Thursday, November 11, 2010

Bad Timing - Suasana Bukit Ceylon

The UMLand-MMC JV's Suasana Bukit Ceylon is finally launched. Unfortunately, the timing is rather bad with the recent Bank Negara policy to restrict 3rd property loan to a maximum 70%. Certainly, this has affected the pool of investors despite the project's offer of a 10:90 0% interests during construction period. The project has been delayed from the start due to hillslope problems but as in any such cases in Malaysia, sooner or later it gets approved no matter what the risk is. The developer has decided to launch half of the over 300 units. The balance of the units will be marketed overseas.




The project occupies one of the last pieces of vacant land in leafy but central Bukit Ceylon. However, it is sitting in a rather less glamorous end, further away from all the action in Changkat but this part is quieter, albeit for now. In future, another condo project will be built fronting Suasana which apparently will be called St. John's Wood. The back side of Suasana is actually built on top of the Bukit Ceylon hill itself. With one side facing a church, units facing this side will have unrivalled and forever unblocked views of both KLCC and KL Tower. It is also facing the much favoured morning sun. Without doubt, if one is to enter this project, the only piece worth buying are units on this side (units in Orange and Yellow below).



Type D (pic below) is a 1450sf 3 bedroom unit with nice and bright layout. I particularly like the long balcony overlooking the 2 iconic views of KL. Unfortunately, the kitchen design the Western type, unlike Verticas Residency's Asian style 2 part kitchen which is more home-friendly.






A week into the launch, all but 1 Type D facing KL Tower has been taken up. Also, due to the fetish of Malaysian investors for small 1-bedroom units, all the 730sf 1-bedroom units have been snapped up. The layout can't be any worse for a 1-bedroom unit. While the bedroom gets the optimum light and windows, the only natural light the rest of the unit gets is from the tiny window over the air-cond. Also, the bathroom has no windows and it is not attached to the bedroom. Maybe this is a good thing as guests do not need to walk into your bedroom to pee but then again, I wouldn't bring any guests home to this dinghy looking place.



The pricing however is rather attractive. The prime Type-D unit I mentioned above is priced at a cool RM740psf i.e. around RM1million. The smaller Type-C is going for RM580k which is slightly under RM800psf. This leaves some room for appreciation but as the new Bank Negara ruling is expected to correct market prices, the appreciation may not be much. The developer claim that the higher floors will be marketed overseas at an ambitious 30% premium.






20 comments:

Anonymous said...

Thanks for the review...so basically the conclusion we can gather here is No Go? and save the capital for better deals to come, especially 2012 subsales?

sinleong said...

we r all smart investors with our own investment objectives and styles... so, the conclusion is up to our own individual selves

David Teh said...

I'm considering Downtown Condo for investment and I've read some of your comments on the risk of future developments at the carpark areas. However, looking looking at the tenancy rates it seems quite sustainable..your thoughts please? Or perhaps suggestions of other condos for that price range...

sinleong said...

depends how much u r getting Downtown condo for?

David Teh said...

The average asking price starts from RM520K for the 1,300sq unit....

Anonymous said...

sinleong: why is downtown condo selling for ~450psf...whereas the new launches at bukit ceylon is going from 700 to 1000psd? what's your insight?

sinleong said...

U r trying to compare Giordano with Armani... you can't!!!

Edith said...

Hello SinLeong,
You aked me to post my question in your blog, so here goes:

I'm considering a unit in Downtown Condo which is nicely refurbished and tenanted @ 3500/mo for 2.5 years, 1276 sf, facing car park. Owner is selling @ 550K net (437psf). After reading your earlier comments on the mismanagement/state of facilities, and considering the high maintenance fees (574/mo), I don't know whether this would be a wise investment or not. What attracts me is the good condition of the unit, the longish tenancy, the freehold status, and the location. But living abroad, I have never seen the building or facilities, so don't know what condition they are in. Please advise. My budget is 500-550K.
Many thanks.

sinleong said...

Thanks Edith for posting the question in this blog. Lately a number of units in Downtown condo has come into the market at no less than RM500k price tag. We need to compare this with other neighbouring buildings within this budget.

A Somerset Seri Bukit Ceylon 640sf 1 br unit next door was recently transacted for RM540k. Although smaller, it's fetching a rental of RM3500/month. The facilities are also remarkably better than Downtown's which is really worn down. This is despite a recent uplift. The mtce fees at Somerset is only RM0.36psf which is RM230/month

sinleong said...

A slightly larger sized unit 1300sf in Seri Raja Chulan, also next door is advertised at RM540k but you might need to spend an additional RM50k on renovations and furnishings. The rental can fetch up to RM4000/month. The facilities are marginally better than Downtown and the maintenance fees is circa RM350/month.

Hence, imho Downtown is not worth RM550k. Perhaps the owner has put a premium on top of his renovations and the 2 year tenancy. At 6.5% nett yield, it might sound attractive but the future prospects of the building is not so enticing as more units are coming into Bukit Ceylon with SixCeylon, Suasana and Verticas, it might be a struggle to maintain tenants in the future.

Edith said...

Thank you very much, SinLeong. I appreciate and will follow your advice. That one-bedroom unit in Somerset Seri Bukit Ceylon would have been ideal, I think. But actually, I am kicking myself that I did not snap up your one-bedroom in Mutiara Villa when I had the chance!

John said...

Hi Sin Leong,

I am interesting in buying a unit in Suasana Bukit Ceylon. There was a launch 3 weeks back here in Singapore and I did went to check out the price. Asking for 1.6Mil for a type A standing at 27 floor. Facing KL and as well as the lush greeny of Bukit Ceylon. I did a check on the per sqft price and it is about 1,004/sqft.
As when looking at other property posting for sales on the internet, it seems that it is very pricey. On average, the price around Bukit Ceylon is standing aroun 480 to 750 per sqft. This are the slightly older unit like Angkasa Impian, Angkasa Impian 2 to name a few.
But in comparison with Verticas, they seems to be going hand in hand. As I am quite new to KL property, I would like to seek you advice. Would investing in Sausana be a good buy for rental and what about the captial appreciation in the next 5 years be like. Kindly provide your views. Thanks for sharing.

John

sinleong said...

John
It looks like UMLand kept their promise to launch in Singapore with a 30% premium. Obviously, you cannot compare Suasana Ceylon with Angkasa Impian 1 or 2. Angkasa is leasehold and the 1st phase is almost 20 years old.

Comparing agaist Verticas, Suasana is about 20% cheaper on an almost equivalent floor and view comparison. But if I am going to be putting stars to the project, Suasana will probably be 4 stars and Verticas earned 5 stars. The other point is, Verticas offers a 20:80 financing scheme and 2 car parks to each unit, which I think Suasana does not have unless it's different in Sg. So this cost has obviously been factored in and would probably make Verticas more attractive.

SL

John said...

Hi Sin Leong,

Thanks for the comment and insight info. Yeah, UMLand did deliver their promise to launch in Spore with a 30% premium. Infact, in Singapore they offer a 10:90 financing scheme and 2 car parks to Type A unit which is the largest excluding those penthouse etc. The rest of the unit will have only 1 car park space. Well, honestly I would say that I am disappointed with a 4 star rate only hehe...

So what do you think of 3 bedrooms unit leasing out? What kind of rental yield would it be fetching? I heard that level 24 to 28 was offer to be fully furnish and identically setup to be service apartments with a top up cost of RM12K. This would including all big and small items from sofa to bed to lcd tv to even the smallest cutlery sets. To what I know Ascott will be working with the marketing agent to lease all these units out. Hence I am pondering if this is a good investment as I am not sure of the recent rental yield.

Lastly, what about capital appreciation in 5 years down the road? What would you think the cap app would be like? 10% 20% or 40%?

John

sinleong said...

I am not aware about Ascott's participation in this project. This must be something new. If Ascott is going to be involved, I think it will be good just as Lanson Place will be with Verticas and Somerset with Seri Bukit Ceylon. Currently, high end 3 bedroom units in Bukit Ceylon are being let out around RM3500 to RM4500/month. This may seem low because all the buildings with 3br units are old such as Menara Bukit Ceylon, Angkasa Impian, Seri Raja Chulan etc. If compared with the 3br units in neighbouring KLCC area, they are looking at RM5,000 to RM6,000 for this size. The larger units 2,000sf and up can fetch RM8,000 to RM12,000.

I am already expecting a "price correction" in the KL city market, so cap app is optimistic... unless something great happens to the economy

John said...

Well, we cannot compare those old 3 bedroom units to the newer one like Suasanna or Verticas. As you mentioned before, it would be like comparing gordanio with armani. 2 World apart in term of standard of living, quality of living amenties etc. I do believe that there are people out there willing to fork out bigger number for rental if they are to like living in places near lots of greens with unblock view from high floors.

I do see the coming of enbloc soon for older condo in Bukit Ceylon area with 6Ceylon taking the lead at the moment. To compete down the road in term of market value those older condo need to take action. Enbloc the whole condo, demolish, revalue the land price and rebuild. Thus enable developer to cash in higher margin with up to date land price and also high per sqft pricing. At the moment, this is what is happening in Singapore. Older condo with low floor will be the first to go as the compensation is low. After the rebuilding of new condo (as high as 40 floors), imagine the number of units there are in the same plot of land. Here in Singapore I call this buying Airspace :P Yes, Airspace in Singapore is no longer cheap! Though with new market cooling measure coming in place, the property market is still climbing.

Well, I am not sure if I would like to see a market boom in KL. Good for us investor but poor on those who trying to get a shelther. Hence, this is more like a 2 edge sword. Which ever direction it goes, one party will be hurt.

So, about the price correction in KL city, how long will this happen? Any idea? Yup, I am confident with KL property market that there is room for breather as economy is moving upward, pricing move upwards as well. Another recession will not be so close at bay at the moment. Hence it is time to cash in a little for a unit.

Tonight will head down to place a booking for a unit in Suasanna!

sinleong said...

John, what I meant was, 3 bedroom high-end rental is unprecedented in Bukit Ceylon. So, at the moment there is nothing to compare. Probably the closest you'll get are the Duplex penthouses at Seri Bukit Ceylon which are going at around RM10k.

Many people are buying into places like Desa Kudalari hoping for an en bloc but to get this one has to change the law which might be difficult in the short to medium term.

A market boom in the high end market will not hurt those looking for a shelter. I would like to see an organic growth instead of the speculator driven boom we've seen in the past 2 years. With the ruling to cap borrowing up to 70% for 3rd property, I'd expect to see a correction of about 5% to 10%. Certainly, the market has become much smaller because a large chunk of buyers in Malaysia are indeed speculators and investors who have more than 2 properties.

Anyway, congratulations on your purchase of Suasana. If it's only 12k, I'd propose you take the furnishing.

sinleong said...

John,
Another word of caution... normally people who pay more than RM10k for a 3 bedroom unit go for units above 2000sf. The 3-br unit you are going for is around 1500sf. The market rate for this size is RM6000 to RM8000 (refer to Meritz, Marc Residence etc.).

SL

John said...

Hey Sinleong,
Yes, I do not expect rental yield of 10K a month although those sales guys was saying that it is acheivable. Well, if it comes it is a bonus. What I am looking at would be at RM6K to RM8K. Good to cover my monthly payment back to bank.

Thanks for the info on en bloc. Well, least I am not jumping into this band wagon going no way till the local law is change.

Yeah the new 70% ruling does help to soften the market and well, this would be what we call as price correction. I guess 5% to 10% correction would just be good. Yes, Malaysia buyers are largely speculators like what we have locally in Singapore. But with the 2nd property ruling cap at 70% borrowing, it too does a price correction locally. Henceforth, now Singaporean are moving and starting to speculate in nearby states like JB, Malacca, KL and even Penang. Very soon, prices will be booming again especially with the chinese from China coming into Malaysia market.

Thanks and yes I will take your advice of going for the full furnish at RM12K on top.

Anonymous said...

Hi thanks for the review. Is it worth buying at RM932/sqft without KLCC/KL tower view?