremban 2 in terms of price growth, but it is still higher than Seremban’s average price increase.”

Ku Fuziah believes property prices in Seremban will continue to grow in the next five years, underpinned by economic growth. “The market is softening as shown by the shrinking volumes due to the inflationary trend of prices and the weakening of consumer purchasing power. We also have to consider that financial institutions are stricter about approving new loans.

“Such events will impact the property market — we can already see a gradual increase in launch prices. The coming years may pose some challenges after taking into account the Goods and Services Tax (GST).”

Property prices in Seremban 2 are still healthy and expected to grow by 7% to 10% a year, says C H Williams Talhar & Wong Sdn Bhd (WTW) managing director Foo Gee Jen. Driving them is a growing population of young married couples seeking better quality homes.

Residential and commercial rents in Seremban 2 have also grown, between 30% and 40%, since 2011. Property consultants believe rents in popular locations, such as Biz Avenue and Uptown Avenue, have risen vigorously.

Biz Avenue, Uptown Avenue and I Avenue currently cost over 30% more than the developer’s prices, says GWP’s Ku Fuziah.

Siew of Henry Butcher says it is natural for Biz Avenue to command the highest rental rates in Seremban 2 as it is in the best location. “Biz Avenue is an older development and it is well located, beside AEON Jusco. In addition, most banks are located in Biz Avenue. Rents in the area start at RM5,000 and go as high as RM8,000.”

Foo of WTW adds that the occupancy rate of shopoffices in Seremban 2 is more than 70%, which is encouraging. “The building of AEON Jusco in 2009 was a turning point for business growth in Seremban 2,” says Foo. “The momentum of the commercial market gained when Tesco entered it. In addition, the completion of Mydin Mall, a wholesale shopping complex, recently added more ‘pop’ to the area.”

However, Foo notes that several shopoffices in poor locations and with unattractive designs have lower occupancy rates.

On the residential side, both Siew and Foo believe growth will come from gated developments as they command higher rents. Siew says a fully furnished house in such developments has a yield of 6% compared to those that are unfurnished.

“There is a 2-storey, semi-detached house in Garden Homes that cost about RM800,000, for which the concluded rent was RM3,000. But lately, we managed to rent out a fully furnished house for RM4,500. For unfurnished houses in gated developments, the rent is RM3,500.

“As for unfurnished homes in non-gated developments, the yield is about 5.2%. So, you can expect future residential developments to be gated.”

Currently, rents for 2-storey terraced homes start at RM650 to RM700 while the asking rent ranges from RM950 to RM1,000, for a yield of 3% to 4%.

Thus, Foo advises buyers to look at gated housing schemes. “The prices may be slightly higher, but the appreciation level is faster too.”

Ku Fuziah, meanwhile, suggests buyers look at commercial properties. “Prime commercial properties in an established area are poised for healthy appreciation in the long term,” she says. “In a market that is trending downwards, the prices of all properties will drop or stagnate, but after a period of adjustment, the prices of prime commercial properties will start rising again.”

Migration to the south

Property consultants expect the trend of migrating to the south to become more pronounced in the next 5 to 10 years as house prices in the Klang Valley continue to rise. GWP’s Ku Fuziah believes young families will not be able to afford homes in Kuala Lumpur by then.

However, she says the migrating population may not opt for Seremban 2 as an obvious choice because Kajang, Semenyih and Bangi are nearer and offer homes in an affordable range. “I don’t think Seremban 2 will be the first pick. A number of tracts in the corridors of Klang Valley are being converted into townships, including in the outlying areas of Bangi, Semenyih and Bandar Seri Putra as well as those south of Putrajaya, namely Dengkil, Kota Warisan and Kota Seriemas. In fact, developers such as Mah Sing Group, S P Setia, UM Land, I&P, Sime Darby Properties and Eco World Development Group plan to develop over 1,000 acres in Semenyih.”

WTW’s Foo adds that those who move to the southern part of the Klang Valley will pick areas that are near the MRT line, such as Kajang. Siew of Henry Butcher echoes the view, saying property prices in Bangi and Semenyih are comparable to those in Seremban 2.

However, Siew notes that many will opt for Seremban 2 as it offers better infrastructure. “Seremban 2 has better schools and commercial areas like Zenith International School and SJK (C) Tung Hua that recently moved to the area from Port Dickson.”

He adds that the high-speed railway, which will stop in Seremban, Ayer Keroh, Muar, Batu Pahat and Iskandar before going into Tuas and Singapore, may see the Seremban station come up in the north of S2 Heights, which is the extension of Seremban 2.

Foo and Siew believe the population in Seremban will continue to grow and are optimistic that in the next five years, the demographic will change as the younger generation starts to populate Seremban 2.

Siew adds that Seremban 2 has the potential to grow like Petaling Jaya as it starts to offer more brand names and shops to cater for the young families and high-income group that Siew expects to move to Seremban 2. “We expect wealthier families to come into Seremban 2 as we can already see more high-end products being introduced to the market.”

Outlook for Seremban 2

All three property consultants agree that Seremban 2 has room to grow in terms of prices, rents and population, but Foo remains cautious as the property market in Seremban 2 will be competitive, given that there are several projects nearby, such as Bandar Ainsdale by Sime Darby Properties and Bandar Sri Sendayan by Matrix Concept Bhd.

“These townships are seeing strong response from buyers,” Foo says. “Prices are expected to continue to rise at a moderate pace, but remain competitive.”

Meanwhile, Ku Fuziah feels that with more land becoming available to be developed in Seremban 2, the town will continue to grow. She believes Seremban 2 has not realised its full potential.

Siew believes that with higher property prices in the Klang Valley and better infrastructure in Seremban 2, people will like the latter for its community atmosphere. “It’s comfortable living in Seremban 2 and I believe prices in the Klang Valley will drive out young couples and families as these groups can’t afford to purchase a home in the city.”

He also views the cooling measures, such as the tightening of loans and proposed higher interest rates, as quite worrying. “If you look at the data anywhere else in the world, when transactions slow down, property prices go down, but here, when transactions are slowing down, property prices remain healthy and moving upwards.”

Siew says GST will definitely impact the property market. “But by how much prices will go up, I don’t know as it’s quite difficult to tell. I believe there should be a rush to buy before GST, but it would be quite difficult with the tightening of loans and developers holding back their launches.

“Will prices stagnant or increase? We can’t know yet. We also have to take into consideration that when GST comes into the picture, people’s useable income will shrink.”

“Right now, property developers are building more high-end homes to cater for the livelihood of the development. It’s not even a concept anymore. We can see that even Seremban 2 and S2 Heights are selling high-end products that cost more than RM1 million to cater for this group.

“You can’t build normal terraced shops anymore. You need to build niche market commercial to cater for the high-end population. In 5 to 10 years, you’ll see a different kind of topography here,” Siew says.

He believes Seremban has huge potential to grow with the upcoming train services, such as the high-speed rail (HSR) that connects Singapore to KLIA and further up to Penang. “With HSR stopping in Seremban, we can expect more population growth and travelling into the city centre will be made even more convenient.

“This railway is opening more doors to developments in Seremban. So, you can see why people are opting to move to the southern part of the peninsula instead of the north.”

This article first appeared in The Edge Malaysia Weekly, on June 02 - June 09, 2014.


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