STRONG emphasis given by the Government in strengthening the economic attractiveness of Greater Kuala Lumpur, improving the overall public transportation system, improving linkages in major growth centers and other initiatives identified under the various National Key Economic Areas (NKEAs) will have great implications on future development of cities.
These NKEAs will influence the direction as well as speed of growth of the cities where the projects are carried out, which will then influence the property market of these cities.
Realising the high speed of urbanisation rate in Malaysia and the inefficiency that could be created by urban sprawl, it is of high importance that sustainable development be given due consideration. This has become the main focal point of discussions in property seminars and conferences in Malaysia and the region.
At the recently held The 3rd Congress of Asian Association of Urban Regional Studies, the theme was Survival City and Region: Risk or Sustainable Planning, speakers and participants were all in agreement on the need to plan, design and invest in smarter cities where sustainable planning becomes the guiding criteria.
Smart cities require skilled workers and innovative ideas. These cities must address green and sustainable issues and be resilient against natural hazards. The President of Thai Planners Society, Professor Dr Eggarin highlighted that sustainablility did not always translate into higher cost of building cities as there were natural methods to incorporate green issues in property development but required innovative techniques to suit the local environment.
It was also highlighted by Annette Dixon, the World Bank's Country Director for Malaysia in the November 2011 edition of the Malaysia Economic Monitor that “as cities concentrate a growing share of the national economy, it is imperative that they have systems to manage natural hazards and prevent them from becoming human and economic disasters.
Malaysian cities are especially vulnerable to floods and landslides. To reduce the risks related to these hazards, Malaysia would benefit from environmental restoration and integration of risk reduction into development planning”.
To lead the move towards sustainable development, one of the key thrusts of the National Housing Policy 2011 is to promote sustainability in the housing sector by promoting green technologies and features, and encouraging urban renewal and redevelopment. In Malaysia, this growing awareness on sustainable development has resulted in various commercial as well as residential developments using “green features” as one of the development concepts and theme or their unique selling features.
Ken Bangsar and 28 Mont Kiara are two examples of outstanding high rise development employing green features and technologies. Sunway Rymba Hills and Cahaya SPK Shah Alam are examples of landed residential development that integrate natural forest and open park. Launched last month, KL Eco City is going to be the country's first integrated green development targeting GBI and LEED certifications.
It can be concluded that it is becoming a “must” for property players from planners, architects, engineers to developers to take initiatives to create liveable cities by incorporating smart-growth principles in their planning and design.
We expect more new development and redevelopment projects to adopt similar principles, In the long run, smart-growth principles will add value not only in terms of capital appreciation of the properties but also social and economic liveability of entire communities.
Urban renewal and redevelopment projects are currently taking place in Kuala Lumpur city center and mature cities like Petaling Jaya. These are indications of the need for cities to grow vertically to create economies of scale in terms of space consumption and the need to minimise vehicular movement.
The current redevelopment of AngkasaRaya (Aurora Tower@KLCC) and Bok House (W Kuala Lumpur, The Hotel and Residences) and the proposed redevelopment of Hotel Istana, Kompleks Antarabangsa and Crowne Plaza into a mix of commercial and residential uses will encourage more owners of older buildings in the city center to take similar steps.
In Petaling Jaya, owners of older industrial buildings are redeveloping their land for commercial use. Approximately 16 million sq ft of prime office space will be completed by 2016 in Kuala Lumpur city center and its immediate areas, increasing the total supply by 22% to 86 million sq ft.
With the current slow take up in office space, rent is expected to remain stable in the next few quarters, hovering between RM5.50psf and RM6.50psf.
About 11,000 new condominiums with prices ranging from RM500psf to more than RM1,000psf will be completed by 2014. Due to the high supply of newly completed condominiums within the Golden Triangle Area and Embassy Row, average rental rate for selected existing condominiums has declined by almost 5% from RM4.66psf to RM4.44psf and from RM3.49psf to RM3.31psf respectively.
Several newly completed condominiums have even lowered their asking rental rate by almost 10%. We expect the leasing market for condominium will continue to be more challenging especially for bigger units though take up rate for new projects in most cases is very encouraging, with a significant percentage of local buyers.
The retail market will see more neighbourhood malls in the Klang Valley completed between 2012 and 2015 adding about 7.5 million sq ft to the current total supply of 51.4 million sq ft. Most of these new malls are located in high growth areas such as Petaling Jaya, Kelana Jaya, Cheras, Setapak, Kota Damansara, Puchong and UEP Subang Jaya.
Will the growth of residential and commercial properties slow down in 2012? Looking at the numbers provided by the Statistics Department and RAM Economics, average annual transaction growth rate of these properties has continued to slow down from 12.8% (1991-2000) to 5.9% (2001-2009).
With the growing population, high percentage of working population and growth in employment supported by various Entry Point Projects throughout the country, we expect the Malaysian economy to provide a conducive environment for the property market to continue to be one of the key economic contributors.
Senator Datuk Abdul Rahim Rahman is the Executive Chairman of Rahim & Co group of companies. This is his last column for StarBizWeek.
By The Star (by Datuk Abdul Rahim Rahman)
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