Easing Rental Yield

There are drastic changes in our KK properties market for the past 5 years. Of course most of us make money if you started investing earlier then 2005. Residential property focusing on Api-Api Apartment, Luyang Perdana, Ganang Villa, Marina Court, Jesselton Condo, Indah Court, Lucky Height Condo, Radiant Court and Rainfield Court has appreciated easily 50% or some even more than 100%. While landed properties like Indah Permai, Kingfisher, Kingfisher Sulaman, Luyang, Damai, BDC and some area in Penampang also enjoying a tremendous growth.

Not to leave out are our commercials properties which appreciated steadily together high rental yield especially area like Gaya Street (including Wisma Merdeka & Suria Sabah), Damai (City Mall), Lintas (Plaza & Square), Inanam (new development mainly KK Taipan & under construction Metro Town), along Lintas Highway (Lintas Jaya, 88 Market Place, Cyber Square & Kepayan Perdana) and lastly Jalan Sulaman mainly focusing on 1 Borneo Shopping mall, Alamesra Mix development, & 1Sulaman.

To purchase the residential and commercial properties within area mention has to be done carefully especially at current market situation as most of the seller are selling at least 10%-30% above the true value of the property. If you are buying into the future value of the properties indirectly you have to wait a bit longer than normal for you to make money. I know a lot of sellers in town are not in the urgency to let go and some even keep the attitude of “buy it or leave it”. Last week I came to know there is one friend who when to bank to apply loans, he bought Beverly Hills apartment for RM 110K which he think it’s cheap. But ending up the value indicated only valued at RM 70K as it’s a studio unit with built up area not more than 430 square feet. So please be reminded that purchasing properties is not like buying vegetables or fruits, the moment you committed it you need to carry all the responsibility for the next 20 to 30 years. So better careful then regret.

In recent years, I think you must agreed with me that in general either apartment, condominium or commercial rental yield has drop drastically due to the higher purchasing prices. I would say, residential yield is ranging from 6%-8% and commercial is at 4.5%-6.6%. But if you started purchasing properties before 2005, I believe you are enjoying rental yield of 10%-12% for residential and commercial is stable at 9%-10%. The best example is at Indah Court which the purchase price in 2005 will be around RM140K with current rental of RM1200 per month @ 10.2% while for commercial purchase prices is at RM500K (area like Ground Floor Lintas & Damai) with current rental of RM4K per month @ 9.6%. At current purchase prices of Indah Court of RM210K and Ground Floor (Damai & Lintas) of RM800K rental yield has drop to 7.4% (RM1300 per month) and 6.3% (RM4200 per month)respectively.

Even at rental yield of 7.4% for residential and 6.3% commercial, the return is still better and acceptable for me. Looking at current market trend of residential ie apartment and condominium which selling not less than RM450psf I still prefer to stick to old/existing development due to cheaper entering cost. Below are the lists of current launched properties and expected to be launch within the next 12 months.

Latest development launch in town: 

1. Residential – Puncak Luyang Condo                         Estimated > RM450psf
2. Residential – The Peak Vista Block A                        Estimated >RM470psf
3. Residential – South China Sea Level 8                     Estimated > RM700psf
4. Landed Residential – Dongonggon                           Estimated > RM250K
5. Landed Residential – Tuaran bypass                       Estimated >RM379K 

 Residential project around KK which expected to be launch soon: 

1. The Peak Block A L 8 & above                     Estimated >RM600psf
2. The Peak Soho                                                   Estimated >RM450psf
3. KK Times Square                                              Estimated > RM500 psf
4. KK Suites (next to Maybank Karamunsing)   Estimated >RM550 psf
5. Grand Condominium (Near KPD)                      Estimated >RM400psf
6. 21 BayCondo (next to Wisma Perindustrian) Estimated >RM400psf
7. KK Times Square 5 Block of Condo (Phase2) Estimated > RM500psf
8. Jesselton Residences Next to Suria Sabah     Estimated > RM600psf
9. Signal Hill Residences (Near to Istana Negeri) Estimated >RM400psf
10. IJM Land (Next to Radiant Tower)                       Estimated >RM600psf
11. Atkinsen Tower (Near Padang Merdeka)             Estimated >RM800psf
12. Surian Residences (Near RTM Jln Lintas)          Estimated  > RM330psf
13. Excluding in the pipeline are Likas (next to Indah Court and infront of Esso Station), Signal Hill (around 8 sites), Damai (Wah Mie Group), Hilltop (Binapuri Group) and Kepayan (my friend)..I will let you know more when I found out.

The ultimate of investment is to make sure you are enjoying steady capital growth while supported by steady and reasonable rental yield. If this objective is not achieve, I think the market are heading towards more challenging economical support whereby you need to accept the fact that negative cash flow (Alligator) will happen whenever you bought new properties for investment. Anyway we are very lucky as we are still enjoying 5%-8% yield per annum in general especially existing for residential and commercial properties at matured area even though the prices has been inflated so much. These never look down at old properties…Happy Investing.

You cannot Grow Land…CK Wong & MY DAD

Related posts:

1. High Growth & Pick up Rental – Plaza Kingfisher
2. Accumulate for Continuing Growth
3. Greater Kota Kinabalu
4. You Need to Know THIS!
5. Landed Residential Back in Favor

Tagged as: capital appreciation, Indah Court, psf, rental Yield, Signal Hill, Steady rental