Had a 1-on-1 recently with a young couple who are both doctors.
They wanted see me as they wanted to explore how to use properties to retire early. So I showed them a plan on how can they retire at 35 if they wanted to.
As I allow clients to ask anything during 1 on 1, one of them asked my opinion about this “new” duplex project in Kelana Jaya that they were seriously considering to purchase as their 1st property.
On paper, this project was “affordably priced” at around 500k and they threw in over 20% discounts and rebates, so on paper it looks very attractive.
I queried back asking why are they looking at buying offices?
They told me that this duplex can be used for both residential and commercial according to the sales office. Told them its not true and the sales agent has misled them.
I further shared with them there are few reasons that makes me uncomfortable with this project after looking at it a few months back and MISTAKES ppl often make when investing in SOFO, SOVO, and the equivalent.
So without further dues let me share my quick thoughts on this.
I would also like to declare that this is merely an opinion of mine and the information shared in this post isn’t a recommendation for anyone to go and buy anything or the opposite.
This is purely an opinion of mine so please take it it with a pinch of salt. The background here is that I’ve had 3 1-on-1 client recently that has asked me about this project and after all of them told me inaccurate facts about what they were buying.
So I’m doing public service to share what I know with you all. My take :
Commercial status – The project is mainly selling commercial retail + loft office and is not covered under HDA or Housing Development Act.
In layman terms, you cannot use the unit for residential purpose, and you are not suppose stay in this.
However, I see lots of the marketing agents selling this as dual-usage which is completely not accurate and a lie.
FYI, the easiest indicator to find out whether a project is fully commercial, is to look at their financing offering.
Any projects where you can get above 70% financing for 3rd property onwards, are not supposed to be used as residential.
Disbursement clause – As this is not under HDA, it doesn’t need to follow HDA’s schedule H’s disbursement schedule.
This normally means disbursement schedule will be very favorable to the developer but horrible for the buyers.
I’ve seen real instances whereby a client bought a 350k SOVO project that is only barely 20% completed, yet the disbursement claim from the developer has been over 80% and the purchaser has to pay close to RM1800 in monthly interest for the next 2-3 years.
That means he will end up paying over 50k in interest alone until the property is completed.
So if you guys plan to buy this or something similar, make sure you check the disbursement schedule and fully understand what you guys are buying.
Rookie developer – If I recall correctly, the project’s developer is new to the game with no completed projects to date.
I saw some agents claiming that this is under Mammoth Empire ( Empire Subang, Empire Damansara fame) but nothing in their official website has suggested this.
So I don’t know if there is a genuine link, but I will take what the sales agent say with a pinch of salt unless the developer claims officially that they are related.
Loft office concept – Largely untested concept in this part of the town. Bro Felix Ferdinand highlighted some examples of similar looking product but somewhat different :
Empire Subang – A proper SOHO title ( legitimate dual usage for both resi and commercial) and sits on top of a very successful mall. – Rental starts from RM2000 per month
Scott Garden – A proper SOHO title ( legitimate dual usage for both resi and commercial) and sits on top of mall. – Rental starts from RM1800 per month
Empire SOHO – Not exactly a SOHO (ironic despite the name) and rental starts from RM1800.
Current primary usage is for residential and perhaps the nearest comparison of the 3. You could buy a unit here today at less than RM500k and you can get rental income immediately ^^
Kelana Jaya office plays – Just take a look at any office development in Kelana Jaya and you can see rentals aren’t anything spectacular.
There are other reasons but I suppose the above are the main ones.
So for me and my team at FAR Capital Sdn Bhd, we prefer to maintain our focus for blue-chip props in tier-1 areas like MK/Hartamas/Bukit Bintang/KLCC and continue buying good yields, highly rentable props props priced around 300k-700k.