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KINDLYREFERTOTHELASTPAGEOFTHISPUBLICATIONFORIMPORTANTDISCLOSURES

16June2011|SectorReport

PropertySector Maintain NEUTRAL

EnBlocRedevelopment:AnupcomingtrendinurbanMalaysia

Inourreporttitled“EnBlocRedevelopment:AfuturetrendinurbanMalaysia?”dated6May2011,wepointedout theopportunities that exist invarious strategically located low-cost housingareas,particularly thosewithina 7km radius ofKualaLumpurcitycentre,whicharepractically sitting onpropertygold-mines.Webelieve theselow-costprojects intheneighbourhoodsof Pandan,Sentul,Setapak,Keramat,PantaiDalam,CherasandSalakSouthareripeforenblocredevelopment.KUALALUMPURGETSITSENBLOCREDEVELOPMENTPROJECT

En bloc redevelopment in Cheras. The Federal Territory Minister, Datuk Raja Nong Chik, earlier this monthannouncedan enblocredevelopmentof (1)Sri Johor,SriPulauPinang,SriMelakalow-cost apartments,and(2)TamanIkanEmaslow-costhousesinCheras,KualaLumpur.Theinitialphaseofthe53-hectareprojectisslatedtobegininthesecondhalfofthisyear.

PROJECTSITE:CHERASENBLOCREDEVELOPMENT

Improve neighbourhoodquality and liveability. Themain objective of the en bloc redevelopment project is torejuvenatetheold,dilapidatedpublichousingarea.Theareawillbemodernizedwithbetterdesignedandbuiltqualityhomesaswellasimprovedpublicfacilitiesandlandscaping.Theenblocredevelopmentwillalsonotonlyenhancetheneighbourhood liveabilityandqualityofpublichousing inKuala Lumpurbutitwillalsohelp tobeautifythecityfringelandscapeinlinewiththeconceptofGreaterKL.Moreover,itallowstheexistingresidentstobenefitfromtherise inthe valueof theirlandsbutwithout havingto sell theirpropertyoutright. Theen bloc redevelopmentoffersopportunitytoupgradetonewandbetterqualityhomesinthesameneighbourhood.Thisarrangementissuchthattheaffectedresidentscanremainclosetotheirfamiliarsurroundingsandpreservethelongstandingcommunityties.Minimaldisruptiontotheexistingresidents. Duringitsinitialphase,theCherasenblocredevelopmentprojectwillinvolvetheconstructionofqualityhomestotaling1,255unitswhichwouldbecompletedinthreeyears.Noneoftheexisting residents will be affected during the project implementation. The initial phase of the multi-phases

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redevelopmentprojectwillbeconstructedonavacantlandinthevicinityofexistingapartmentsandhomes.Hence

theoldbuildingswillbedemolishedonlyuponthecompletionofthenewunits.Newapartmentofbetween800-900sqfeet.DatukRajaNongChiksaideventuallyall858homeownerswilleachreceiveanewapartmentofbetween800-900sqfeetdependingonthesizeoftheirexistingunit.Meanwhile,all4,810existingrenterswill eachbeoffered topurchaseanewapartmentor torentitfromDBKLatprevailingprices.ThecurrentsellingpriceandmonthlyrentalrateareRM42,000andRM124,respectively.Affordable apartments for young executives, first house buyers. It would also undertake apartment housingdevelopmentintheareaforyoungexecutives,firsthousebuyerswitheachunittoaffordablypricedatnotmorethanRM300,000andwithabuilt-upareaofatleast800sqfeet.Underthesubsequentphase,itwilldevelopacommercialand residentialcentre.Thewholeprojectwill takearound 15years tocomplete. The totalredevelopment value isestimatedatRM2.8billion.DBKLhasappointedSPSetia(Neutral,TP:RM4.33)asthedeveloperforthisproject.

WHITHERTHEENBLOCREDEVELOPMENTINURBANMALAYSIA?An unanswered question. What would happen if any of the 858 existing homeowners in the Cheras en blocredevelopmentprojectdecidedtorejecttheofferfornewapartmentsinlieuoftheirexistingones?Requiredlawstofacilitateenblocredevelopment:TheSingaporeexperience. ThegovernmentofSingaporehaspowertocarryouttheenblocredevelopmentundertheLandAcquisitionsActwhichinvokestheprincipleofeminentdomain(i.e.anactionof the state toseize,orexpropriate,or seizerights inprivate property, withduemonetarycompensation even without the owner's consent) to undertake the urban redevelopment projects. Moreover, theamendmentstotheLandTitlesActpassedin1999allowedhousingestatestobesoldagainstsomeoftheowners'willifthemajorityoftheownersruledagainstthem.Howeverthishasattractedcontroversyasitraisedconcernsof‘majoritarianism’.Neverthelessitisanacceptablesolutioninviewofitsgreatergoodtothesociety.

Urgentneedtogetthelawsright.Hencewebelieve themainobstacle thatmayhamperthegrowthofenblocredevelopmentinMalaysiaisthelackofrequiredlawsthatfacilitateitsimplementation.Inthisregards,theMalaysiangovernmentwillneedtoeitherintroducenewlawsormakenecessaryamendmenttotheexistinglawsinorderfortheeconomyandmoreimportantlytheresidentstobenefitfromtheenblocredevelopmentproject.Thepotentialwinners.Propertydeveloperswithtrackrecordsindevelopinghigh-riseresidentialprojectsshallhavethe upper hands in en bloc redevelopment project.Apart from SP Setia, companies such as UEM Land (via itssubsidiarySunrise)(Neutral,TP:RM2.70)andMahSing(Buy,TP:RM2.90)areamongtheotherpotentialwinners.

SyedMuhammedKifnismkifni@midf.com.my03-21738383

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