Student Accomodation - Pangsapuri SS15 @ Subang Jaya

In this economic slowdown, everything slows down.... nobody can deny that it is extremely difficult to rent their properties out, especially in the higher end expatriates market. However, I have confidence in one particular market, which is the high end students market. I expect that in an economic crisis, students will stay put in Malaysia to continue or complete their studies instead of going overseas. This was the case in the 1997 crisis. Colleges converted their 2+1 degrees to 3+0 and as a result tens of thousands of students who were supposed to fly to UK, USA and Australia had to stay back. Thousands more returned home as their parents could not cope with the exchange rate.

In any case, I have confidence that in the Subang Jaya SS15 area for example, with more than 10,000 students in 3 colleges, I think I would be doing really badly if I can't at least get 4 or 5 students to rent rooms in my property.

So, I am extremely happy that after more than 2 years observing this area, I managed to get myself into this market. There are 2 apartments within the 100m radius of Taylors and Inti College. Pangsapuri SS15 is the preferred apartment due to the location in a quiet residential part of the area. The other one, My Place apartment is unfortunately badly managed by the developer, Sime Properties. My Place is also located close to the shops and food courts, which means noise and rats... Many students also live in rented link houses in the SS15, SS12 and SS14 areas but apartments are preferred due to the security.

Besides the security, students also love having additional facilities such as a swimming pool and also places to hang out by the pool.

Units in Pangsapuri SS15 are extremely rare and hard to come by. In the past 2 years there have only been 4 sub-sale units prices ranging from RM240k to RM490k. The median price is about RM260k. They are generally 3 bedroom and 2 bathroom units. There are also some extremely rare "twin units" i.e. 2 conjoined units with 6 bedrooms, 4 bathrooms and sharing a single kitchen and living room.

According to my survey, students pay between RM400 for a single windowless room to RM1000 per month for a master bedroom with adjoining bathroom and airconditioning. You would normally find 3-4 students sharing a room in the more expensive ones. The median rent is around RM500 plus bills and many of these rooms or houses are in extremely squalid conditions. Many landlords are unwilling to provide better furnishings or living conditions despite collecting handsome rents. But students don't seem to be fussy too..

There are shop houses such as this one in SS15 being converted into students housing. The condition inside is so terrible, but yet a 1st floor unit can easily collect RM2000 to RM3000/month from 5 to 6 students.

Being an ex-student myself, I don't believe in living badly and paying a lot. Based on the rental yield from this kind of investment, I do not see why it is so difficult to invest in a little more to provide a better environment. If we are willing to spend on quality furnishing with LCD TV thrown in for the expat housing market, why can't we spend some money for the students? Some may argue that the students will tend to trash the place, but trust me, even high ranking expats trashed my places before. That's why we collect a deposit and high rent.

I have some ideas collected from our favourite neighbourhood furniture store on how a student's room should look like. And these are some pictures of how the apartment will look like after renovation. The total costs including re-fitting of the bathrooms and kitchen, relocation of the master bedroom's bathroom door to allow others to access will cost less than RM20k. With a rental yield of 11%, I don't see why not. If the environment is comfortable, clean and nice, I am sure it will be easier to get tenants and they may even stay the entire 3 years duration of their course. This is better than the standard 1-2 years turnaround of tenants in the expats market.