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.
Recently, one of my clients was looking for a rental property in Kuala Lumpur and expressed interest in Banyan Tree Residences. He is an expatriate relocating to Malaysia with his wife and son, so I accompanied him to view several units within the development.
Banyan Tree Residences is part of the Pavilion Group’s project and it is accessible to Pavilion KL shopping mall via a link bridge.
It is located right in the center of Bukit Bintang, with train stations, big firms and KLCC within walking distance.
The building consists of both hotel and residential components. Floors 54 to 57 are occupied by the hotel, while the remaining floors are residential units. Facilities are separated between hotel guests and residents.
One observation I had during the viewing was the location of the residential swimming pool, which is situated on a mid-level floor. While the facilities are well-maintained, the pool view is relatively underwhelming compared to the panoramic city views available from the higher floors. This may also reflect the view experienced by lower-floor units.
In this analysis, I will use the layout D4 .
Details of Banyan Tree Residences:
| Completion Year | 2016 |
| Tenure | Freehold |
| Size | 1,060 sqft |
| Layout | 2 Bed/ 2 Bath |
| Developer | Pavilion Group |
10 criteria for Selecting an Investment Property
| Criteria | Details | |
|---|---|---|
| Well known developer | Pavilion Group | ☆☆☆ |
| Scarcity | Link bridge to train stations, KLCC, Pavilion KL | ☆☆☆ |
| Mutiple tenant target | High Net Worth Locals/ Expats who is single | ☆☆ |
| Price | Type D4 : RM1,407 psf RM1,500,000 | ☆ |
| Accessibility | Highways Train Station Walkable distance to few Business Districts | ☆☆☆ |
| Layout | 2 Bed/2 Bath | ☆☆ |
| Cash Flow | Current rent : Rm 7,500; monthly cash flow of RM1,200 | ☆☆ |
| Catalyst for potential Capital gain | Increasing property value in KL due to scarcity of land | ☆☆ |
| Big Shopping Mall/ Business Districts nearby | Shopping Mall: Pavilion KL Business District: Bukit Bintang, KLCC | ☆☆☆ |
| Rental Yield | 4.11% | ☆ |
| Overall | ☆ |
Simulation
The asking price for the property is RM1,500,000.
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.
The average asking rent in the area is also around RM7,500, 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 RM1,172,600.
With a loan interest of 3.7% and 35 years tenor, the monthly mortgage would be RM5,124.
Monthly Cash Flow Analysis
Average asking rent is RM7,500 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 – RM0.80 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 (RM5,124) + total expenses (RM1,227), which a total of RM6,351.
Total money flowing in would be the rent, RM7,500.
In total, I will be earning RM1,148 each month or RM13,784 annually.
Annual cash flow divided by the total invested capital will bring a rental yield of 3.1%.
My objective is to achieve positive cash flow, so this property is clearly a YES for me. However, it is over my budget of RM1 million.
Capital Gain = Icing on the cake
Assuming this project appreciates by 2% annually (same as inflation rate in Malaysia) and I sell it after 10 years, the estimated total profit would be around RM445,563, translating to an annualized return of 9.9%.
This is relatively attractive, compared to the RM1million and above properties in other areas.
Concerns About Vacancy Risk
One concern is the tenant profile.
Bukit Bintang is highly urban, densely populated, and experiences significant traffic congestion throughout the day.
Furthermore, the nearest international school, ISKL, is not within walking distance.
As a result, I believe this property is best suited for:
- Single expatriates
- Young professional couples
- High-income local professionals
It may be less attractive to expatriate families with school-going children.
Interestingly, my client ultimately decided against this location. His main concerns were the lack of nearby preschools and the absence of affordable supermarkets within walking distance.
Final Thoughts
Banyan Tree Residences offers a rare combination of prestige, convenience, and strong connectivity in the heart of Kuala Lumpur. Its direct link to Pavilion KL and proximity to KLCC make it highly attractive to expatriates and professionals working in the city centre.
From an investment perspective, the property meets my primary objective of generating positive cash flow, with an estimated monthly surplus of approximately RM1,148. The potential for long-term capital appreciation is an added bonus.
However, the RM1.5 million price tag is well above my preferred budget, and the tenant pool is relatively concentrated towards single professionals and expatriates rather than families.
Overall, this is a quality investment property with solid fundamentals, but due to the high entry price, it remains on my watchlist rather than a property I would purchase immediately.
For now, my search continues.
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