Case Studies of Actual Property: COVO at 16 Sierra @ Puchong South

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 six months ago was COVO at 16 Sierra @ Puchong South. 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 May 2027.

　

　

The project is part of the larger 16 Sierra masterplan, located in the southern part of Puchong. The township consists of landed homes, shop lots, and two condominium developments. All properties within the masterplan are leasehold.

The main selling point of COVO is its direct connectivity to the MRT station via a covered walkway, with an estimated walking time of five minutes. As there is currently no designated park-and-ride facility at the station, many commuters park along nearby roads.

　

　　

　

COVO consists of 2 towers, Tower A and Tower B with direct access to car park. Tower B is all sold out and remaining Tower A. For Tower A, COVO offers 3 layouts, 1 Bed/ 3 Bed / 4 Bed.

In this analysis, I will use the layout B (3 Bed) as it is within my budget and appeal to multiple tenant segments.

　

Details of COVO:

Completion Year	2027 May
Tenure	Leasehold
Size	~926 sqft
Layout	3 Bed/ 2 Bath
Developer	IOI Properties

　

　

10 criteria for Selecting an Investment Property

Criteria	Details
Well known developer	IOI Properties	☆☆☆
Scarcity	5 mins walk to train station in 16 Sierra,	☆
Mutiple tenant target	Young professional/ Young Families	☆☆
Price	Type B : RM580 psf RM537k	☆
Accessibility	Train Station: 16 Sierra MRT	☆☆☆
Layout	B* 3 Bed/ 2 Bath, facing future school	☆☆
Cash Flow	Current rent : Rm 2,000; monthly cash flow of -RM656	☆
Catalyst for potential Capital gain	Cyberjaya data centers more jobs, schools upcoming to attract more young families, more retail outlets that improve convenience, ioi city mall office tower>more companies moving in;	☆☆
Big Shopping Mall/ Business Districts nearby	Shopping Mall: Fresco, IOI City Mall Business District: IOI City Mall Office Tower	☆☆
Rental Yield	4.4% (Average:4%-5%)	☆
Overall		☆

　

Simulation

　

　

The asking price for the property is RM537,117 after discounts/rebates.

Purchase costs include:

• Interest payments during the construction period
• MOT ( will be waived later by developer)

I plan to take partial mortgage insurance coverage, which costs approximately 4% 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 RM2,000, so I assumed there could be a 12-month vacancy period after handover, given that it is in the city center.

Total downpayment would be around RM64,198 and I would need to borrow around RM483,405.

With a loan interest of 3.7% and 35 years tenor, the monthly mortgage would be RM2,171.

　

　　

Monthly Cash Flow Analysis

Average asking rent is RM2,000 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 – RM0.35 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 (RM2,171) + total expenses (RM485), which a total of RM2,656.
Total money flowing in would be the rent, RM2,000.
In total, I will be losing ~RM656 each month or RM7,874 annually.
Annual cash flow divided by the total invested capital will bring a negative rental yield of 12.26%.

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

　
　

　

Capital Gain = Icing on the cake
　

　　

Assuming this project appreciates by 1% annually and I sell it after 5 years, the estimated total profit would be around RM39,703, translating to an annualized return of 12.4%.

However, given that the property price is heavily dependent on the success of the data centers development in Cyberjaya as well the business district in IOI City Mall, it is considered high risk as these areas have been known for having very slow growth and a failure.

Moreover, it has confirmed that there will be another residential property right opposite COVO coming up soon as well as primary and secondary school on the other side. Plus, a row of shoplots will be built in between 16 Sierra MRT station and COVO. There are already many cars illegally parked around the train station, just imagine how it would be like once the schools and shoplots are completed. Residents might find it difficult to drive into COVO.

　

Final Thoughts

COVO offers excellent MRT connectivity, a practical layout, and a reputable developer. However, the numbers do not work for my investment strategy.

With an estimated negative cash flow of RM656 per month, I would be relying primarily on future capital appreciation to justify the investment. Since my focus is cash flow rather than speculation on price growth, this property is a pass for now.

At first, I thought it was a good investment, especially when taking the potential capital gains into account, and I paid the RM1,000 booking fee. However, after a deeper review of the numbers and risks involved, I decided to cancel the booking. It took approximately three months to receive the refund.

Sometimes, the best investment decision is the one you choose not to make.

The search continues.