POTENTIAL IN SETAPAK

Setapak, a large and established suburb in the district of Gombak, Kuala Lumpur, has seen the average values of its high-rise homes outpace that of Kuala Lumpur’s on the back of a strong rental market, affordability and good access via road and light rail transit.

According to research by theedgeproperty.com, prices of such homes in Setapak surged 30.9% y-y in 3Q2013, propped up by subsale market transactions at Setapak Green, the third-most expensive condominium in the area (average price, RM631,375 per unit).

Setapak high-rise homes attract higher-than-average rental demand. “Due to higher rental demand, the homes are more for investment, with about a 60:40 ratio [of owner-occupiers to investor].

Target Market

The good accessibility offered by a number of major roads and public transport — the area is serviced by the Kelana Jaya LRT line and a number of stations, including Sri Rampai, Taman Melati and Wangsa Maju — as well as tourist attractions nearby such as Bukit Tabur, Berjaya Hills Resort, and Genting Highlands that make for nice weekend getaways.

Typical tenants of these apartments include professionals,  and university and college students mainly from the Tunku Abdul Rahman University College (TARC) at Taman Bunga Raya, just off Jalan Genting Klang. Working professionals enjoy Setapak’s good accessibility to major highways such as the Middle Ring Road 2 (MRR2), the Karak Highway, the Duta-Ulu Kelang Expressway, and access roads such as Jalan Genting Klang and Jalan Danau Kota. Meanwhile, students appreciate the convenience offered by public transport, eateries, entertainment outlets and proximity to TARC. There is also demand for commercial space by businesses such as restaurants, entertainment, sports, electronics, grocers, offices, salons and so forth.

Property in surrounding area

Condos in Taman Melati, Genting Klang and Wangsa Maju usually enjoy an occupancy rate of above 90%. Newer partly furnished three-bedroom units can be rented out for at least RM1,800 a month while older units with a similar number of rooms and furnishings can command at least RM1,500 per month. Rentals of condos and serviced apartments — such as those in Taman Setapak, Taman Gombak, and the Platinum Victory condos in Danau Kota, Genting Klang, Taman Melati — range between RM1.80 psf and RM2.50 psf, depending on furnishings offered. The average return on investment for these homes is between 3.8% and 4.6%. Meanwhile, theedgeproperty.com research shows that the top 10 high-rise homes in Setapak yield an average return of 4.7% to 5.7%.