City&Country: Mont’Kiara condos still attractive

Although the condominium market in Mont’Kiara has been subdued of late, it does not seem to have lost its attractiveness to new residents, especially expatriates.

Last November, Australian Dianne B Pier, her husband who works in the local palm oil industry and their three children moved into a unit in Sunrise Bhd’s 10 Mont’Kiara condominium in the exclusive address.
“We chose to live here because the condo has a trendy design and offers a lot of space,” says Pier.
Apart from the myriad facilities offered by 10 Mont’Kiara to its residents, Mont’Kiara is a hive of activity and provides ample amenities that include free shuttle services.

This explains why Mont’Kiara’s condo market has remained relatively stable despite the concerns of real estate agents and consultants over the impact of incoming supply.

According to CB Richard Ellis Malaysia’s (CBRE) Kuala Lumpur Residential Market Report for May 2011, there has been a noticeable shift towards condo living.

Its data shows that the number of high-end condos priced from RM500,000 that were transacted in Kuala Lumpur rose to 2,156 in 2010 from 1,346 in 2009. This suggests that the market for such properties is still strong.

CBRE also notes that “the average capital values in the three main condo markets in Kuala Lumpur — KLCC, Bangsar and Mont’Kiara — have remained relatively steady since the global financial crisis, demonstrating the resilience of the markets”.

It estimates that there were 32,742 condos in KL in 1Q2011 with a third or 11,121 units found in Mont’Kiara. Future supply is estimated to be 17,048 units with Mont’Kiara accounting for 5,291 units from now until 2014.

Despite the competitive market, “the condo market in Mont’Kiara is still very active”, says a spokesman for CH Williams Talhar & Wong. “However, investors are cautious because Mont’Kiara is seen as an overgrown and overrated area.”

According to Reapfield Properties’ senior real estate negotiator Yew Bee Yee, “Demand for the 1,500 to 3,000-plus sq ft units continues to be strong, although it is slightly lower for the larger ones. In fact, rental rates for the older and larger units have dropped 20%.”

Bucking the trend are the large units in the newer condo projects, such as those in 10 Mont’Kiara, the rents for which have risen recently. “When they were handed over a year ago, the 10 Mont’Kiara condos were leased out for as low as RM9,000 to RM10,000 each. Rents now are between RM13,000 and RM16,000 for units that are 3,400 to 4,090 sq ft in size, depending on the furnishing,” remarks Yew.

Sivam Kandiah, who owns two units in 10 Mont’Kiara, says he has had no problems renting them out.
He explains that the units were renovated in a minimalist and neutral style, which appeals to a wide range of potential tenants. “I added some extra touches for a little wow effect, like a coffee maker and a wine cooler in the kitchen and a digital safe in the master bedroom.”

He says he placed advertisements in the local papers when the renovations were almost done and informed his agents about the availability of the units.

“In Malaysia, unlike elsewhere, tenants generally have a long list of additional requests and if the owner is prepared to comply, within reason, it is easy to secure a tenancy,” Sivam adds. His units were rented out a week after the renovations were completed.

“With a minimal budget and some improvisation, it is possible to spend as little as RM30 psf to fully renovate each unit and rent it out for a yield of 6% to 8%,” he says.

Sivam has invested in Sunrise properties since 2001. “From an investor’s perspective, I know that I am assured of a property that will give me capital gains even before the keys are handed over,” he observes.

Zerin Properties’ private wealth real estate negotiator Jean Wong also believes the Mont’Kiara condo market is stable with a strong rental market for units of 1,500 sq ft and above.

“There are plenty of enquiries, even for large units, but the well-located and better-managed condos do better,” she says. “Not all condos in an area do well in terms of sales and rents. Those that are well maintained with strong management fare better than others.”

Compared with a few years ago, when the condo market was at its peak, tenants are spoilt for choice these days. “This has made our job tougher. On average, we need to show a tenant [the unit] 5 to 10 times before we can close a deal. In the old days, we could probably do it after three to five times,” says iProp Realty’s managing director Victor Lim.

He hopes that the government will implement more measures to attract foreign investors as this will indirectly increase the expat population in the country.

“The condos in Mont’Kiara are also competing with those located in the immediate vicinity, such as Bangsar, Damansara and Petaling Jaya, as these locations are also strategically located with ample amenities, facilities and transport services such as buses and taxis and LRT stations nearby,” says YY Property Solutions’ valuation director Tiffany Goh.

Nevertheless, Mont’Kiara is resilient and able to sustain demand because of its many amenities. A main draw, especially for the expats here, is the presence of international schools — the Mont’Kiara International School, the Garden International School and the French International School. At the same time, the area boasts numerous eateries and restaurants, supermarkets and convenience stores, banks, pharmacies and so on.

“Mont’Kiara continues to be a shortlisted location for those working in Petaling Jaya, Subang Jaya and Shah Alam,” says Goh. “In addition, expats with families like it for the presence of international schools.”
According to Siva Shanker, CEO of PPC International’s agency department, expats are slowly making a comeback to Mont’Kiara as economies around the world recover from the recent global financial crisis. He reasons that its location near the Kuala Lumpur city centre, its numerous amenities and reputation as a high-end expat enclave will continue to draw foreigners. “Expatriates naturally draw other expatriates,” he observes.

Yew of Reapfield Properties agrees. “The expat population is dependent on the economic situation. There seems to be a fairly good comeback of mid-level expat executives with rental allowance budgets ranging from RM3,000 to RM7,000. Mont’Kiara is still a favourite among expats not only because of the three established international schools here but also its reputation as a safe and secure neighbourhood.”
Wong of Zerin Properties also expects the expat community in Mont’Kiara to remain strong. “Although there are more units available in Mont’Kiara now, the ones that are well maintained and better located will continue to do well. We also see more locals staying in Mont’Kiara because young couples like the conveniences it offers while retired couples living in landed homes might want less space to maintain as their children move out. Mont’Kiara will also attract locals concerned about security.”

Meantime, as new units come onto the market, real estate agents advise investors to be discerning and seek out reputable developers with good track records and which offer good amenities and management on top of quality products.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 864, June 27-July 3, 2011