After one year of relatively calm market situation, in the last few months Cyberjaya has made a big “come back” on the Malaysian Property Stage with several successful new development launches. The market, soft because of all the news coming from Government (budget 2014) and Bank Negara Malaysia, keeps on wondering if this return is real or if there are chances for a over-supply or downturn of the Property prices. Which are the drivers for further growth and is it sustainable?
Let’s find it together in this column by Dr. Daniele Gambero who has made an in-depth study on Cyberjaya and is here sharing his findings and takes.
Cyberjaya, a City Poised for Capital Growth
THE story of Cyberjaya started in 1995 when the Federal Government commissioned a study for the Multimedia Super Corridor (MSC) Malaysia to the management consultancy firm McKinsey. The consultancy firm proposed to create an Information Technology or IT-themed hub (Cyberjaya) to become The Malaysian IT Research and Development (R&D) centre right at the west side of Putrajaya, the new Malaysian Administration Centre.
Since then, the newly born IT City has seen a number of ups and downs that started in 1997 with the global financial crisis and continued in the first decade of 2000 through all the minor and major crises that globalisation brought over to Malaysia.
As I emphasise when talking about properties, one should always look at the sustainability of the location before making an investment decision. Cyberjaya has a strong strategic sustainability that lies in its Cyber or IT Malaysian capital concept.
As a matter of fact, even though Cyberjaya has stepped onto the property stage only a few years ago, since early 2000, Government agencies have been promoting Cyberjaya internationally. At the end of 2013, there were more than 500 MSC status corporations that have located their headquarters, IT centres and operation offices in Cyberjaya.
Some of the corporation giants we have now in Cyberjaya, Dell, HP, DhL, Motorola, OCBC, IBM and so on. IT means innovation, and there cannot be innovation without education. Cyberjaya has also become the educational hub of central Malaysia with many local and international universities which have based their campuses there. The latest statistics indicate that the student population has already passed the 25,000 head count and is in fact, on the rise.
As New York in the 70’s has been nicknamed the “Big Apple”, Cyberjaya is increasingly becoming known as the “C” city of South east Asia.
Why “C” you will ask? C means computers, cyber-science and of course Cyberjaya. Other C’s in relation to property, could stand for: Clean hub, centralised location, capital of creativity, connectivity and last but not least capital gains.
Out of the 7,000 acres of freehold land in Cyberjaya, 30% or 2,100 acres will be dedicated to public parks and the green lung of the city together with an impressive lake. Universities and IT centers are populated by young generations or members of the Gen Y and Gen Z groups that are environmentally sensitive.
Looking into this, the developers have been planning and designing accordingly, leaving ample space for green facilities in all their developments and setting their buildings to become Green Building Index (GBI)-rated.
Cyberjaya is a natural green hub and is probably going to become an example of how to plan and construct smart, green cities as authorities and developers will not have to deal with existing old buildings or “out of date” road networks. It is a brand new city designed on a “blank slate” and this will surely give its developments a big plus point.
Centralised location facilitated by convenient causeway links
Location means good connectivity and for sure, Cyberjaya has what I define as a “conveniently far” location. It is far from all the hustle and bustle of the crowded KL and Greater KL area yet you can easily be connected with a mere 20 minutes commute by train (Transit KL) or less than 30 minutes’ drive. At the same time, you can easily catch an international flight from KLIA (Kuala Lumpur International Airport) within the same amount of time.
For car lovers, an extensive network of existing and under construction highways and expressways allow easy and fast connectivity.
The four cardinal points of the compass as the Plus highway is at a stone’s throw distance as far as the Maju Expressway (MEX) (formerly known as Kuala Lumpur-Putrajaya Expressway (KLPE) and KL-KLIA dedicated expressway), the Middle Ring Road 2 (MRR2), Lebuhraya Shah Alam (Kesas) as well as the South Klang Valley expressway (SKVE), just to name the major linkages.
Easy connectivity leads to high catchment
Cyberjaya is surrounded by highly populated areas such as Puchong, Putrajaya, Kajang, Bangi and the whole southern corridor of Klang Valley.
The increasing offerings of activities will cater to the future residents of this hub who are expected to be young and/or foreigners. In this light, Cyberjaya is poised to attract crowds from most of the neighbouring areas.
Residential, commercial or retail space will be sought after for many years to come which will benefit wise investors who will collect profitable rentals and see their investment being very remunerable.
Capital city of the creative industry
From a purely property point of view, the presence of international universities and multinational corporations means good tenants and/or foreign purchasers for highly priced properties.
An example is the Limkokwing University in Cyberjaya which has been branding itself as one of the world centres for creative technology. Besides attracting a large number of international students, it is also a reference point for other international universities and colleges, not to mention specialised industries and service providers – all related to the creative industry.
Normally when investors, prospective purchasers or friends ask me about where to invest, I always recommend multiple phase projects or even better, townships.
When you purchase a property, the first thing that you want to see is good capital appreciation and this is why I recommend them to purchase in a development with a long way to go to its completion.
Cyberjaya is nothing less than this. 7,000 acres of freehold landthat will be fully developed within another 15 years and this means property values there will surely rise consistently.
We all remember well in 2007 and 2008 that nobody was actually looking at Cyberjaya as a good location for investment.
At that time, we were talking about prices of properties ranging from RM200 per sq ft to RM250 per sq ft and nobody was actually buying there.
Then, suddenly in 2009 and 2010, the first spring of Cyberjaya started.
Big developers were all there, launching their residential, commercial and mixed-use projects. Prices then suddenly jumped up to RM300 per sq ft, RM400 per sq ft, RM500 per sq ft to above RM800 per sq ft.
Suddenly, at the end of 2011 to early 2012, there has been a marked slow-down and developers didn’t launch any new projects for quite some time.
Let me call this a “well-planned property values growth” or “pushup”. Cyberjaya was a green field first; and then a crowded brown field of tower-cranes but still without life in it. Some of my friends would liken this to “not being activated yet”.
Purchasers were asking to see some projects being built before they would purchase and developers understood that. With completed buildings, the developers would have the opportunity to get better profitability from their projects.
Consequently, they slowed down the launches of new projects and instead, concentrated on the completion of the impending projects under construction.
Now, the time has come as several projects in Cyberjaya will be ready and open for occupancy within the next 12 months.
Universities have established their campuses there with more than 25,000 students looking for a place to stay in a vibrant and lively hub. Foreigners are also in Cyberjaya, following the initiatives of the Multimedia Super Corridor (MSC) Malaysia development and the rising number of multinational corporations with headquarters and operative offices in Cyberjaya.
They too are in the market to find nice and convenient accommodation
Developers could see that the rising interest in Cyberjaya was presenting them with the opportunity to gain more profit from their projects. So, they slowed down the launches of their new projects and concentrated on the completion of the ones already launched which are now, mostly sold out.
Look at the map which shows all the available land for development in Cyberjaya as of August 2013 highlighted in yellow while the blue colour highlights the already launched or planned developments.
After this, take a look at the table showing the price trend for the past four years and draw your own conclusions as to how viable it might be to invest in Cyberjaya.
My personal take is that within the next five to eight years, property values there will rise abundantly above RM1,000 per sq ft even though investors will have to be wise and patient when looking for tenants.
In other words, holding power might become the name of the investment game in Cyberjaya, offering a reward of high capital appreciation and good or above-average (Return On Investment) ROI.
>> REI Group of Companies CEO and co-founder Dr Daniele Gambero gives presentations on the property market and welcomes feedback at firstname.lastname@example.org
>> Sources: Ho Chin Soon Research, StarProperty.my and iProperty websites, Napic and Ispen Property Market Reports, statistics and REI Group archives
Source : Star Property