Property Oversupply in PJ, Subang and Shah Alam?

If you are looking to buy a property in PJ, Subang Jaya or Shah Alam but worry about potential oversupply, this article is for you.

INTRO

PJ, Subang Jaya and Shah Alam area under a district called Daerah Petaling.

First of all, what is Daerah Petaling?

Daerah Petaling is a huge area that borders Sungai Buloh, Ijok, Klang, Cyberjaya/Dengkil, Kapar, KL and Kajang. It’s a huge area.

You also have Bandar Sri Damansara in the North of Daerah Petaling.

Areas like UiTM Puncak Perdana. Yeah, that is still under Daerah Petaling’s jurisdiction on the North-West, Shah Alam where it borders with Klang (which is under Daerah Klang). And yes, I-City is under Daerah Petaling.

What are well-known places inside Daerah Petaling? You have Bandar Utama, where your One Utama shopping mall is located; Mutiara Damansara, where Damansara Ikea is located; as well as familiar areas like Puchong, Sunway, Petaling Jaya, Subang Jaya, and Glenmarie, to name a few.

So what is it about Daerah Petaling?

HIGH POPULATION

Daerah Petaling is just NEXT DOOR TO KL. Daerah Petaling is the GATEWAY TO KL. If you are staying in places like Shah Alam, going to KL is just a mere 30-45 minutes depending on traffic. If you want to shop, there are plenty of places to go: One Utama Shopping Mall, which is just 20 minutes away, or places like Mid Valley Mall and Sunway Pyramid are easily accessible thanks to the highways in the area.

Daerah Petaling has been rated to be the second highest in population density amongst the districts in Malaysia. In THE Whole Country. Daerah Petaling is the Second highest with 4,783 people per km square in comparison to places like KL (W.P. Kuala Lumpur) with the highest figure at 8,235 people per square KM.

Where does places like Sepang and Daerah Seremban fit in? Sepang is at 612 people per km square and Daerah Seremban is at 739 people per square KM.

So when you are next door to KL equipped with high pupulation, you must be curious about the properties that are selling in this area, yes?

Is it safe to own one? How much would it cost? How competitive is it?

SHOLD WE WORRY?

I ran some figures from NAPIC to get the number of transactions, average value per transaction and percentage of change for 3 different residential categories i.e. landed houses, condo/apartment, serviced apartment and SOHO in Daerah Petaling.

What I found out is quite exciting – and also surprising – because I didn’t expect the figures at all.

For me, I would’ve thought that there’ll be a lot of supply coming from the serviced apartments in particular, with figures in the thousands, as well as concerns with regard to oversupply. That is always our worry.

Turns out, that is not the case at all.

SUPPLY VS DEMAND

If there is a development coming up and they are coming in the thousands, they are most likely coming in stages and not straight away in the thousands. Because of that, the number of units coming in per year is actually in the hundreds.

Ultimately, we have to ask: Is there an oversupply situation?

In asking that, we need to understand what is oversupply, and how do we see an over or undersupply?

The fastest route to understand this is through the rental and transactions figures. See if there are any drops in transactions and asking prices.

If there are drops in the asking prices and transactions, even the lowest figure of supply in the area is considered an oversupply. This is due to the waning demand. Therefore, be cautious when you see a development coming up with the number of units in the hundreds or even lower. Do not jump to conclusion, but instead check whether the demand is there.

Not just on mere figures for number of units being built.

NEW SUPPLY

In the case of Daerah Petaling, I tracked down new supply of different types of properties from 2021 till 2023.

Total new supply from 2021 to 2023 :

• Landed Houses : 866

• Condo/Apartment : 1,858 units

• Serviced Apartment : 4,244 units

• Soho: 891

In total, within the 3 years there were 7,859 units of NEW Supply in the area.

DEMAND

Additionally, we see a population increase by 36,100 from 2021 to 2023 with the average household size in Daerah Petaling within the same period to be 3.575. Dividing the increment in population size with the household size, we get to 10,097 households.

Based on this figure, it can be interpreted that there is a shortage of 2,238 units in Daerah Petaling.

However, we do also need to account for the total of 2,313 unsold properties mainly from serviced apartments and SOHO (a combined of 71.4%). Each of the unsold serviced apartment unit averaged price at RM 746,347. Whereas the SOHO unit unsold average price is at RM 450,207.

Are they located in an undesired area of Daerah Petaling? No idea. We need to identify the projects and area involved individually. That is another story.

Interpreting these figures allow us to understand the changes in quarterly average price. I assume that those yet being sold units are either located or undesired by the market in certain ways and we might have an undersupply situation due to mis-match in certain category of properties.

CONCLUSION

In summary, what can we conclude from the data provided above?

I do not see a situation where there is an oversupply of units, but instead an undersupply. It is easy to simply assume that an area is having an oversupply situation simply by looking at the tall buildings that is being built. However, numbers might tell a different story.

As noted above, Daerah Petaling is massive – in order to really understand the supply and demand of units in an area, there is a need for local areas to be carefully examined. If you are looking to purchase a unit in Shah Alam, zoom into that particular section. If you wish to purchase in Bandar Utama, zoom into Bandar Utama. It is impossible to have a one size fits all figure. Puncak Perdana is not the same as Bandar Utama or Mutiara Damansara. Shah Alam is not the same as Subang Jaya.

How do we zoom in? We look at each and every development in that area of focus and come up with a list of developments within that area. Thereafter, check on the asking rental, asking price and transactions. Count the supply. Each project, number of units, number of studio units, 2 bedrooms, 3 bedrooms and so on. Can you then get your answer.

If you ask me where we should focus, I will find in those areas where everything will continue to grow. Is it safe to buy anything with Daerah Petaling just because it’s not considered oversupply? No. Other data to consider are median transacted prices and rental rates within that area to avoid overpriced properties.

If you are unsure about certain developments and would like to get our views, you may post your question to us here:

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