Going from strength to strength

LOOKING at Puchong today, it's hard to imagine it was once a quiet little town. Today, you will find a network of highways, shopping malls, row upon row of shophouses and residential properties ranging from terraced houses to condominiums to million-ringgit bungalows.

Much of Puchong's growth has been driven by demand for properties, particularly residential, in the area. As the residents and market observers will tell you, property prices are on an upward trajectory.

According to Foo Gee Jen, managing director of C H Williams Talhar & Wong, in the last five years, Puchong has become an alternative property market for those seeking affordable homes as prices skyrocket in prime areas in Kuala Lumpur, Petaling Jaya and Subang Jaya.

"The property market in Puchong is buoyant with strong demand and high prices," says Foo.

"Improved accessibility via the Damansara-Puchong Highway (LDP), Kajang-Shah Alam Highway and South Klang Valley Expressway, coupled with the many successful housing schemes, has shifted the focus to commercial and high-density high-rise residential developments."

Puchong's neighbours have also played a role. The continued rapid growth of Cyberjaya's residential property market, its commercial activities and numerous educational institutions, plus the acceptance of Putrajaya as the federal capital, have been an added impetus to the town's development. Cyberjaya's working and student population find Puchong a suitable place to live in.

Foo says the town's close proximity to Petaling Jaya, Bandar Sunway and Subang Jaya is another factor. Based on past and current performances, these areas have proven track records of giving property investors high returns.

"Also, Puchong has many developments by big property developers such as S P Setia Bhd and IOI Properties Bhd."

However, as more projects come up, the fear is that development land will run out in Puchong, which is already well-developed.

According to Foo, there are still large tracts available for development in Puchong, but these are held by established developers, which means new builders seeking to enter the residential market in Puchong may have problems finding prime pieces of land.

Based on the sales of the past five years, most buyers of new properties in Puchong are young to middle-aged professionals, entrepreneurs and investors.

According to Foo, even though this group can afford high-end products, Puchong is not shifting towards such a market.

"The higher prices are more a reflection of rising costs and inflation rather than a premium for exclusivity," he says. "There are a few exclusive enclaves such as Lake Edge by YTL Land & Development Bhd, but these are the exception."

Foo adds that large sections of Puchong are still occupied by industrial properties, noting that the Shah Alam and USJ industrial areas are quite close by. Generally, he says, industrial activities tend to depress the value of residential and commercial properties.

Foo believes the Puchong property market will go from strength to strength if public transport in the area improves, and urbanisation gains momentum.

See Kok Loong, director of Metro Homes Sdn Bhd, shares Foo's optimism.

"Puchong, especially its primary market, is performing well with the prices high and backed by strong demand. As for the secondary market, the only issue is valuations as some properties are a bit old and need a lot of sprucing up before being sold."

According to See, the past year was good for Puchong's property market because the LDP was upgraded, the new light rail transit (LRT) line (Ampang Line extension) was coming up and the area was getting densely populated.

Some of Puchong's appeal lies in its accessibility and its short distance to Putrajaya and Cyberjaya. Property investors and buyers are also drawn to Puchong because of its vibrant population and demographics.

See believes Puchong is now home to a large group of middle-income earners who cannot afford houses in Subang or Petaling Jaya and are looking to start families. He notes that they are mostly Chinese, followed by Indians, and have a combined household income of around RM5,000 to RM10,000.

Even though a large group of middle-income earners want to buy homes in Puchong, there aren't many parcels of undeveloped land left, says See.

"The large tracts are mostly developed. Moving forward, there will be more boutique developments — such as condominiums, and mixed-use developments because townships are no longer possible. As supply is limited, property prices will continue to rise. However, the market should still be very stable."

Unlike Foo, See believes that the Puchong property market is shifting towards the higher end due to the scarcity of land and the large number of middle-income earners who can afford such products.

He says the purchasers of new products will be existing residents looking to upgrade from their current dwellings, commercial and industrial investors, as well as entrepreneurs keen to expand their business in the area.

According to See, the investment potential in Puchong will increase with the completion of the 17.7km LRT extension, which will have 12 stations, including four in Puchong. Completion is scheduled for late 2015.

"The upgrading of the LDP will temporarily alleviate traffic congestion as the volume is expected to increase in the next five years. However, the LRT extension is expected to encourage more residents to use public transport, which will resolve traffic woes," says See.

This story first appeared in The Edge weekly edition of Jul 29-Aug 4, 2013.

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