City&Country: Cover Story-- Zooming in on Kayu Ara

Smooth tarred roads and dusty dirt tracks, large modern bungalows and tiny makeshift wooden homes — Kampung Kayu Ara or just Kayu Ara is a land of contrast. Driving down the SPRINT Highway and through Kampung Kayu Ara in Petaling Jaya, you just can’t help but notice the awkward mismatch of buildings lining the stretch.

A luxury automobile sales gallery can be found next to a car repair hut with its walls black from exhaust fumes while a high-end furniture store selling Italian leather sofas sits opposite a row of rundown huts. It is as if the kampung is tediously trying to catch up with the rest of the Damansara and PJ North areas around it.

Some of its labyrinthine alleys lead you to more kampung houses that have been there for decades. “There are still many kampung houses located within Kayu Ara even though a lot of modern and higher-end developments are popping up,” says Owen Wong, real estate agent at Reapfield Properties (KL) Sdn Bhd.

Once, there were only small squatter homes and kampung houses, but now Kayu Ara is host to a variety of new landed properties like bungalows, townhouses and semi-detached and even terraced homes. “Condos are beginning to spring up as well,” Wong remarks.

According to the Petaling Jaya City Council (MBPJ) website, the Kayu Ara area spans 1,438 acres, bordered by Lebuh Bandar Utama and the Kayu Ara river. The SPRINT Highway runs down the middle. One side of Kayu Ara is located next to Bandar Utama while the other has 10 Boulevard — developed by Newlake Development Sdn Bhd — as its landmark. According to MBPJ planners, Kayu Ara, which has an estimated population of 56,942, should be seen as one undivided area known as PJU6A.

Located at the border of Kuala Lumpur and Petaling Jaya, Kayu Ara has prime residential estates such as Damansara Utama, Damansara Jaya, Ara Damansara, Taman Tun Dr Ismail (TTDI) and Bandar Utama as its neighbours.

Kayu Ara is now considered part of Petaling Jaya North, which also includes Kota Damansara, Mutiara Damansara and Damansara Perdana, explains James Wong, the director of VPC Alliance (KL) Sdn Bhd. In 1996, MBPJ added PJU to the address in line with its inclusion in PJ North or PJ Utara. James believes the first settlement in Kayu Ara, which is primarily leasehold, was established around 1953.

“Most of the land was originally alienated to the Malays and Indians. However, there is no Malay reserve land in Kayu Ara,” James observes. “It was intended for kampung-type settlements and orchards. However, in the last six years, developers have been buying up land in Kampung Kayu Ara, amalgamating the lots and converting the land into developments.”

He believes Kayu Ara has tremendous potential for redevelopment.

With development land becoming increasingly scarce in Petaling Jaya, it is no wonder that developers are looking at Kayu Ara’s redevelopment potential. Its central location in the Klang Valley and close proximity to Bandar Utama and Damansara Jaya are its other plus points.

Sulaiman Saheh, director of research and strategy at Rahim & Co Chartered Surveyors Sdn Bhd, says the uptick in development activity in Kayu Ara over the past few years was also due to the overall bullish property market in the Klang Valley. “We experienced a small boom, which spurred the gentrification of certain ‘left out’ pockets of the Klang Valley, including Kayu Ara.”

Sulaiman says Kayu Ara’s  development potential lies in its location and accessibility.

“Not only is it tucked between Bandar Utama, Damansara Utama and Damansara Jaya, but it is also served by two expressways — SPRINT Highway and Lebuhraya Damansara Puchong. It is also close to the Damansara toll exit of the New Klang Valley Expressway.  The area is also surrounded by various commercial hubs, hospitals and schools,” he points out.

Changes in the landscape
Established property developers such as Metro Kajang Holdings Sdn Bhd and Glomac Bhd and even small ones like Briswood Sdn Bhd and Ong Chong Realty Sdn Bhd have developed niche projects in Kayu Ara, which is famous for its Chinese seafood restaurants like Lala Chong.

A resident of Kayu Ara, who wants to be known only as Shamsudin, comments that construction activity picked up over the last 10 years. He says he remembers a time when there was nothing else but “jungle and wildlife” in the area where he has been living for the past 40 years.

He reveals that he was offered a large sum for his piece of land. “The area is booming ... I was once offered RM5 million for my 32,000 sq ft lot.”

According to local listings, the going rate for residential land in Kayu Ara is RM137 to RM200 psf. However, the land here is leasehold.

According to VPC Alliance’s James, due to its location and proximity to mature townships like Bandar Utama, Kayu Ara is now becoming a “hot area” for developers. This has resulted in land prices shooting up in the past few years. Based on transactions recorded by VPC Alliance, a 0.77-acre plot in 2007 fetched  RM2.3 million or RM70 psf while a similar plot was sold last year for RM4.2 million or RM125 psf.

Hairul Azlan, who has lived in the area since he was a child, says Kayu Ara is becoming saturated. However, he adds, it is a good thing because it helps make the area more developed. “With more new developments, the place is not as messy.”

Jamie Lee, someone familiar with the area says Kayu Ara is very different from what it was 19 years ago.

“My best friend and her family used to live there. The roads were not so busy and there was a lovely ‘kampung’ feel to it then. The houses had big gardens in which to play and the neighbours were warm and friendly. My family lived just six minutes away in Damansara Jaya, but going to Kayu Ara was a whole different experience. It was something I really looked forward to.”

Today, she says, Kayu Ara has sprouted so many new developments that it has become congested. Worsening the situation are the  people who use its roads as short cuts between Bandar Utama, Damansara Utama and the SPRINT Highway.

According to resident Sharon Tan, the roads of Kayu Ara are narrow. If more developments come up, something needs to be done to improve the roads and overall accessibility, and reduce the congestion, she adds.

At the moment, Kayu Ara is still mainly kampung houses, medium-cost apartments flats (rumah pangsa), says Rahim & Co’s Sulaiman. The rumah pangsa in the area include Rumah Pangsa Kayu Ara and Rumah Pangsa Sri Ara as well as Pangsapuri Pelangi Ara. Existing condominiums include Puncak Damansara and Pelangi Utama.

New properties
Property development in Kayu Ara, Sulaiman adds, is sporadic with different types of products coming up next to each other, for example 10 to 20 terraced houses, townhouses and semidees in an enclave or cul-de-sac that is landscaped and guarded. These include Bella Damansara, Merdu Kayangan Town Villa, Merdu Idaman and Sri Araville Townhouses.

One of the ongoing projects in Kayu Ara is Briswood Sdn Bhd’s Se’terra — a 46-unit high-end, low-rise condominium on a 1.5-acre site on the Bandar Utama side of Kayu Ara. Launched in 2H2011, the units are 1,813 to 5,683 sq ft in size and are priced RM1.2 million onwards.

When the development was unveiled, its prices were perceived to be very high, but to date, the take-up rate has reached 80%, says Sulaiman.

VPC Alliance’s James says Se’terra’s “above RM600 psf” pricing has paved the way for more “high-priced” developments in the area as RM600 to RM650 psf now seems acceptable in the Kayu Ara market.

According to the spokesperson of Briswood Sdn Bhd, Kayu Ara has strong development potential because it is in a central location.

“With proper planning by the local council, we foresee a substantial price appreciation in the near future. This is the last piece of residential land available for development just next to Bandar Utama.”

Among the latest property launches in the area is Glomac Centro — a mixed-use development on a 7.6-acre site down the road from Se’terra that offers fifty-four 2-storey shopoffices and 344 serviced apartments in a 29-storey block. Apartment sizes range from 1,200 to 1,600 sq ft and prices from RM500 to RM580 psf. Some 50% of the development has been taken up.

Another ongoing development is Ong Chong Realty Sdn Bhd’s Boulevard Residence @ Damansara located on the southern half of Kayu Ara just behind 10 Boulevard. Boulevard Residence sits on 2.3 acres and offers 300 units of condominiums with built-ups ranging from 850 sq ft to 1,900 sq ft. The prices range from RM450,900 to RM1.2 million or RM635 per sq ft and is expected to be completed in 2014. It currently has a take-up rate of almost 90%.

Ong Chong Realty seems to be the developer with the most number of projects in Kayu Ara, having completed, among others, Westwood Terrace and Chestwood Terrace (townhouses) and D’Residency (terraced houses), which is sold out.

Rising values
“In Kampung Kayu Ara, Glomac Centro, Se’terra and Boulevard Residence have caught the attention of homebuyers and investors. Sales have reportedly been encouraging, although they could be better where a smaller number of units is on offer. Still, it is an eye-opener for many that primary sale prices for condominiums in Kayu Ara have reached RM600 psf,” comments Rahim & Co’s Sulaiman.

House prices on the secondary market in Kayu Ara have risen over the years. In 2007, a 3,157 sq ft home cost RM2.6 million or RM78 psf, but by October 2011, a 3,119 sq ft home was going for as much as RM4.2 million or RM125 psf.

According to Rahim & Co data on  developments in the area, units in the Puncak Idaman condominium — completed in 2007/2008 — were going for RM160 to RM190 psf but by 2011, they were fetching RM200 to RM220 psf. Transacted prices in 1Q2012 were RM300 to RM350 psf. Prices for units in the Pelangi Utama condominium — which was completed in 2004 and whose units have built-ups of 920 to 1,137 sq ft — were RM240 to RM260 psf in 2007 but these had jumped to RM350 to RM400 psf by 2011.

Prices at Merdu Idaman (unit size: 1,950 sq ft) were RM180 to RM190 psf in 2007 but by 2010/2011, transactions were recorded at RM280 to RM320 psf.

In 2007, units in Sri Araville (completed: 2006; sizes: 1,220 to 1,450 sq ft) were sold for RM200 to RM210 psf but by 2011, they were going for RM270 to RM300 psf.

The projects in Kayu Ara are mostly small in size because of difficulties in acquiring adjoining parcels. “Land ownership and limited sizeable land available for development in Kayu Ara are issues that challenge developers,” says Sulaiman. “The land here comprises mostly small plots owned by individuals.”

If a developer had embarked on a project here in the late 1990s, says Sulaiman, it would have experienced a tight cost-to-benefit ratio because of the time and effort spent on purchasing several plots and amalgamating them for a comprehensive residential development.

However, with stronger demand for properties in the area and with fewer projects in prime areas, prices have gone up. “With the much higher property values in Petaling Jaya today, selling prices are more attractive to developers and provide them with some margin to cover the non-direct development costs they face here,” Sulaiman points out.

Another challenge of developing Kayu Ara, he adds, would be to change its landscape and upgrade its facilities.

“The reputation or ‘image conditioning’ of the site is not that great at the moment. Although there are already pockets of small developments such as apartments, clusters of townhouses or small enclaves of link houses and even semidees, there is still the strong presence of traditional kampung houses. There are also low-medium-cost apartments and flats in the area.”

Would Kayu Ara be a good investment option for the long term?  Sulaiman says yes, if the price is right.

“The lack of development land in the vicinity will force developers to look again at what is arguably one of the last few potential development sights in PJ North. This would include Kayu Ara.

“Kayu Ara’s potential has been there for the last 20 to 30 years as it is one of the gateways to Kuala Lumpur. Now, with interest shown by Gen Y, which is maturing as a key driver of demand for housing, Kayu Ara is definitely an option for investment.”

However, as optimistic as he is, Sulaiman says one still has to assess the fundamentals of a real estate investment before deciding on it.

In the meantime, all that long-time residents of Kayu Ara can do is brace for the winds of change.

 

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 914, June 11-17, 2012