A rising star

The landscape of Mont’Kiara has changed dramatically. In just 20 years, a once unpopular and inaccessible location has become a trendy expatriate enclave with high-end condominiums, international schools and other amenities to meet the needs of its residents.

And one of the newest spots in Mont’Kiara is Solaris Mont’Kiara, a development completed in 2007 and which currently hosts myriad business activities such as F&B outlets, retail services, a supermarket and office suites.

Developed by Sunrise Bhd, the project with a gross development value of RM496 million, sits on 12.7 acres of freehold land and was built in two phases. The first phase saw the completion of 79 units of 3, 4 and 5-storey shop offices and the second phase showcased three towers of 8 to 10-storey office suites and retail spaces, with a 4-storey basement carpark. In total, it has a nett lettable area of over 1.2 million sq ft.

Early investors in Solaris Mont’Kiara properties have been rewarded. Property values there have made substantial gains since the project launch in 2004, says  Anne Tong, Sunrise senior manager of branding and community development.
Victor Lim, iProp Realty managing director, concurs, disclosing that a 3-storey shop in Solaris Mont’Kiara sold for RM2.6 million in 2005. Today, the same shoplot could fetch RM3.6 million to RM4 million, an almost 40% increase in less than four years.
 
Business slowly improving
While property values have increased in Solaris Mont’Kiara, tenants are finding that business growth is relatively sluggish. “Business is picking up, although slowly,” says Karen Chua, owner of Party@World. “This is partly due to the state of the economy and the H1N1 flu scare. But I am optimistic that things will improve as there is potential for growth in the area due to new condominiums coming onstream. Once more people move in, things should pick up.”

Loo Chee Wei, owner of Departure Lounge, an espresso and sandwich bar, however, says his business is doing well, with traffic heavier on the weekends than weekdays. “The area has potential for growth as not all the office space has been taken up,” says Loo. “Once that is filled, there should be enough population to sustain the current businesses.”

Another tenant, Vanessa Tshai of Desigva Design, a lighting and furniture store, has also seen some progress. “There is improvement in the activity in the area, especially since I opened [last year], but business is still slow,” she says.

Lalitha Anandarajah, Zerin Properties’ executive (for mergers and acquisition business space), reveals that rents for ground floor office units in Solaris Mont’Kiara’s Phase One are about RM8,500 per month, while the first floors command RM4,000, and upper floors, RM3,000. Occupancy rates of the office suites stand around 30%, while retail occupancy is at about 80%.

However, the relatively low office space occupancy rate doesn’t appear to be confined to Solaris. “Generally, office take-up is low for all areas, and Solaris has not been spared,” shares iProp Realty’s Lim. “Unless the landlords are willing to lower the rents or give some incentives like free rents, potential office tenants will move to other areas as there are now plenty of choices.”

Growing catchment area
While the office spaces are waiting to be filled, Solaris is sustained mainly by visitors from within Mont’Kiara and neighbouring residential areas. “There are nearly 10,000 families in Mont’Kiara alone, excluding the vicinity of Desa Sri Hartamas, Bukit Damansara and Kenny Hills. And this number is growing,” says Kenn Yam, executive director of development firm Seria Saujana Sdn Bhd, which manages and partly owns a commercial building in Solaris Mont’Kiara called SOHOKL.

SOHOKL comprises 71 retail outlets and about 40 different kinds of cuisine and concept operators, such as Japanese restaurant Tenji, Croatian restaurant Dubrovnik, chocolatier Schokolart and a host of attractions to whet appetites and soothe dry throats.
Allan Soo, managing director of Regroup Associates, believes that the number of visitors to the area is much higher. “There are now 7,300 condo units in Mont’Kiara and if we take an average occupancy of 60%, then we are talking about roughly 21,900 people there. And if we add to the landed properties, we have a total internal population of about 50,000,” he says.

 “But the secondary catchment will include people from other nearby housing areas like Damansara Heights, Bangsar, Petaling Jaya and TTDI (Taman Tun Dr Ismail). These could supply another 100,000, albeit less regular customers,” he adds.

The numbers are indeed there and with time, Solaris Mont’Kiara could be the central spot for the neighbourhood. “I feel that in the future, Solaris Mont’Kiara has better potential for commercial business due to its central location,” says iProp Realty’s Lim. “Currently, Desa Sri Hartamas and Plaza Mont’Kiara are faring better, but the Mont’Kiara development has spilled over to Segambut. Once that part of town is fully developed, Solaris will be the centre of Desa Sri Hartamas, Mont’Kiara and Segambut,” he says.

The competition
While strategically positioned, Solaris Mont’Kiara has to contend with competition from other nearby commercial areas such as long-time stalwarts, Desa Sri Hartamas and Plaza Damas.

The shoplots in Desa Sri Hartamas, which were built during the 1990s, consist of 4-storey shop offices. Zerin Properties’ Lalitha says businesses there consist mainly of eateries, banks, hair salons, pharmacies and so on. The occupancy rate also varies but the ground floor and first floor units are faring better than other levels. Rent for the ground floor is estimated at RM8,000 per month, while the first floor is going for RM5,000, and the upper floors, RM 2,500. In 1995, a unit sold for about RM1.7 million and the value has since doubled to about RM3.5 million, says Cheng Yi, CY Harta principal.

Plaza Damas, also built during the 1990s, comprises the Hartamas Shopping Centre, shop offices and residences on about 14 acres. The walkup shop office units come in 1,100 sq ft, 1,567 sq ft and 1,588 sq ft dimensions. This area provides mostly niche products and speciality services such as dentists, chiropractors and physiotherapists, along with offices and property showrooms, says Lalitha.

Rents for ground floor units are estimated to be between RM4,800 and RM5,500 per month, first floor units about RM2,500, and the upper floors going for RM1,800. The ground and first floor units have good occupancy rates. Prices for the shop offices were RM1.4 million when they were first launched but are now valued at around RM3 million.

In general, Solaris Mont’Kiara, Desa Sri Hartamas and Plaza Damas cater to lifestyle activities. However, on closer inspection, Solaris Mont’Kiara and Plaza Damas are part of an integrated mixed development unlike Desa Sri Hartamas, says Tiffany Goh, director of YY Property Solutions (valuation) in association with Cushman & Wakefield.

Lalitha concurs. “Desa Sri Hartamas and Plaza Damas are neighbourhood areas; they have their own market and also certain businesses have their own pull factors like Soul’ed Out in Desa Sri Hartamas,” she says.

One key success factor for Solaris Mont’Kiara has been its ability to position itself differently from its much older rivals in the vicinity. “Solaris Mont’Kiara has successfully turned into one of the lifestyle destinations in the Klang Valley and poses stiff competition to Desa Sri Hartamas and Plaza Damas,” says YY Property Solutions’ Goh.

“Its boulevard, alfresco dining, hip-trendy retail outlets and boutique sidewalks have been a pull factor, which attract urbanites to the location,” she adds.

However, in these current challenging economic times, Solaris Mont’Kiara may need to have a little bit of patience before it can have the upper hand. “I would foresee Desa Sri Hartamas and Plaza Damas doing well now, but when good times return, I believe Solaris will shine,” shares Lim.
 
Boost for neighbours?
The increase in commercial property values in Solaris Mont’Kiara may give the impression that all nearby residential property priceswould have gone up, too. This, however, may not necessarily be true.

“It is the age of a building that determines the prices in Mont’Kiara. Condos like Astana, Aman, Bayu, Damai and Bayan are newer, therefore they fetch better prices,” says Lim. However, he adds that in general, properties close to commercial hubs tend to perform better in terms of capital appreciation.

Also, residential property prices in the area were already competitive before commercial operations took place. “Values of residential properties were already high before commercial activities became prominent,” shares Regroup Associates’ Soo.

“Sunrise’s properties command higher values due to their high-quality management and the various international schools nearby.

These attract expatriate tenants who pay higher rents, and therefore create a stronger investment market. In fact, it is the expatriates who attract commercial operators, and not the other way around,” he says.

So far, the steady performance of the property market has benefited Solaris Mont’Kiara as well as its neighbours such as Sri Hartamas and Plaza Damas.

“Based on our analysis, more than 2,000 condo units and serviced apartments are expected to be completed in the next two to three years in Mont’Kiara,” says Goh. “The commercial component is expected to complement the overall development and indirectly boost the capital value as well as the marketability of this area.”

“With an established and growing population, nice residences, shopping centres, shop offices, office suites, international schools and good linkages to various highways, Mont’Kiara can become a sustainable township,” she adds.

As a result, the nascent Solaris Mont’Kiara is primed to reap the benefits of this expansion and become an important commercial and lifestyle hub for the many residents and businesses in the area.




This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 771, Sep 7-13, 2009.