Seeking better values for their land
Much has been said about the redevelopment of Kampung Baru but little has changed in the area in decades.
It is the government’s hope to transform this last bit of prime land in the heart of Kuala Lumpur city centre into what could be the second Golden Triangle but there is resistance from the landowners in the area. They are concerned, not about redevelopment, but about their rights as landowners.
City & Country spoke to two Kampung Baru landowners — Dr Mohd Yusof Ismail and Azizah Abdul Aziz — whose views may well reflect the general sentiment of the residents of the area. Mohd Yusof and Azizah believe their land should fetch prices commanded by the rest of KL city centre and that any land acquisition for redevelopment should recognise this.
Born and bred in Kampung Baru, Mohd Yusof owns 10,000 sq ft of land there with several others. A former high-ranking civil servant who is an urban and regional planner with a PhD in urban planning from Cornell University, he is more than qualified to voice his views on the issues related to the redevelopment of what is known as the Malay heartland in the city.
Mohd Yusof is the vice-president of the Kampung Baru Development Association, which, he says, represents a substantial number of landowners in the area. The association was set up in the early 1990s when the proposal to redevelop Kampung Baru was first mooted.
The association recently presented its views on the redevelopment plans for Kampung Baru proposed under the Draft KL City Plan 2020 in a memorandum to Kuala Lumpur City Hall (DBKL) and in a public hearing on the Draft City Plan on April 3. These views were the result of a discussion held in August last year on the Draft City Plan between concerned landowners and professionals, including bankers, architects, city planners, economists, lawyers and real estate professionals.
According to Mohd Yusof, the association’s views were well received by the hearing committee.
“If you are not from here, you may not appreciate what Kampung Baru means to us. My heart and soul is here, so when I look at the development plans, I am both professionally and emotionally involved. And with my qualification and wide government experience, I appreciate the subject matter even better,” he says.
When the Draft KL City Plan 2020 was unveiled, the association went through the Kampung Baru module with a fine-tooth comb and came up with several proposals to “strengthen the weaknesses” in the plan.
“We are not politicians and we are not against development as stated in the Draft City Plan but there are weaknesses that we have to address. We want to help strengthen and make it better,” Mohd Yusof says.
Uppermost on their minds is the value of land in Kampung Baru. The association says the value should be nothing less than that in the Golden Triangle, where real estate transactions in 2006 to 2007 breached RM2,000 psf. Current prices are between RM600 and 1,200 psf on average.
“If this is going to be the second Golden Triangle, as declared by former prime minister Tun Abdullah Ahmad Badawi recently, then values have to reflect that,” Mohd Yusof says, adding that the association has proposed that the redeveloped Kampung Baru be called Kampung Baru City Centre to complement KLCC, which is just a stone’s throw away.
According to the Draft City Plan, Kampung Baru covers more than 378.93 acres, of which 225.89 acres (874 lots) are in an area gazetted as Malay Agricultural Settlement (MAS) since 1897. These were the first indigenous land settlements established under Land Enactments in 1897 as a trial for the implementation of Malay reserve land in 1913. They were gazetted to protect and preserve Malay landownership. Such land, both undeveloped and developed, cannot be transferred or sold to or occupied by non-Malays.
But that does not seem to be an issue for landowners like Mohd Yusof. “The purchasing power of the Malays has gone up and I am sure they can afford properties here. We know that land here can only be owned by the Malays but we are sure there are many rich Malays who can afford to buy land here — just look at Damansara Heights where there are many Malay property owners. After all, you only need to be able to service the loan financing from the banks,” he says.
Another suggestion of the association is to extend the designated Corporate Street proposed under the Draft City Plan to cover more areas in Kampung Baru. The proposed street is now limited to Jalan Raja Abdullah for the development of mixed commercial projects. Such zoning is significant to the landowners as it will affect the value of land there, Mohd Yusof says.
“Why is it that only one road is designated as the Corporate Street? Wouldn’t land values there rise automatically? This creates a lopsided advantage for landowners on that street,” he explains.
As an alternative, the so-called Corporate Street should be extended and expanded in Kampung Baru to include Jalan Raja Muda Abdul Aziz, Jalan Raja Bot/Jalan Raja Uda, Jalan Raja Alang and Jalan Raja Muda Musa in a grid-like system like in New York City. There, residential and commercial land use is interspersed following a grid system. “This way, more landowners can benefit from higher land values.”
The association is also concerned about the implementation mechanism for the redevelopment. Former federal territories minister Datuk Zulhasnan Rafique had said earlier this year that the government would set up Kampung Baru Development Corp under the purview of DBKL to undertake the redevelopment of the area.
The association, however, says landowners prefer that the corporation comes directly under the prime minister as in the case of Putrajaya Development Corp.“This will reduce red tape when decisions have to be made, hence increasing transparency,” says Mohd Yusof.
“An even better option would be to set up a consortium of government-linked companies, à la Synergy Drive, to raise funds and negotiate with landowners on a willing-buyer, willing-seller basis,” he suggests. This way, he adds, landowners can decide whether to retain ownership or sell or lease to the developer.
Synergy Drive was the initial name of the merged entity of Sime Darby Bhd, Kumpulan Guthrie Bhd and Golden Hope Plantation Bhd before it was renamed Sime Darby Bhd.
According to Mohd Yusof, half of the landowners in Kampung Baru, including himself, are no longer staying there and would prefer to sell their land or be involved in joint ventures as landowners to develop their lots.
“Ownership must remain with the Malays but some leeway may be required to allow commercial space be leased out to the non-Malays for a limited mutually agreed period of time,” he says.
The government has often cited landownership issues in Kampung Baru as a major hindrance to redevelopment. Multiple landownership, a norm here, may pose problems when not every owner of a plot wants to sell or develop the land. However, once everyone agrees, they can obtain a power of attorney and an administrator can be appointed on their behalf.
Another landowner in Kampung Baru is real estate agent Azizah Abdul Aziz, who is looking for a buyer for a 8,000 sq ft plot in Jalan Raja Abdullah which she and several others own. Their asking price is RM900 psf, which Azizah feels is reasonable considering that land values in Jalan Sultan Ismail, which is nearby, are around RM1,500 psf. If the land did not front a major road, they would have gone for between RM600 and RM800 psf, she says.
According to Azizah, a foreign real estate investor approached her to acquire the plot for a condominium development but the land cannot be sold to non-Malays.
Many of the landowners here, she says, are like her. They are hanging onto their land to see how the land acquisition process under the redevelopment plan will be carried out. As Azizah puts it, most of these landowners can afford to wait as land values in the city centre will not go down, simply because there is limited land left for development there.
One of Kampung Baru’s newer landmarks — a 23-storey 300-unit condominium called Plaza RAH — resides in Jalan Raja Abdullah. It was developed by Datuk Abdul Rahim Mohd Ibrahim on a 0.48ha site comprising his own land (two lots) and the adjacent three lots acquired from the Malay Chamber of Commerce and a neighbour. The plots were acquired at an average RM150 psf while the condos were launched at an average RM170 psf in 2005. Transacted prices at Plaza RAH — one of the few developments that have taken place in Kampung Baru in recent years — were around RM250 to RM300 psf while current asking prices are around RM270 to 370 psf. (Condominium prices in the KLCC area are from RM800 to RM2,000 psf.)
In a Bernama interview earlier this year, Abdul Rahim said that the main challenge for developers in Kampung Baru was landowners who sought high prices for their land on the assumption that the developer would reap enormous profits from the development on their land.
He said they tended to disregard the fact that their land could only be owned by and sold to Malays. “If the land is sold to a Malay at a high price, how much higher can the developer sell to regain his capital or make profits? The units also have to be affordable to Malay buyers.”
Land values in Kampung Baru are significantly lower than in the prime parts of the city and are not reflective of the area’s prime location in the centre of the city, says Tang Chee Meng, COO of Henry Butcher Malaysia. The following indicative figures from Henry Butcher illustrate the difference in value between the areas:
• KLCC vicinity: Around RM1,500 to RM2,000 psf
• Jalan Yap Kwan Seng: Around RM400 to RM800 psf
• Jalan Tun Razak: Around RM400 to RM1,200 psf
• Kampung Baru: Around RM200 to RM400 psf
“Land values appreciate due to pressures of development. Compared to the hectic pace of development in the Golden Triangle, there was hardly any development in Kampung Baru. Furthermore, non-Malays are prohibited from owning land in Kampung Baru while the Golden Triangle does not have such restrictions,” Tang says.
Also, land transactions are scarce in Kampung Baru, with prices ranging from RM200 to RM400 psf (see table on transactions).
According to valuation executive Aziah Mohd Khalid of property valuers Akram & Co, land prices in Kampung Baru can range from as low as RM150 psf to as high as RM500 psf, depending on the seller. “A good price would be in the range of RM280 to RM500 psf.” However, says Aziah, in transactions that took place last year, prices were as low as RM150 psf for a plot in Jalan Raja Alang, which she describes as “ridiculously low”. Another piece of land in Jalan Raja Abdullah was sold for RM175 to RM250 psf.
“There is a vast disparity in land prices in Kampung Baru. It all depends on the landowners, with some wanting a quick sale. On the other hand, some are asking for more than RM500 psf,” Aziah adds.
Major commercial buildings in Kampung Baru include the 15-storey Menara Naza, which is owned and occupied by Naza Group as its headquarters. It houses five floors of car showrooms in Jalan Raja Muda Abdul Aziz. This area has been proposed to house Malay entrepreneurs in the automobile industry and designated the Autocity Mall. Naza’s flagship project, Platinum Park, is being developed in the KLCC area and plans are afoot for its headquarters to be relocated there.
Other commercial buildings in Kampung Baru include Safuan Plaza in Jalan Raja Alang, which also houses the four-star Regency Kuala Lumpur and a 5-storey shopping/retail podium occupied by bumiputera traders, and Bangunan Yayasan Selangor Kg Baru, a 19-storey office building in Jalan Raja Muda Abdul Aziz with 186,000 sq ft of office space.
“Values here can be enhanced through a comprehensive redevelopment programme and by making property ownership less restrictive. With the government’s proposal to redevelop Kampung Baru under the Draft KL City Plan 2020, the real estate market there may finally take off,” says Henry Butcher’s Tang.
“Under the Draft City Plan, there will be residential and commercial developments as well as a medical hub and an arts and culture market in the area. However, for this plan to materialise, there must be political will and courage on the part of the government to go ahead with the redevelopment plan in the face of opposition,” he adds.
For any meaningful development to take place there, Tang believes the landowners must cooperate and jointly operate under a single umbrella to enable a comprehensive and substantial development to be undertaken instead of undertaking small pocket developments individually.
After Plaza RAH, the next significant project here is the RM500 million redevelopment of the Pasar Minggu site, with Naza Group as the project manager and DBKL as the landowner. The mixed development project, called Puncak Baru, will comprise a 60-storey condominium tower with 392 residential units, 40 floors of office units, three floors for shopping and businesses as well as an integrated development of the Kampung Baru LRT station and a business space called Bazaar.
The groundbreaking ceremony for Puncak Baru was officiated at by Tun Abdullah on March 30, reflecting the seriousness of the government to push ahead with its redevelopment plan for the area. The project is coming up on a 1.5ha site and is expected to be completed in four to five years. It is hoped that it will be a catalyst for the redevelopment of Kampung Baru as a whole.
Meanwhile, public hearings on the Draft KL City Plan 2020 continue and it will be some time before the plan is gazetted. While landowners take a wait-and-see stance, the government knows it has to tread carefully in deciding how it can realise the grand plan it has for the city’s diamond in the rough.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 752, April 27-May 3, 2009
TOP PICKS BY EDGEPROP
[ Confirm Rental Get RM 3000 ] Students Condo
[ Europe Style Duplex Condo ] ROI 9% Cash Back
Invest Dual Key Unit GRR 9 years RM280k
Richmond Mont Kiara 4 rooms 3 bathrooms
Mont Kiara, Kuala Lumpur
Ukay perdana house for sale 5 rooms 5 bathrooms
Student Rental RM1800 Cover Instalment! Freehold
Ukay perdana sierra hijauan ampang semi d
Shamelin, Ampang, Pandan Indah, Chan Sow Lin
Cheras, Kuala Lumpur
[ READY TENANT+ COVER INSTALLMENT ] Hotel Suites
Residence [email protected] [Foc Mot & Free Furniture]
Bandar Botanic/Bandar Bukit Tinggi, Selangor
[ READY TENANT INVEST] New Township Between Cyberj