Yesterday, I received an email with regards to my opinion on Setia Sky Residences. I shall reply it openly. =)
p.s. the name of the pretty lady has been camouflaged to Miss Y. and certain sensitive information have been removed from the excerpt of the email.
Hi Eric,
My name is Miss Y. and I stumbled upon your blog while researching the Setia Sky Residences. I find your opinions insightful and I really wish I was as knowledgable as you are when it comes to the whole property investment scene.
I have read so many comments about whether or not Setia Sky Residences is a good property to invest in, and it seems the more I read, the more confused I am getting.
I wonder if you would share with me your opinion:
I am looking to purchase a unit in Block A. My initial payment is RM10,000 (booking fee) and no further payment until I get the keys when the project is completed. The purpose for purchasing this unit will be to rent out or to sell upon completion.
It all sounds like a sweet deal, but I am worried about whether I am missing any key points when considering this purchase.
- Will it be easy to rent out this property? How much do you think it will fetch per square foot?
- In the case of selling it upon completion, do you think the price would appreciate enough for me to make some profit?
- Or is this property over-hyped and will I be stuck with a huge financial burden of which I will then have to sell it immediately and maybe even suffer a loss?
I have thought about how its location and the future Kampung Baru developments may positively affect its value, but I don't know if I'm being too optimistic, bordering on unrealistic.
If it were you, what would you do?
Eric, I know you don't know me but if you could share your thoughts on this, I would be so grateful. Thank you for reading this and I hope to hear your wise insights soon.
Sincerely,
Miss Y.
The Setia Sky Residences at Jalan Tun Razak, Kuala Lumpur.
Dear Miss Y.
I would like to thank you for your nice compliments on my blog and my opinions. I personally dont think I am 'that knowledgeable' in the whole property investment scene - there would be thousands out there who are better than I am for sure. I am still learning... still still learning...
Before I start replying your enquiry - I would like to first declare one thing first. I am not in any form of link with the developers of Setia Sky Residences - namely S P Setia Berhad or their direct subsidiary - Exceljade Sdn Bhd. However, I do admit I am working in the company that is constructing the Setia Sky Residences Phase 1 - Blocks A and B.
You did mention that you are looking to purchase a unit in Block A - or Alia Tower. Do bear in mind that the Block B - Boheme tower, launched at an average price of about RM680psf, has been fully sold out already. Block A should be reaching 100% sales soon, limited units left. The recently launched Block C also had very good responses. At the price you were looking at, I think you would be getting a pretty good price. As for your initial payment of RM10,000 and no further payment til project is completed - yes, this is how the 5/95 concept that S P Setia projects have.
Anyways, come to the main point...
I think the property is a good investment opportunity for you. Think about it - pay just RM10,000 today, and nothing until completion. Assuming the property is selling for say... RM1,000,000 for the Type A1 unit (1,055 sf) - you're looking at a price of just below RM950psf. The rentals for this area is expected to fetch about RM5k upwards, which translates to about RM5psf / month. Taking that figure - you'll still be able to fetch a good 6% yield. That is better than putting money in the bank - and has better investment returns as compared to a lot of other properties in the KLCC region which is only getting 3-4%. I think the units here would be quite easy to lease out
Upon completion, the property would be expected to have some appreciation. I think 2 years down the road, properties at prime locations such as the KLCC vicinity - would have at least 20-30% appreciation value. However, I dont expect the rental rates to go up much though - maybe up to RM6psf maximum - which would mean the yields in 2 years time would drop to an average of 3-4%. Look at the property sector as a whole - and also the Setia Sky Residences. I do not think that the property is overhyped at all. Unless there is a major slump in the economy in 2 years, you should have not much worries selling or leasing out your property at Setia Sky Residences.
Recently, at the ETP conference, the Government also showcased some future developments in the Kampung Baru area. This would positively impact Setia Sky Residences for sure - the only concern is WHEN will the redevelopment take place. Yes, there would be some traffic congestion in the area as well - but to me, congestion means progress. Congestion means busy place, high exposure, and good business!
I put myself in your position - and I would positively consider buying the property (the truth is, I already bought - but I bought it much earlier in January 2010). In fact, I recommended a good friend to go get a unit at the recent launch of Block C. I would also be looking at the Type A1 (facing Jalan Tun Razak and GH direction) instead of the KLCC facing ones. WHY? To me, a house is a home to me. What matters most is the inside - not the views that you get outside. How often would you be looking at KLCC anyways? PLUS, they're not going to do much high-rise at the hospital side, so you get a pretty clear view of quite a good distance.
When making a property acquisition - you need to ask yourself - is it for own use, or for investment? In your case, it is an investment-based purchase - so you need to look at few factors before making any purchases, anywhere - rental yields (anything above 4% would be considered a good buy), location (you just cant go wrong with this location) as well as developer packages (in this case, low entry cost). Market sentiments are important too - but right now it seems like everyone's jumping into property investments.
Last but not least - making property investments also you need to look at who is the developer. S P Setia Berhad is the country's largest developer by market capitalization as well as sales. They have managed to turn a pretty difficult Bukit Cahaya/Meru location into what we know today as the Setia Eco Park and Setia Alam. This Kampung Baru location would be a breeze to them. On top of that, look at the features of the development. Setia Sky Residences have the interesting Sky Club on the Level 34 which has the trendy infinity swimming pools and gym, the Sky Villas for parties, private lift lobbies (exclusivity) and a lot more.
I hope my opinions would assist you in your decision-making. However, please dont hold me responsible for your choices in the event of unforeseen circumstances (economy downturn, slumps, financial crisis etc etc - these are beyond my control...). I shall end the blog post here with some construction progress pics - as taken from the developer's website.
Thank you and take care.
Eric Yong.
