#The Edge Forum* High-speed rail boost for Malaysian real estate

KUALA LUMPUR: The KL-Singapore high speed rail (HSR) when it becomes a reality in the future will boost the Malaysian economy including the property sector, said industry experts at a panel discussion on “The Impact of the KL-Singapore High Speed Rail” at The Edge Investment Forum on Real Estate 2013 held on Saturday May 11.

The panelists were Malaysia Building Society Bhd (MBSB) Senior VP of Corporate Business Nor Azam M. Taib, Sunway Executive Director Kumar Tharmalingam and Knight Frank Malaysia Managing Director Sarkunan Subramaniam.

Sunway’s Kumar believes that as the ties between Singapore and Malaysia improve, more of Singapore’s government linked companies as well as private firms currently operating in Singapore will enter Malaysia.

“We are already seeing interest from CapitaLand Ltd and with Singapore having approximately 750 financial institutions, these institutions will look at Iskandar and Malaysia as investment potentials,” Kumar explained.

Malaysia will also draw more property developers from Singapore and around the region with the opening of large tracts of land in the west coast and the HSR connectivity with Singapore thus bringing in even more foreign interest.

“Japan, China and Korea are already keen,” Kumar adds.

There is also the potential that the HSR will boost the development of real estate in smaller towns while another major beneficiary would be the rental market following the uptake in foreign investments.

“Foreigners who come to Malaysia will bring their own capital and will all be prepared to pay higher rents,” he said.

MBSB’s Nor Azam said the HSR is expected to have a positive impact on various industries such as the tourism, education, retail, transportation and construction sector along the high speed rail which will lead to more employment opportunities

The KL-Singapore HSR, which will see travel time between the two cities cut down to 90 minutes, will benefit both the capital cities, allowing more movement and activities between the two financial hubs when it is completed around 2020, said Nor Azam.

He added that the proposed stations in Johor (Batu Pahat and Muar) and in Malacca will lead to an increase in demand for properties around the stations and one can expect to see the  development of new townships and business centres in these areas.

Meanwhile, Knight Frank’s Sarkunan said much like China’s second tier cities, which are benefiting from the HSR there, so too will Malaysia’s secondary towns.

“Companies in China are expanding to more inexpensive offices in second tier cities,” he said. “So the HSR in China really helped the second tier cities and this is exactly what we will see in Malaysia.”

He added that for the economy, the HSR will definitely elevate urban growth in the main cities and trigger growth in nearby second and third tier cities citing China again. It will also cause the spread of population growth and hopefully reduce the disparity of income between the main cities and secondary towns.

The shorter door-to-door travel time can boost the economy creating a multiplier effect on Malaysia’s economy, especially the construction and manufacturing sectors along with tourism and services sectors.

For the full coverage of The Edge Investment Forum on Real Estate 2013, read the coming May 20 issue of City & Country, the property pullout of The Edge weekly.