One of the latest additions to the Malaysia property scene is the Dual Key living concept which is increasingly popular among developers and also house buyers. The Dual Key properties are a fairly recent emergence, however they have existed for decades in places such as Sweden, Japan, Australia and the United States. It was first introduced in Singapore in the 1980s but was phased out due to low demand. It appeared again in 2009 with Fraser Centrepoint’s Caspian project. In Malaysia, the first Dual key properties was developed by Wing Tai in its Verticas Residensi in the Kuala Lumpur city center near KLCC in 2011 and have taken off since then and has become a common features in new launches, which accounts approximately 10% of new stratified developments in Kuala Lumpur.
In general, dual key property is simply one where two homes share a main entrance/hallway and foyer but have separate living, bedroom and sometimes even kitchen. Most of dual key unit in Malaysia also has separate main entrance. The main unit usually has bigger built up area whilst the other unit/studio unit is much smaller in size.
The idea was originally brought in to cater for multi-generational living, meaning that a married couple could have more privacy, or grandparents could have – for all intents and purpose, their own home, whilst still being under the shared family roof. It could be for safety or some other reasons such as privacy or time and cost saving or more recently for higher yield or return on investment.
The dual key units have been mushrooming mainly in Klang Valley and capital cities of the states. Several example of established and incoming supplies of dual key units within Klang Valley includes Zefer Hill Residence in Puchong, The Estate in Bangsar South and The Luxe by Infinitum near KLCC area, Sky Setia Condominium in Kampung Baru and The Duo@USJ 1 to name a few. In other states dual key has made its presence in SummerSkye in Penang, Upper East@Tiger Lane in Ipoh, Tropez Residence in Johor Bahru and LD Lagenda in Kuching, Sarawak.
Unlike duplex properties, dual key properties can be let out to two different tenants and gets double income from rental. It is an excellent investment tool as the owner can choose to rent out either one the unit or both units separately to maximize rental income. The rental income from both unit would fetch higher amount rather than a standard unit of similar size. For instance, a dual key unit within Residence 8 at Jalan Klang Lama is being rented out at RM2,000/- to RM2,200/- for the main unit (1,100 square feet) and RM1,200/- to RM1,300/- for the studio unit (300 square feet) giving a total rental of RM3,200/- to RM3,500/- per month. Meanwhile a standard unit of similar size condominium at Riverville Residence within the same locality is being rented out at RM2,800/- to RM3,000/- per month.
There are many advantages of dual key development as stated below :-
i - Higher yield
Since the unit can be let out individually, or let out to two different parties, there will be double income to the owner, giving higher yield to the property.Or if the owner stays in one unit and rent out the other unit, there will additional income/rental to the owner, from one title.With the same number of rooms within the standard or conventional units, dual key units produce higher yield.
ii - Lower Maintenance Cost/Strata Fee
Dual key unit is held under one strata title, thus owner only need to pay strata fee for one title but benefitting of ‘two properties’.The quit rent, insurance, maintenance fee, assessment, utility bills are for one unit only. Thus, whilst owner benefit from higher yield, they will also pay lower maintenance cost than they would have paid for two separate investment properties.
iii - Privacy
Since Dual Key unit has two separate entrances, living and kitchenprivacy for both occupiers is assured, as if they are living away from each other. With the aging population, dual key concept is the solution for family who wish to be near their parents or who wish to look after the parents where their kids can enjoy seeing their grand-parents and still keep the privacy between parents and grand-parents. Tenants will be also be assured of their privacy and space since they don’t have to be in the same house with the landlord.
iv - Easy management and maintenance
Since landlord and tenant are living next to each other, rent collection will be easier or even if rental are usually paid online, the facts that you practically know that your immediate neighbour is your tenant, will ease the problem of rental collection in the event of late payment,as its only a step away from your home.Anything goes wrong at the rented unit in term of maintenance, theowner is just next-door.Or if both units are rented out,and owner need to enter the other unit,he can generally arrange for repairs at more flexible or suitable time.
v - Potential solution for high mortgage payment for first time house buyers, couples, singles and small family.
For couples, newly wed, or young family without childrenor even singles who do not need large space, they can opt for the smaller unit and rent out the bigger unit or for first time house buyer who prefer the bigger unitand rent out the smaller unit.The rental from the rented unit can ease the burden of monthly mortgage instalment for the unit.
vi - Multi-generational household problem
Many of Gen-Xs are having problem to buy their own house. They cant afford to leave home as cost of renting or buying house is beyond reach at the same time they want to their own life. On the other hand, some individuals are faced with difficulty of elderly parents needing to live nearby.
Thus, this ‘multi-generational household’are looking for housing that is independent of one another but still within reach.This modern family situation can be overcome by dual key unit as it allows them independence from parents but the safety of having a family member right next door.
vii - Alternative use
Dual key living concept is extremely versatile and alternatively can be used as an office, once again saving rental income, plus travel time and expenses.Instead of renting an office elsewhere, business owner can convert the smaller/studio unit into office, thus saving money for the rental and save time to travel to the office which may takes hours during the peak hours.
Despite the many advantages of dual key units there are also disadvantages of this type of development as follows:-
i - Higher entry cost
Since the size of the dual unit is bigger than the standard and conventional unit, the price is also higher. Buyer need to prepare more cash for the deposit, cost attributes for securing the units as the price is higher, thus gives higher monthly mortgage payment. Thus its less attractive in term of pricing to lower or middle income group of buyers and only appeal to a handful of buyer.
ii - Can’t sell separately
Although having two separate units in one title can generate higher yields, these two units cannot be sold separately. This could limit the appeal of the dual key units. Whilst it can easily be re-converted into a single property, it require additional cost to renovate.
iii - Restrictions
For owner who is using the smaller/studio unit as an office, there will be restriction on the number of non-resident to be engaged in the business or allowed in the unit, no signage or billboard is allowed, restriction on the office expansion due to petite size, only one address is allowed, ie the same address as the main unit’s address. Besides, most business owner prefer not to disclose their home address to clients.
The dual key units is undoubtedly a popular trend in the strata development especially within the city center. Not only its popular among developer, it is also a preferred choice for city dwellers and investors due to its space flexibility and privacy, not to mention the higher rental income from the unit.