A MASS RAPID TRANSIT (MRT) line always raises the value of nearby properties and since the government announced that Line 2 will run from Sungai Buloh to Putrajaya, real estate executives have gone into overdrive, guessing the alignment as well as where the stations are likely to be located.
Although a lot of it is still speculative, what is quite clear is that the 56km line will pass some densely populated neighbourhoods, such as Kepong, Kuala Lumpur city centre, Pandan and Serdang. Most of these areas are currently underserved by public transport.
The daily ridership of MRT Line 2 is also expected to be higher than the 442,000 projected ridership of Line 1, which is currently under construction. According to the Land Public Transport Commission, MRT Line 1 will see a train every 3½ minutes during peak hours.
“The MRT Line 2 is expected to have a higher ridership because it will pass through areas with a high density of lower and middle-income groups who rely on public transport to move around,” PA International Property Consultants Sdn Bhd managing director Jerome Hong tells City & Country.
Meanwhile, key locations in the city include Sentul, Kampung Baru, the proposed Tun Razak Exchange (TRX) in Jalan Tun Razak and KLCC. It is worth noting that the proposed line from Batu Kentonmen to Pandan Jaya will be underground, according to Ho Chin Soon Research Sdn Bhd’s speculative alignment. It will end in Precinct 14, Putrajaya, otherwise known as the diplomatic enclave of the administrative capital.
According to Ho Chin Soon, mapmaker and director of Ho Chin Soon Research, it makes sense for the line to be linked to the Express Rail Link (ERL) that runs from KL Sentral to KLIA and klia2. The ERL also stops at Putrajaya Sentral in Precinct 7, which has a feeder bus service to Cyberjaya. At press time, Mass Rapid Transit Corp Sdn Bhd had not responded to requests for comments on a possible extension.
“It is interesting to note that the MRT Line 2’s terminal in Sungai Buloh will be the same one that is used by MRT Line 1. The TRX, KLCC, Plaza Phoenix (now known as Cheras Sentral mall), Pandan Jaya and Sri Serdang stations will be the interchanges for the light rail transit (LRT), monorail and KTM lines,” says VPC Alliance (M) Sdn Bhd managing director James Wong.
Stations that serve as interchanges on MRT Line 1 are TRX/Pasar Rakyat and Cheras Sentral mall.
Meanwhile, the KLCC station will likely serve as an interchange along the Kelana Jaya LRT route that is currently being extended to Putra Heights. The Pandan Jaya station, which is the start of the Ampang LRT line, is also likely to be integrated into the MRT Line 2.
Then, there is the Sri Serdang station, which will be an interchange linked to the KTM Seremban-Rawang route.
“From the planning point of view, to allow for connectivity between MRT Lines 1 and 2 is a plus point and will help increase passenger traffic and cover areas such as the Sri Damansara-Kepong-Jinjang stretch, eastern part of Cheras, Serdang and Putrajaya’s Precincts 14 and 15. The MRT Line 2 will bring about a more balanced development of the Greater Kuala Lumpur area and extend development to the outskirts of KL,” says Wong.
There are a number of issues that could affect the alignment, such as public objections, lack of population, redundant stations, soil problems, proximity to forest reserves and land cost. The high cost of land is especially pertinent within the city, where four stations are located, namely Sentul, Kampung Baru, KLCC and TRX/Pasar Rakyat.
“The Kampung Baru and KLCC stations and the MRT 2 Line serving these two stations may have to be realigned because of high land costs and also to avoid acquiring too many buildings,” says Wong. For instance, Oxley Holdings had paid RM3,300 psf or RM446.7 million for a 3.11-acre parcel in Jalan Ampang, which is earmarked for an integrated development comprising two five-star hotels, a shopping mall, serviced apartments, offices and a theme park. The project has an estimated gross development value (GDV) of RM2.5 billion to RM3.5 billion.
However, Ho says there will be four key stations there, which are unlikely to be removed due to a number factors. The KLCC station, for instance, is already part of the LRT line and, hence, it makes sense for the lines to intersect there, making the KLCC stop an integrated station.
Stations such as Kampung Baru and TRX/Pasar Rakyat are politically significant as they represent the government’s support for the developments there. As for the Sentul station, it was already expected to show up on the alignment as developer YTL Land & Development Bhd’s flagship project in Sentul was built to accommodate MRT stations, Ho explains.
While most consultants feel that the alignment is fairly firmed up at this point, they also opine that the line should be extended to Cyberjaya. “We would like to see that happen, considering Cyberjaya’s current rate of development of commercial activities as well as residential projects. This will provide a future extension of the LRT line from Putra Heights to Cyberjaya and form a convenient rail loop,” explains C H Williams Talhar & Wong Sdn Bhd (WTW) managing director Foo Gee Jen.
As the MRT Line 2 is expected to run through Universiti Putra Malaysia (UPM), he suggests that it veers east to Bangi before circling west to Putrajaya. “Apart from providing convenient public transport to students attending UPM and Universiti Tenaga Nasional (Uniten), the line will have higher passenger traffic if it connects Bangi to the KL city centre.”
Ho says, “The approval of the MRT Line 2 will pave the way for the circle line, which gives access to Bandar Malaysia in Sungai Buloh.”
It is worth noting that Sungai Buloh is also one of five stops along the proposed high-speed rail line from Kuala Lumpur to Singapore. The other stops are Seremban in Negeri Sembilan, Ayer Keroh in Melaka, and Muar, Batu Pahat and Nusajaya in Johor.
Emerging hot spots and (re)development potential
As the MRT Line 2 is expected to pass through densely populated areas, there are several locations that are poised to benefit. Ho’s map of the likely alignment shows that there are opportunities for redevelopment of land owned by government agencies and older low-density developments such as light industrial areas and showrooms.
“Along the northern part of the alignment, a number of parcels belonging to institutions may be privatised,” says Zerin Properties Sdn Bhd’s head of research and consultancy Roja Rani. These include the Sungai Buloh army camp and Pejabat Perhutanan Selangor. Tropical plantation research centre Applied Agricultural Resources Sdn Bhd, an associate company of Boustead Holdings Bhd, also occupies a sizeable parcel in Sungai Buloh.
Slightly south in the Metro Prima commercial area in Kepong, some properties that can be redeveloped include the wet market and food court near Jalan Kepong. Over in Jinjang, Roja points out that the MCA building and the Kuala Lumpur City Hall (DBKL) parcel are also sizeable enough to be redeveloped.
Another redevelopment opportunity is the 245-acre Batu Kentonmen army camp. In 2011, Boustead was reported to be in talks to redevelop the land. The group has yet to respond to requests to comment on this matter.
Over at the Batu area, which is near Kepong, a new project coming up that could benefit from a direct link to the station is Magna Prima Bhd’s Boulevard Business Park, a 10.23-acre freehold integrated project comprising shopoffices, serviced apartments and a retail mall. Work on the
RM635 million project began in 2011 and is expected to be completed this year.
Other notable developments include TA Global Bhd’s Damansara Avenue near the Sri Damansara station, which comprises small office/flexible office units, retail and office suites and residences. The 48-acre freehold project has a GDV of RM3.8 billion and is expected to be completed in 2020.
Over in Sentul, YTL Land & Development’s Sentul Raya urban renewal project is also expected to benefit. The developer has built five condominiums in the area.
In Kampung Baru, UDA Land Holdings Bhd has unveiled plans to redevelop the 301-acre village in the heart of the city.
At the General Hospital station near Taman Tasik Titiwangsa, the most significant project coming up is the redevelopment of the 56.8-acre Pekeliling flats. DBKL began demolishing the flats in January. Asie Sdn Bhd, which was appointed to redevelop the site, had proposed to build Tamansari Riverside City, a RM9 billion high-end development comprising five million sq ft of office and retail space and another five million sq ft of residential space and had in 2011 entered into a joint-venture agreement with Mah Sing Group Bhd to turn a four-acre tract within the site into a retail and residential development called M Sentral (GDV: RM900 million). However, the deal fell through following a legal tussle. UDA Land Holdings is reportedly eyeing the site.
Over at KLCC, three parcels measuring four acres have been earmarked for a RM5 billion project comprising a luxury hotel, serviced apartments, a 64-storey grade A office tower, a 6-storey retail podium and a basement car park. It is expected to have a gross floor area of 3.8 million sq ft. The developer, Cititower Sdn Bhd, is a 50:50 joint venture between KLCC (Holdings) Sdn Bhd and Qatari Diar Asia Pacific Ltd.
Meanwhile, the top picks of PA International’s Hong are the Kepong-Batu area, Sentul, Pandan and Putrajaya-Cyberjaya. “Thanks to its proximity to Putrajaya, the IT-themed city of Cyberjaya is also expected to receive a boost from the proposed MRT Line 2. Although the line does not stop in Cyberajaya, [Cyberjaya’s master developer] Setia Haruman Sdn Bhd has plans to provide feeder bus services from the nearest stations to Cyberjaya, further improving its accessibility and connectivity.
“Cyberjaya is already well connected through various expressways — the Maju Expressway greatly reduces travelling time between the city and Cyberjaya — and this has led to many developers seeing its development potential. Improved accessibility and connectivity will enable the general public to commute more easily to Putrajaya, in terms of reduced travelling time, added convenience and so on,” he says.
Setia Haruman declines to comment on its plans to introduce the feeder bus services.
WTW’s Foo believes land values in Sungai Buloh-Kwasa Land, Kampung Baru, Taman Maluri, Pandan Jaya, Bandar Alam Damai and the Balakong industrial area will rise substantially.
VPC’s Wong believes that the emerging areas include Damansara-Kepong-Jinjang, the eastern part of Cheras and Serdang/Seri Kembangan, as they are not serviced by the MRT Line 2. “We reckon that for these new areas, the impact on the property market will not just be confined to within a 500m radius but will cover properties up to a 3km radius of these stations.
“Kwasa Land as the master developer of Bandar Malaysia will be the biggest beneficiary of the line. By creating an intersection of two MRT lines in Sungai Buloh, the planners have also made a potential high-growth commercial and business node there. Similarly, we see potential high-growth commercial nodes in Sentul West/East, Kampung Baru, Tun Razak Exchange, Taman Maluri and Cheras Sentral mall. The beneficiaries will be land owners in these localities and areas adjacent to the line.”
Earlier this month, Kwasa Land awarded Malaysian Resources Corp Bhd the 64-acre MX-1 project in Bandar Malaysia, which is valued at RM7 billion.
While KL is already largely developed, opportunities and challenges still abound. The MRT Line 2 will also unlock the value of commercial properties within the city centre, especially the central business district, says Hong. “There will be a choice for the working population to commute to work by public transport with reduced travelling time. This improved connectivity and accessibility within Greater KL may lead to higher demand for good grade office space [with staff recruitment and retention also expected to increase] as well as promote city living among professionals and young families.
“In general, dual-compliant good grade office space in Kuala Lumpur is well received. An oversupply is seen only in selected office locations/selected grade of office spaces that do not meet the requirements of multinationals.
“If the various mega projects such as the TRX, Tradewinds Centre and Bukit Bintang City Centre are successfully implemented, the commercial, retail and entertainment activities created will lead to a more vibrant city living and business environment for the country’s capital city. Supported by a seamless public transport system via the monorail, LRT and MRT
Line 1, 2 and 3, KL’s liveability will improve.”
However, the city’s highly developed environment is also precisely why it is a challenge to put an MRT line through the area. VPC’s Wong foresees challenges in land acquisitions due to the higher land cost and difficulty in negotiating with owners. “This may result in some realignment of the MRT Line 2 in the city centre. So, the beneficiaries will include owners of vacant land located within 3km from the proposed MRT line.”
PA International’s Hong sees the Kepong-Batu, Sentul, Pandan and Putrajaya-Cyberjaya areas as emerging hot spots once the MRT Line 2 alignment is confirmed. “Both buyers and investors will be spoilt for choice and the general preference will be for new developments, rather than older ones, because there is no need for major renovations and new products generally offer modern or improved specifications and flexible or practical layouts that cater for the lifestyle of today’s buyers and occupiers.”
Meanwhile, redevelopment opportunities include the 245-acre Batu Kentonmen army camp, commercial properties along the Selayang-Kepong highway, apartments in the vicinity and a number of apartments that are home to largely low-middle and middle-income families.
Hong opines that there is greater upside for properties in the southern part of the MRT Line 2 as he observes a number of new launches in the northern part of the line running ahead of the secondary market. For instance, Tropicana Corp Bhd’s Tropicana Gardens in Kota Damansara was reported to be selling serviced residences in Phase 2 for RM1,100 psf, he says.
“We also see potential for a number of government parcels to be converted and developed with affordable housing schemes, namely Batu Kentonmen in Batu, tracts near Taman Cuepacs in Cheras, Sungai Besi government reserve land and UPM and Mardi land in Serdang,” says Foo.
A PR1MA spokesman tells City & Country that the army camp is not earmarked for any affordable housing scheme under the federal government agency nor has it identified any potential sites in Serdang.
Further down south in Seri Kembangan, VPC’s Wong names Country Heights Holdings Bhd’s Mines Wellness City as a key beneficiary as the integrated development still has 120 acres of under-
developed land, which include two natural lakes. Adjoining the development is the Mines Golf Resort.
“Mines Wellness City, like Medini in Iskandar, has been offered tax incentives until 2023. Operators [of healthcare services or complementary and traditional healthcare services], developers and development managers will benefit. This is the first integrated health and wellness resort project in the country.”
Market activity and notable transactions
Given the tentative nature of the MRT Line 2 alignment, real estate consultants do not see the market reacting to news just yet.
VPC’s Wong highlights 1MDB Real Estate Sdn Bhd’s TRX, which has pegged prices of its commercial land at RM3,193 to RM5,502 psf, with the highest plot ratio at 18. “These are indicative prices, so there may be parties that have bid at higher prices.”
Some notable deals struck by 1MDB Real Estate in the past year were with the Export-Import Bank of China to develop a landmark tower and Land Lease to develop 17 acres worth RM8 billion into the Lifestyle Quarter, which will comprise a hotel, a retail mall and three residential towers.
City & Country spoke to an agent specialising in Seri Kembangan, where five stations are planned — The Mines, Serdang, Sri Serdang, UPM and Uniten. While she observes prices of properties rising — for instance, the asking prices of 1-storey and 2-storey linked homes are double compared with last year’s — she is not attributing this increase solely to the MRT Line 2 as the alignment is still tentative.
A more immediate reason is the university. “The hottest properties there are the 1-storey and 2-storey houses in Taman Sri Serdang, which is next to UPM. People buy them to rent out to students,” she explains.
WTW’s Foo says, “There is active speculation that land values will rise substantially in a number of areas, but there are too many uncertainties for billions of ringgit to be committed at this point in time.”
This article first appeared in The Edge Malaysia Weekly, on July 28, 2014.
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