City&Country: Cover Story-- Semenyih attraction

Sleepy Semenyih awakens

The Klang Valley southern corridor has recently seen an upsurge in real estate investment with several of the country’s leading developers such as S P Setia Bhd, UEM Land Holdings Bhd and Dijaya Corp acquiring land in the Semenyih/Kajang corridor in Selangor.

This could have been prompted by a number of factors, namely the completion of the Kajang-Seremban Highway (Lekas), rising land prices in the more established parts of the Klang Valley and more demand for affordable housing.

Situated 8km southeast of Kajang along the Kajang-Seremban Highway, the once quiet place of Semenyih is now appearing on the radar screen of investors and buyers. The Semenyih-Kajang corridor comes under the jurisdiction of the Kajang Municipal Council (MPKJ), whose area of administration is approximately 787.61 sq km and includes all mukim (sub-district) within the Hulu Langat district such as Kajang, Cheras, Semenyih, Beranang, Hulu Langat and Hulu Semenyih, but not Ampang.

Separated from Kajang by Bangi, Semenyih is known for Semenyih Memorial Hills, the industrial parks and swathes of rubber and oil palm estates.

Industry observers suggest the recent attention Semenyih has attracted is due to the large tracts still available for development there, and that land there is more affordable compared with the more developed parts of the Klang Valley. No matter the reason, it is evident from the presence of the major developers that Semenyih and its surrounding areas are receiving more attention than before.

“Klang Valley land is getting scarce and the remaining parcels are expensive. So, rather than branching out to other states, developers such as S P Setia that are looking for available land at affordable prices just move further away from the heart of Kuala Lumpur and turn their attention to growth areas such as Bangi, Kajang and Semenyih,” says Rahim & Co (Selangor) managing director Choy Yue Kwong.

Since the end of last year, there have been activities indicating a growing interest in Semenyih, including a number of sizeable acquisitions in the town.

UEM Land Holdings Bhd acquired two parcels of freehold agricultural land totalling 463.51 acres for RM268.5 million, or RM13.30 psf, in Semenyih last year.

In September, Dijaya Corp entered into a conditional sales and purchase (S&P) agreement to acquire 198.54 acres of freehold land at RM228 million, or RM26.36 psf, in Kajang Hills.

Ireka Corp, known for high-end luxury developments, also announced recently that it was keen on penetrating the mid-priced property development and industrial development segments in the southern corridor. The company is buying 20.6 acres of freehold land in Kajang for RM22.4 million.

Leaders generate confidence
Choy believes the emergence of S P Setia, Malaysia’s largest listed property developer by sales, in Semenyih and its vicinity will create more value for the surrounding developments due to the developer’s solid reputation.

S P Setia recently acquired two parcels of land in the area. In October, it entered into an S&P agreement  to acquire 673.3 acres of freehold land in Semenyih for RM381.26 million, or RM13 psf, boosting its landbank in the immediate three-month period to about 1,683.8 acres. The tract, situated mid-way between Semenyih and Bangi old town and Beranang, was purchased by S P Setia’s wholly-owned subsidiary Setia Hicon Sdn Bhd, 13km south of Kajang while 35km south of KL city centre.

The other parcel, 1,010.5 acres of freehold land in nearby Beranang, was acquired about two months earlier by another of S P Setia’s subsidiaries, Bukit Indah (Selangor) Sdn Bhd, for RM330.13 million or RM7.50 psf.

S P Setia plans to develop starter homes for first-time homeowners in the  1,010.5-acre parcel, with an estimated gross development value (GDV) of RM3.5 billion, while upscale products with a projected GDV of RM4 billion are planned for the smaller parcel due to its better accessibility.

S P Setia declined to comment further on its plans for the two parcels. However, it can be said to be a relative latecomer as other developers have already established themselves in the area.

“Sunway Semenyih had ventured there earlier. Boustead then started the development of Mutiara Semenyih while AP Land developed a few medium-sized projects there in the early to mid-1990s,” says CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen.

Sanctuary Gasing Group Sdn Bhd and MKH Bhd, formerly known as Metro Kajang Holdings Bhd, were among  the developers that began developing there in the mid-1990s.

Leo Tan, director of Gasing Meridian, a unit of Sanctuary Gasing Group, says: “We got involved in Semenyih because we saw opportunities in that area and wanted to get a foothold in the southern districts of KL.”

“We had heard word that the new international airport [now KLIA] and a federal administrative capital [Putrajaya] were being planned in the vicinity. The Multimedia Super Corridor added to the excitement as well as a lot of other exciting proposals. So you would think that the new KL was going to be located down south,” he recalls.

The Australian-Malaysian property group’s development, Kesuma Lakes, developed in 1996, is located 11km south of Kajang town centre. The entire township, which covers 1,357 acres initially planned for only 1,000 bungalows, has a gross development value (GDV) of RM1.6 billion.

“Most of the purchasers then were investors from KL who were looking at the planned developments down south such as Putrajaya, KLIA, and the Multimedia Super Corridor [Cyberjaya],” says Tan.

However, around 1997 to 1998, Sanctuary Gasing sold the development to Nam Fatt Corp Bhd, which has delisted and liquidated this year.

Meanwhile, MKH Bhd owns at least four parcels of land amounting to 390 acres in the Semenyih vicinity.

Managing director Datuk Eddy Chen says the company ventured into Semenyih because it had a “very bright outlook”.

“The demand for housing is high there due to its affordability, especially for migrants from other areas of the Klang Valley, good infrastructure, highway networks and supporting amenities while its proximity to Putrajaya and KLIA is an added bonus,” says Chen.

On one of the four parcels, MKH is developing Pelangi Semenyih 2,  which follows the developer’s earlier 294.66-acre Pelangi Semenyih township development.

Pelangi Semenyih 2 covers 168 acres of freehold land has a total GDV of RM360 million. The mixed-use development comprises 2-storey link houses, semi-detached houses and shopoffices. The current take-up for the three phases launched so far is 95% while the launch for the fourth phase is in the works. The fourth phase will consist of 2-storey terraced houses priced at RM373,900 and semidees at RM538,000. MKH has said that the fourth phase will not be the final phase and there will be more to come.

The second and third parcels will be planned for a medium high-end mixed-use housing development known as Hillpark 2 and Hillpark 3 located in Bandar Teknologi Kajang. Hillpark 2 will sit on 60 acres of freehold land with a GDV of RM150 million, and will feature 2-storey link houses and 2-storey semidees. Hillpark 3 will span 100 acres with an estimated GDV of RM320 million, and will consist of 2 to 3-storey super-link houses and 2 to 3-storey semidees.

The remaining 130-acre parcel in Semenyih has been proposed for a high-end mixed-use housing project with an estimated GDV of RM550 million.

According to Chen, MKH is still looking for land in the Semenyih area as it is still relatively inexpensive. “This is where we are able to build affordable housing as land is still cheap. But having said that, the land price in this area has gone up more than 50% from our purchase price in 2009. Given this scenario, it may be more and more challenging to build affordable houses.”

A rough calculation shows that the land purchased by S P Setia in 2011 is 50% more expensive than the land purchased by MKH in 2009, giving an indication as to how much prices have increased.

Other notable developers in Semenyih include Sunway Group with its 700-acre Bandar Sunway Semenyih, and Bandar Semenyih Sdn Bhd with its Taman Tasik Semenyih.

In neighbouring Kajang, a number of developers have ongoing projects there including Naza TTDI (TTDI Grove), Gamuda Land (Jade Hills Kajang), Country Heights Holdings Bhd (Country Heights Kajang), OSK Property Holdings Bhd (Taman Sri Banyan development within Country Heights Kajang), Nadayu Properties Bhd (Nadayu 92) and Sime Darby Group (Saujana Impian).

Basis of attraction
Besides the lack of development land closer to Kuala Lumpur city, there are other factors tempting developers to snap up land in the Semenyih/Kajang corridor.

“The Sungai Buloh-Kajang mass rapid transit (MRT) line, coupled with the better road infrastructure due to the completion of the Kaseh highway that links KL and Mantin as well as Seremban, could also spur growth,” says CH Williams Talhar & Wong’s Foo.

Other than the new Lekas highway, the improved road links to Semenyih include Infra-Lekas that links Kajang, Semenyih, Mantin, Pajam, Seremban and Paroi, and the SILK highway that connects Cheras, Kajang, Semenyih and Bangi. Due to the extension of Greater KL to include Kajang and its proximity to Nilai, Pajam and Mantin, the Semenyih and Kajang area will play a key role in capturing the Selangor and Negeri Sembilan market.

According to Knight Frank Malaysia, the recurring theme for developers choosing to build there is the availability of land for development at competitive and attractive prices. These provide opportunities for developers to plan and develop new comprehensive and integrated townships.

“This will cater for the growing demand for affordable and mass housing that follows the recent spike in prices for landed property in selected locations within the Klang Valley. This also fulfils the needs of upgraders within the area seeking modern homes within secure neighbourhoods,” the consultancy explains.

Knight Frank believes that rapid population growth in the area is also spurring the growth of Semenyih. “The population of the Ulu Langat district as per the Population & Housing Census 2010 has been recorded at 1,156,585. The current population of the district represents about 21.2% of Selangor’s total population,” the consultant says. According to the census report, the main ethnic group in the Ulu Langat district are bumiputra (50.7%) followed by Chinese (30.8%) and Indian (9.8%).

Semenyih alone has a population of 68,000, and large retail shops have opened up, adding to the area’s attractiveness and boosting further growth.

“We feel the retail facilities and amenities that cater for the convenience and needs of the growing population adds to the area’s attractiveness including established retailers such as The Store located in Semenyih Sentral, Tesco Semenyih at Pelangi Semenyih and Metro Point Kajang on Jalan Semenyih Kajang,” the consultancy explains.

According to Rahim & Co senior manager Hee Chee Meng, perceptions of Semenyih have only changed in recent years. Due to its growing population, KFC, McDonalds and Pizza Hut outlets have popped up in the area, along with a Tesco hypermarket.

In 2005, the University of Nottingham Malaysia Campus (Unim) was established on 101 acres of land worth RM120 million in Semenyih. The higher learning institution’s entry has benefited the area, particularly Taman Tasik Semenyih and other neighbouring housing schemes. Semenyih’s proximity to other educational institutions such as Universiti Kebangsaan Malaysia (in Bangi), Universiti Putra Malaysia (Serdang) and Universiti Tunku Abdul Rahman (Utar) Bandar Sungai Long campus among others, has also raised its profile.

Prices on the rise?
Considering that Klang Valley real-estate prices have shot up, investors and developers are looking towards the southern corridor for cheaper and more affordable opportunities. But how long before prices there follow suit? Knight Frank believes that it is just a matter of time.

Knight Frank states developers are gradually introducing higher-end products there to cater for the growing market of discerning home buyers and upgraders. These include properties that may have gated and guarded precincts, modern and contemporary facades, good floor layouts that segregate public and private space and promote natural lighting, quality finishing and fixtures, wide car porches and green-building features that incorporate rainwater harvesting and others.

“However, by introducing such features, the prices of these new and innovative homes will inevitably increase due to higher construction costs compared with conventional houses in the secondary market,” it adds.

CH Williams Talhar & Wong’s record of transactions shows that when Taman Pelangi Semenyih 2 was launched by Metro Kajang Holdings Bhd in 2009, double-storey terraced units were going for RM240,000 while semidees ranged from RM454,000 to RM465,000. Since then, terraced units there have risen 14% to RM287,000 while the semidees are up 7% to RM500,000.

Based on data provided by Rahim & Co, double-storey terraced houses in Bandar Rinching with a land area of 111 sq m (1,194.8 sq ft) that went for RM130,000 to RM150,000 in 2009 have seen a 10.7% price hike to RM147,000 to RM168,000.

At Taman Pelangi Semenyih, 2-storey terraced houses with a land area of 130 sq m (1,399 sq ft) that were sold at RM210,000 to RM240,000 in 2009 have jumped 22.9% to RM250,000 to RM295,000.

In Taman Tasik Semenyih, 2-storey terraced houses with a land area of 109 sq m (1173.3 sq ft) went for an average price of RM100,000 in 2009. A year later, the prices jumped by as much as 70% to between RM130,000 to RM170,000.

Bandar Rinching shoplots with a land area of 130 sq m (1,399 sq ft) were sold for RM100,000 to RM200,000 in 2009, but now cost 30% more at RM200,000 to RM260,000.

Two-storey shoplots in Taman Pelangi Semenyih with a land area of 153 sq m (1,646.9 sq ft) in 2009 were going for RM430,000 to RM520,000. In 2011, prices leapt 48% to RM630,000 to RM770,000.

Mushrooming hotspots
It cannot be denied that Semenyih has cast a spell on developers. The area’s potential for growth has risen considerably and CH Williams’ Foo expects to see some real estate hotspots come up around Semenyih and Ulu Lalang all the way to Beranang.

Currently, the more popular projects here include the Bangi estate that UEM Land recently purchased from Inch Kenneth, the Glengowrie estate owned by Sime Darby, Dijaya’s Kajang Hills, Bandar Rinching and Boustead’s Mutiara Semenyih, says Foo.

Knight Frank suggests that these schemes are successful due to good planning by reputable developers. “Some of the schemes in Semenyih are popular because they are well planned and undertaken by reputable developers with a proven track record, providing a range of facilities and amenities that caters for the growing population,” it offers.

“With the existing and improved road infrastructure, connectivity and accessibility to this corridor has been enhanced. The proposed MRT line will spur the growth of this corridor when it is completed in the near future,” it adds.

Rahim & Co’s Hee says there is still great potential for residential developments in Semenyih. “Previously, Semenyih gave people the impression that it was an industrial area but residential developments are actually supporting the area. The two big land acquisitions by S P Setia will change everyone’s perception.”

“We have great confidence when carrying out valuations in the area. Sometimes, we do need big developers to come in and bring in the crowd,” says Hee, adding that the likes of S P Setia “have done just that”.

 

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 883, Nov 7-13, 2011