Shah Alam-Subang Jaya-PJ Area Oversupply?

Shah Alam-Subang Jaya-PJ Area Oversupply?

This whole area is 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?

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.

So when you are next door to KL and your abode is convenient, you must be curious about the properties that are selling in this area, yes?

If you wish to own one, how much would it cost? How competitive is it?

?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. 2-3 story terrace houses, condo/apartment and serviced apartment 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.

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.

In the case of Daerah Petaling, I tracked down 3 different categories of residential properties: 2-3 storey terrace houses, condo/apartment and serviced apartment from 2020 till 2023.

Total new supply :

2-3 storey terrace houses : 415 units

Condo/Apartment : 2,129 units

Serviced Apartment : 3,400 units

In total, within the 4 years between 2020 – 2023 there were 5,944 units of NEW Supply from these three categories.

Additionally, we see a population increase by 36,100 from 2020 till 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.

Total New supply of All Residential houses for

2020 is 377 units

2021 is 0 units

2022 is 1,680 units

Q1 – Q3 2023 is 906 units

Total New Residential Supply for 2020, 2021, 2022 & Q1 – Q3 2023 is 2,963 units. Adding the 3,400 units of serviced apartments from the New Supply, we see a total of 6,363 units.

What about SOHO? New supply of SOHO is 168 units total for 2020 till Q3 2023.

Totaling these figures, we have 6,531 units of new supply coming in the past 4 years.

Based on this figure, it can be interpreted that there is a shortage of 3,566 units in Daerah Petaling.

However, we do also need to account for the 662 units of unsold residential properties as at Q4 2022, 860 units of unsold serviced apartments as at Q1 2023, and 791 units of unsold SOHO, bringing a total of 2,313 unsold residential plus Serviced apartments and SOHO units. 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.

A final point to note is that 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

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. 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. You need to come up with your own border and lists of developments within that border. 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.

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