Area Focus—2019 Revisiting Mont Kiara
By: Jotham Lim
Introduction
Mont Kiara is renowned for being one of the most luxurious, high-class districts in the entire Klang Valley. Known for its strategic location, just 15 minutes away from the heart of Kuala Lumpur, it is also celebrated for its high quality of life. Referred to as an international condominium township, many expatriates reside in this area, with a majority of them being South Koreans and Japanese. This is easily reflected through the vast array of Japanese and Korean restaurants lining the streets across the entire district.
Some of the many iconic condominiums in Mont Kiara include Arcoris, Solaris Mont Kiara, Plaza Mont Kiara, One Mont Kiara, and Gateway Kiaramas. Despite being the concrete jungle that it is, the area is paradoxically dubbed one of the “green lungs” of Kuala Lumpur, situated at the base of Bukit Kiara.
Roaming through the streets of Mont Kiara, surrounded by towering condominiums left and right, one might wonder how this affluent township came into being. Let us take a trip down memory lane and look at the brief history of Mont Kiara.
Brief History
Before it was called Mont Kiara, it was known as Segambut Dalam Rubber Estate in the 1990s. There were no major access roads in and out of this area, and the ground was graced with nothing but undergrowth and rubber trees. The uneven terrain and hilly surface made it very difficult to transport goods and materials - not exactly the most accessible place to start a real estate development project.
Datuk Alan Tong Kok Mau, founder of UEM Sunrise, acquired the land at a relatively low cost. He had big plans to turn this area into a lavish township centred around comfort and quality living. The name “Mont Kiara” was the only one that didn’t end up on the cutting room floor, and the name has attracted plenty of foreign investors and expatriates.
Initially, its emergence served as direct competition to Bangsar, which happened to be one of the most opulent neighbourhoods already established in Kuala Lumpur at the time. Being relatively unknown during that period, it attempted to pull attention towards itself through heavy promotions, offering enticing and competitive prices. Properties could go as low as RM190 psf, a steal when compared to Bangsar’s RM300 psf at the time.
Present
In stark contrast, units at Arcoris Residences averaged about RM1000+ psf as of 2018. It is shocking to see how far it has come. With a brand new year and a fresh new start, we would like to get to know how it has been performing lately. Property Insight has reached out to Johann Paul Gregory to get his insights from a resident’s point of view. Johann Paul Gregory is an author, speaker, trainer, consultant, and real estate partner with plenty of experience dealing with real estate.
Living In Mont Kiara
As high-class as it is, there are still several problems that have been plaguing the area for the past decade. The most prominent issue would be traffic congestion, which has raised many complaints from residents. Traffic could come to a halt during school pick-up hours, but there are pockets of time when traffic is smooth sailing, especially during school breaks. The scarcity of land and gentrification in the North are some primary concerns. However, none of these issues are severe enough to drive down property prices, though they are issues that should be addressed by the government.
Despite usually congested traffic, Mont Kiara boasts great connectivity, being situated in a prime location. The Penchala Link Expressway links Petaling Jaya, Kota Damansara, and Damansara Perdana, allowing easy access to offices and shopping malls. One can also reach Kuala Lumpur City Centre using the Kerinchi Link Expressway. Notable shopping malls include the newly opened Shopping Centre, Hartamas Shopping Centre, and Publika. Convenience is never an issue with a wide array of grocery markets like Jaya Grocer and Village Grocer.
There are plenty of property value boosters such as the International School, Gardens International, and the new Hyatt House hotel. Amenities are aplenty; everything you will ever need is within a 15-minute drive away, including banks, hospitals, and post offices. Overall, Johann is happy to live there and has no major qualms about the area. It is amazing, peaceful, and importantly, safe. The great location and high security highlight it as an ideal place for own stay. “If there’s anything missing to complete the experience, it’s a nearby cinema or bookstore,” said Johann.
Data Interpretation
The best way to understand how Mont Kiara is performing is by looking at statistics. Special thanks to the people at the Valuation and Property Services Department (JPPH) for providing the data (see Figure 1). As you can see, the density clusters and the amount of transactions in the condominium sector have somewhat dropped. This is more apparent in the serviced residences sector, which experienced a significant drop in transactions as well. This data aligns with the statistics in Figure 2.
While it is great to have these charts, how does the data relate to us? We have approached Michael Lam, an associate partner at CH Ass Management, to get his interpretation of the information presented. According to Michael, this spells good news for property investors, indicating steady appreciation in prices, not stagnation as some have been led to believe. Judging from the House Price Index, there is a year-on-year increase in house prices, and until now, the median price of sub-sale units is around RM700 psf. He doesn’t expect anything dramatic to happen.
Michael further explains that this is an increase compared to longer periods, but we no longer see the higher rates anymore due to government regulations and the influx of projects. If you are looking for value, it is still best to stick with sub-sale units due to their relatively lower price per square foot. New projects such as Pentamount and Sefina by UEM Sunrise are a great buy due to their newly built status, priced around RM650-RM790 psf. The critical factor to consider is location. Existing units surrounding the heart of Solaris have a stable and consistent rate of capital appreciation. Newer projects are on the outskirts, and there isn’t enough data to give a concise prediction of potential gains, essentially making it a high-risk, high-reward situation. Many of Michael’s inner circle friends and clients are planning to move to Kayamas or somewhere else within Mont Kiara, with most of them looking for sub-sale units for their value in prime areas.
When asked about rental yield potential, Michael mentioned that there has been a massive influx of residential projects, giving tenants more choices. He foresees a steady flow of expatriates coming in, but investors will need to work harder to attract tenants due to increased competition. The demand is definitely still there. Regarding rental yields, The Edge published statistics indicating that rental rates as of April average around RM3.50 psf. Fast forward to now, and current rates haven’t changed much. Local news outlets quote that rental rates will remain flattish during 2023. When asked why the rental market remains soft, Michael concluded that it is stagnating due to the surplus amount of residential options to choose from. He is currently managing a few properties in the City Centre and the expatriate region, and while rental rates have been dropping, he considers it a blessing to manage and hold current rates right now. With tightening regulations regarding short-term rentals like Airbnb, landlords are forced to stick with long-term rentals.
Personally, Michael believes that Mont Kiara will remain an expatriate hotspot for years to come, with only a positive outlook for the future. PPC International managing director Datuk Siders Sitapatham quoted that Mont Kiara continues to be a highly sought-after residential area. Occupancy rates are dropping due to the influx of new launches, but good locations mean prices are not expected to drop soon. When asked for advice to give to investors, Siders said, “For capital appreciation, it’s the survival of the fittest. If we are talking about landed properties, there’s nothing to worry about. If we are talking about high-rise condominiums, it honestly depends on many factors. Judging from the current trend, the rate has slowly stabilised, yet prices are steadily rising. Now is an excellent time to purchase, but it depends on the location. Don’t expect much in terms of yields. Sub-sales are where the real value is.”
Conclusion
Considering the fact that Mont Kiara has been underperforming for the past few years compared to other areas, it still holds up against the competition as an attractive option for people looking for a mature, affluent neighbourhood with plenty of potential for future growth.
Note: Figures and charts mentioned in the article are not included in this text.