As mentioned previously, I am currently searching for an investment property, and I’ll be sharing my journey and analysis along the way. My main objective is cash flow.
The second property viewing I attended was Parkside Residences | Setia Federal Hill. This is a pre-built property, meaning it is still under construction and I would be purchasing directly from the developer. The expected completion date for Parkside Residences is 2030.
The sales gallery is located in KL Eco City. It was easy to find parking, and no reservation was required.
Parkside Residences is a new township project in Bangsar developed by SP Setia and Mitsui Fudosan Group, a Japanese developer. Bangsar is already a mature and highly developed area, with very few large-scale township projects featuring high-rise residences. As a result, this project has attracted significant attention following the success of Bangsar Hill Park.
Parkside Residences offers multiple floor plans, but I narrowed my options down to two layouts that fit my budget: Type C1 and Type C2.
Here is my analysis of Parkside Residences.
Details of Parkside Residences:
| Completion Year | 2030 |
| Tenure | Leasehold |
| Size | ~732 sqft |
| Layout | 2 Bed/ ~2 Bath |
| Developer | SP Setia & Mitsui Fudosan |
10 criteria for Selecting an Investment Property
| Criteria | Details | |
|---|---|---|
| Well known developer | SP Setia and Mitsui Fudosan | ☆☆☆ |
| Scarcity | Township in Bangsar, walkable distance to Train station | ☆☆ |
| Mutiple tenant target | Young professional/ Expats | ☆☆ |
| Price | Type C1 (35th floor): RM1,345.5 psf Type C2 (15th floor): RM1,158.57 psf Median Price: RM 1,068 psf | ☆ |
| Accessibility | Highways: Federal Highway Train Station: Bangsar LRT (10mins walk) | ☆☆☆ |
| Layout | C1 faces Bangsar and low-rise residential properties, but unobstructed views are only available from the 35th floor and above. C2 faces another residential project by SP Setia. | ☆☆ |
| Cash Flow | Current rent : Rm 3,800- RM4,000; monthly cash flow of -RM124 | ☆ |
| Catalyst for potential Capital gain | Successful township with office towers, hospitals, and retail shops bringing strong foot traffic | ☆ |
| Big Shopping Mall/ Business Districts nearby | Shopping Mall: NU Sentral Business District: KL Sentral, Bangsar | ☆☆☆ |
| Rental Yield | 5.38% (Average:4%-5%) | ☆ |
| Overall | ☆☆ |
Simulation
To remain conservative, I used the higher purchase price from Type C1 while assuming rental income would be similar for both layouts.
The asking price for the property is RM869,130 after discounts/rebates.
Purchase costs include:
- Interest payments during the construction period
I plan to take partial mortgage insurance coverage, which costs approximately 2% of the purchase price.
As a new owner, I would also need to bear utility deposits for:
- Other utilities
- Water
- TNB
- Indah Water
To remain conservative in my calculations, I also included vacancy risk.
After completion, I will need to get a defect check and request developer to do the repair as well refurbish the unit before listing.
The average asking rent in the area is also around RM3,800, so I assumed there could be a 12-month vacancy period after handover.
Total downpayment would be around RM91,657 and I would need to borrow around RM763,000.
With a loan interest of 3.7% and 35 years tenor, the monthly mortgage would be RM3,370.
Monthly Cash Flow Analysis
Average asking rent is RM3800 per month. I have listed down all the monthly expenses:
- Quit rent and assessment tax – paid twice a year and I calculated the monthly cost
- Insurance – house insurance is needed, in case of a fire, etc
- Maintenance fee – RM0.50 psf including sinking fund
- Property management fee – I will be doing it myself thus RM0
- capital expenditures – in case there is any repair or replacement of furnitures needed
Overall, the money going out of my pocket will be mortgage (RM3,370) + total expenses (RM553), which a total of RM3,923.
Total money flowing in would be the rent, RM3,800.
In total, I will be losing ~RM124 each month or RM1,484 annually.
Annual cash flow divided by the total invested capital will bring a negative rental yield of 1.62%.
My objective is to achieve positive cash flow, so this property is clearly a NO for me.
Breakeven Analysis
I used Excel’s What-If Analysis tool to determine the breakeven point.
To make it profitable:
- Rental income would need to increase to around RM3,929
In my opinion, achieving RM3,929 rental income is possible, however, there will be fierce competition around the area, with another 60 floor residential coming up next door (phase 2), as well as the completion of Bangsar Hill Park phase 2 in year 2028.
Moreover, there is a risk that the covered walkway to the train station — which the developer has been aggressively promoting — may not materialize despite government approval having reportedly been obtained.
After visiting the site, I realized the proposed covered walkway would be built over the current highway by removing one lane. It cannot be constructed on the shoplot side because that land is not owned by the developer.
Capital Gain = Icing on the cake
If the property appreciates by 2% annually and I sell it after 10 years, the estimated total profit would be around RM280,300, translating to an annualized return of 30%.
Of course, property prices may rise, fall, or remain stagnant — nobody truly knows. Additionally, with the increasing supply of residential developments in the area, there is a possibility of oversupply.
While the projected annualized return looks decent on paper, I would prefer to wait and see whether the covered walkway is actually completed as planned.
Another concern is accessibility. The highway access currently only supports travel toward KL city. To travel southbound, residents would need to make a U-turn after heading north.
The developer is also proposing a cross bridge that would connect residents to the opposite side of the road toward the south. However, this remains a tentative proposal pending government approval.
That is why I view capital appreciation as merely the “icing on the cake,” rather than the main investment thesis.
Final Thoughts
Despite its excellent location, beautiful design, and backed by well known developer, Parkside Residences does not meet my investment criteria due to:
- Negative monthly cash flow
- High capital appreciation risk arising from uncertainty surrounding the covered walkway, future oversupply, and the proposed cross bridge
At the current stage, this property is a pass for me.
However, if the covered walkway is completed as planned and the township proves successful, I would reconsider the opportunity.
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