Tuesday, July 6, 2010

It's Only Hot Cake If You Rent It Cheap

As I was trawling the internet for properties in Sunway PJS7, which apparently has been in high demand due to the neighbouring Taylors College main campus, I chanced upon some advertisments for Mutiara Perdana. This apartment is located just minutes walk from the campus' main door. One ad claim that their unit is the only one available in market currently, giving the impression that it is really hard to find.
.
I recently went for a survey and found that the claim is indeed true. The unit advertised for RM200k is the only one I can find for sale. The asking price also seems to be higher than the bank's valuation which is between RM150k to RM160k for these 3 bedroom units. I don't know how long it will stay in the market but when I looked around the place, I found at least 6 units available for rental.
.
It might be understandable considering that the semester is coming to an end and most students won't be rushing for accomodation until the intake around August. However, what I found was, the units being occupied or taken were all rented below RM1000/month for an empty unit. Fully furnished ones go for around RM1400 and some even asking for RM2000. I came across one owner who wanted RM1200 for a completely empty unit - no fittings, no furnishings... One agent told me that the unit has been in the market for a long time. The previous tenant who was paying RM800/month left and the owner now wants to increase the rent.
.
I don't think it will be impossible for the rental to go up in the future but at this stage, it is still too early. The campus is not yet even half it's capacity. Some owners yet to be realistic. No doubt some students are paying up to RM800 for their room but they will move as soon as they find a cheaper option. And there are owners providing this cheaper option.
.
Also a great concern with the building of a bridge linking the Lagoon Perdana apartments due to be completed end of this year will add another 1000 rooms into the equation. Then the market may become more realistic and the bankers' valuations may seem to be right after all...

17 comments:

Anonymous said...

I just do not understand why some owner still insist to sell their unit above the bank valuation. If a seller have to pay more than 10% of the downpayment, which mean that's an overprice property and not worth for an investment, plus the other unit in mutiara perdana apart rent it at cheaper price which is below rm1k.The competition too fierce, and after deducted all outgoing, the profit only at rm100 to rm300 per month. Not attractive at all.

Anonymous said...

it's not the owners who decide. it's the market that dictates. if the property is above valuation rate, people can choose not to buy. but the fact that properties are still being transacted above valuation shows that there is a market. talk until the cows come home, nobody ever put a gun to force buyer to purchase. it's willing buyer, willing seller transaction... always!

Anonymous said...

Investors who only look at nett rental profit as an investing yardstick are really short term investors - the type sellers should not waste their time entertaining. In some countries, most properties yield less than 4% rental and with high interest rates, mostly it is a break even or slight loss. Still investors go in for long term capital gain. I think it is the same case here in Malaysia with landed properties. Double storey links go for anything above RM500k these days. Yet rental is less than RM1500.

Anonymous said...

banks are damn kiasu these days.

Anonymous said...

rm500k for DS but rental less than rm1500? Does it mean the rental can't even covered the monthly installment payment? oh my gosh...

sam bruns said...

tried to search in web regarding info on bridge linking Lagoon Perdana but can't find anything. Are they already start on the construction.?

sinleong said...

yes it has started but i am a bit baffled how they intend to terminate the bridge on the lagoon perdana side.

Anonymous said...

That's a bridge (ready) for vehicle from LDP to U turn to south quay.... Is that the one ? in front of Lagoon perdana is Toll plaza, How to build ?

sam bruns said...

Went to Lagoon perdana to check on the auction unit.. 1st time been there.. went with my wife and kids.. my opinion, lagoon perdana have too many block and unit..crowded..cleanliness not up to the standard of apartment.. more to low cost.. safety not too sure..but there are mix here with african, middle east, indon, pakistan,bangla.. my wife dont feel comfortable while walking there and entering the lift.. for me, it is not suitable to rent to female student.. just my opinion..

with regards to the bridge.. i dont see any "walking pedestrian jejambat" crossing the LDP.. anyway, brigde crossing for traffic user already completed for both direction (last time i remember it was only one direction)... sin leong..can you advise is this the bridge you re talking about..

sinleong said...

yes, it appears they have widened the bridge. at the moment, it is still not possible for cars from lagoon perdana side to cross over to pjs7. however, you might notice they are still widening the bridge on the PJS7 side but there does not seem to be any space on the lagoon side to terminate it. so, i suspect they might be trying to put a traffic light there so cars can queue to enter taylors campus.

as with all talam/europlus projects, they are all dogged by management problems. lagoon perdana is no different. but if you are renting to students and pricing it cheap, you will always find a market. as i pointed out in the case of Casa Subang (http://realtymalaysia.blogspot.com/2009/12/investing-in-students-accomodation-casa.html), whether you have the heart for this or not

cmy said...

Dear Sin Leong,

I find your article useful. I have been recommending people who are interested in Mutiara Perdana to read your blog for information. Keep up the good work!

ann lau said...

Hi Sin Leong,

Got to know your blog by accident. Almost read all articles in one day. Thanks for your sincere sharing on your property venture. Keep up the good work!
I am finding 1st property solely for investment. Lagoon Perdana subsale & rental has shot up quite a bit lately. I notice many units occupied too. Belvedere which is nearby going for CF soon. I find Casa Subang & Sunway Indah Villa okay too. Can you give me a pointer?

sinleong said...

Thanks, Ann. The demand in Sunway is going to be quite steady due to the colleges. We've got 4 big ones in this area alone - Sunway, Taylors, Monash and The One. But be cautious not to pay too much as there is a limit to the rental you can collect in this market. Lagoon Perdana, Casa Subang and Indah Villa all have low entry prices but there are some major management issues here. They are not a preference for students except those seeking the cheapest rent. And sometimes (not always), those in this category will give you some form of problems one way or another.

ann lau said...

Thank for the tips! Do you invest in UK properties? I've search your blog and don't find any article on UK. I'm being approached to invest in studio unit and if pound goes up again.. "fatt tat".

sinleong said...

i am more of a collector than an investor. i like to buy something i can see and touch and enjoy now and then. i dont really go to the UK that often, so i am not considering anything in the UK. nevertheless, compared with Australian properties, UK is a good choice now as the Pound is low. It is the best time to go in

ann lau said...

Thanks again Sin Leong!For a newbie, there's so many doubts to consider before investing. In short, making money in whatever ways is simply not easy. I'm glad to found this blog. Thanks to be able to chat virtually. Cheers!

apartments in gainesville said...

This is a good common sense Blog. Very helpful to one who is just finding the resources about this part. It will certainly help educate me.