Case Studies of Actual Property: Pavilion Square

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 property viewing I attended a few months ago was Pavilion Square. 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 is 2029.

　

　

Pavilion Square has attracted significant attention because it is widely marketed as the last new residential project directly linked to Pavilion Kuala Lumpur.

The surrounding area has already proven to be highly successful, supported by projects such as Pavilion Suites and Banyan Tree Residences. Naturally, this creates strong branding and prestige for the development.

　

　　

Moreover, Pavilion Square is set to feature the longest swimming pool in Kuala Lumpur, stretching an impressive 118 meters with panoramic views of the city skyline. For comparison, Marina Bay Sands’ famous infinity pool measures approximately 150 meters.

　

　

　

Pavilion Square offers multiple layouts, but unfortunately, even the smallest unit exceeds RM1 million, which is well above my budget. If budget were not a concern and I were purchasing entirely in cash, I believe this could still be an attractive investment from a capital appreciation perspective.

Here is my analysis of Pavilion Square.

In this analysis, I will use the layout A on level 15.

　

Details of Pavilion Square:

Completion Year	2029
Tenure	Leasehold
Size	~504 sqft
Layout	Studio
Developer	Pavilion Group

　

　

10 criteria for Selecting an Investment Property

Criteria	Details
Well known developer	Pavilion Group	☆☆☆
Scarcity	Within Golden Triangle, Linked to Pavilion KL and corporate buildings	☆☆
Mutiple tenant target	Young professional/ Expats	☆☆
Price	Type A (15th floor): RM2,976 psf RM1.5million	☆
Accessibility	Train Station: Bukit Bintang MRT, KLCC (walkable distance)	☆☆☆
Layout	A: facing Royale Chulan Hotel, this layout (studio) make up only 10% of the project	☆☆
Cash Flow	Current rent : Rm 5,000; monthly cash flow of -RM1,750	☆
Catalyst for potential Capital gain	Bullish outlook on the Malaysian economy, Pool and strong overseas investor interest	☆☆☆
Big Shopping Mall/ Business Districts nearby	Shopping Mall: Pavilion KL Business District: KLCC, Bukit Bintang	☆☆☆
Rental Yield	4% (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 RM1,500,000 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 RM5,000, so I assumed there could be a 6-month vacancy period after handover, given that it is in the city center.

Total downpayment would be around RM450,000 and I would need to borrow around RM1,382,600.

With a loan interest of 3.7% and 35 years tenor, the monthly mortgage would be RM6,034.

　

　　

Monthly Cash Flow Analysis

Average asking rent is RM5,000 per month. I have listed down all the monthly expenses:

1. Quit rent and assessment tax – paid twice a year and I calculated the monthly cost
2. Insurance – house insurance is needed, in case of a fire, etc
3. Maintenance fee – RM0.90 psf including sinking fund (free for the first year, but for simplicity, will assume that it starts from year 1)
4. Property management fee – I will be doing it myself thus RM0
5. capital expenditures – in case there is any repair or replacement of furnitures needed

Overall, the money going out of my pocket will be mortgage (RM6,024) + total expenses (RM699), which a total of RM6,723.
Total money flowing in would be the rent, RM5,000.
In total, I will be losing ~RM1,723 each month or RM20,681 annually.
Annual cash flow divided by the total invested capital will bring a negative rental yield of 4.6%.

My objective is to achieve positive cash flow, so this property is clearly a NO for me.

　
　

　

Capital Gain = Icing on the cake
　

　　

The property value of Pavilion Series in this area has been rising 4% annually for the past decade. Assuming this project appreciates by 4% annually and I sell it after 10 years, the estimated total profit would be around RM316,276, translating to an annualized return of 7%.

From this perspective, Pavilion Square appears to be more suitable for:

Cash buyers who are less concerned about monthly cash flow, capital appreciation investors and High-net-worth buyers.

　

Final Thoughts

Pavilion Square is undeniably an iconic project with strong branding, a prime location, and solid long-term capital appreciation potential.

However, at nearly RM3,000 psf, the entry price is simply too high for me to achieve my main objective: positive cash flow. Based on my calculations, the property would generate a consistent monthly loss, making it unsuitable for my investment strategy.

This project may suit investors who are focused on capital appreciation or purchasing entirely in cash, but for me, cash flow comes first.