Text : Eunice Ng
The two five-star hotels at KL Sentral – Hilton Kuala Lumpur (left) and Le Meridien Kuala Lumpur.
Little India after its facelift.
Bustling Brickfields – always alive with activities.
Home Finder takes our readers on a series of potential investment spots served by the Mass Rapid Transit (MRT). Whether you are looking to invest in a particular area or just researching on potential properties, we hope to uncover some hidden gems along the way for the benefit of our readers. In this issue we feature areas within the vicinity of proposed KL Sentral MRT station in Brickfields, Kuala Lumpur.
To many of us, Brickfields is better known for Little India, the thriving business spot run by the Indians who formed the major community in the area. In the past, Brickfields was also famous for its red clay bricks.
“Brickfields has been experiencing a steep uptrend in price,” says Tommy Chin, Sole Proprietor of Propmark Realty.
The rapid rise of property prices in Brickfields can be attributed to the development of Kuala Lumpur Sentral (KL Sentral) as well as its strategic position of having both the KL Sentral railway and KL Monorail terminals.
“People have realized the centrality of Brickfields, and the value-added demand has been ongoing for the past two and a half years.”
“They can visibly see the massive physical projects that are undertaken by Kuala Lumpur Sentral.”
The demand for properties here is so high but there are hardly any sellers, Tommy says, attributing the demand to the urbanization of KL Sentral.
“People want to locate themselves here, especially those who are working in town.”
“They buy an apartment like Palm Court for RM200,000, and rent it out at RM600 per room. The return is more than 8% for small parcels like that.”
According to Tommy, 14 years ago, Palm Court was sold around RM50,000 per unit at developer’s price. Today, these approximately 800 sq ft units are sold in the range of RM180,000, that’s 260% in capital appreciation in 14 years or 9.58% compounded growth rate per annum.
Still, Brickfields at large comprised of old residences, ranging from flats, terrace houses, townhouses, old railway quarters and bungalows, with newer and higher end properties like Suasana Loft and Suasana Sentral Condominium at KL Sentral.
On the commercial side, the rental performance of office space in KL Sentral is taking the lead as people find it practical to locate here.
The centrality of the central business district runs from KL Sentral to the shops located at Jalan Tun Sambanthan and Little India.
Four years ago, the office space at Plaza Sentral of 2,000 sq ft was sold at developer’s price for RM440 per sq ft. Today, it is selling at RM1,000 per sq ft and above.
Based on today’s market price and a rental rate of RM8 to RM10 per sq ft, the rental can yield approximately 10% per annum, which is already higher than Bangsar.
The ceiling price of a three-story shop in Bangsar is around RM5 million with asking prices touching RM6 million. With a total rental of RM31,000 per month on an average, it is generating an average yield of 6.2% per annum.
The rental returns of the three-story shops in Brickfields however tread lower at 3.5%, which is not on par with its capital appreciation. Despite the lower rental yield, “purchasers here are motivated by the potential of Brickfields and its future value based on the KL Sentral’s complex development and urbanization”.
“Brickfields is still under transformation.”
So what are the opportunities left for investors here?
With the critical mass of business community here, ranging from local market research firms to multi-national oil and gas companies, Tommy sees opportunity for investments in the serviced residence sector where a simple 500 sq ft apartment fulfils the Small Office Home Office requirements of the business executives and professionals in the managerial levels.
Furthermore, new developments, he says, are scaled around the riverside where a number of bungalow plots are now being rebuilt into high density commercial developments.
“Brickfields’ land is in such high demand that it is a waste of land resources to build low density residential development.”
“For those bungalow lands, which are potentially convertible, the capital appreciation is overwhelming.”
These bungalow lands, he says, were only about RM60 per sq ft 10 years ago. Today, it ranges between RM600 per sq ft and RM800 per sq ft. The sizes average from 10,000 sq ft to one-acre plot. But there are not many chunks of land left, he adds.
For example, a bungalow plot, next to a church at Jalan Tun Sambanthan, was converted to a high-rise office building. The land was sold in 2005 at RM400 per sq ft whereas in 2000, the asking price for the land was just about RM100 per sq ft.
It is also not uncommon to find older residences such as townhouses being used as commercial premises.
Speckled behind the Young Men Christian Association (YMCA) building, the variety of businesses flourished. What used to be townhouses then are now being occupied by Indian restaurants, agricultural product wholesalers to even law firms on the ground unit. The upper units are used as office space and some are retained as residences.
Currently, the construction of a multi-story car park fronting the riverside is underway to feed the parking needs of Brickfields and in anticipation of the MRT.
Tommy predicts that when the development at KL Sentral is fully completed, Brickfields will at the same time come to its maturity. Then, property prices in the area will ‘boom’. Brickfields will then truly be a centralized location, a host to multi-business communities, supported by a full-fledge transport convenience.
“Brickfields has been experiencing a steep uptrend in price.” – Tommy Chin, Sole Proprietor of Propmark Realty