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Thursday, September 24, 2009

LRT extension a boon to construction sector

PETALING JAYA: Analysts are generally more bullish on the construction sector since last week’s announcement that state transport firm Syarikat Prasarana Negara Bhd has been given the nod to extend the Kelana Jaya and Ampang light rail transit (LRT) lines, estimated to cost RM7bil.

A local analyst said the project would have significant and positive impact on the sector, create spin-offs to boost employment, besides helping to ease traffic congestion.

“The extension of the Kelana Jaya and Ampang LRT lines will also help increase the value of properties along the lines,” he told StarBiz.

He said it was not uncommon for properties within walking distance to the LRT stations to appreciate, but it also depended on the location.

“These properties located near LRT stations are definitely more easy to rent as people can opt for an alternative mode of transportation, to driving.”

He also said the extensions, slated to be completed in three years, would serve the transport needs of those living or working further from the Kuala Lumpur city centre, thereby easing congestion and improving transport efficiency.

At this moment, it is unclear whether Prasarana, a wholly-owned unit of Ministry of Finance Inc, will award the entire project to one company or a consortium of companies.

“Many leading construction companies are definitely eyeing a major slice of the cake,” the analyst said.

An analyst with OSK Research also concurred that the extension lines would help lift property prices, especially for properties near the stations.

He said prequalification tenders for the construction of the extension lines were expected to be called next month and contracts awarded only from early 2010.

“This, we reckon, is very timely as the estimated completion of the extension lines by early next decade will likely coincide with the expected boom in the mass to mid housing market, thus giving many of the townships along these upcoming LRT lines the leverage to ride on the next major upcycle,” he said.

The Kelana Jaya line would extend from the Kelana Jaya station to Subang Jaya and USJ, before ending in Putra Heights.

A total of 13 stations will be located along the 17km Kelana Jaya extension. There will also be an interchange at the existing KTM line located behind Carrefour in Subang Jaya.

The analyst said the extension would serve the densely populated and mature townships such as Subang Jaya and USJ.

“There is a sizeable student population within the enclave and its vicinity as it houses a number of colleges and universities, such as Taylor’s College, INTI College and Metropolitan College,” he said.

The analyst said the Ampang extension line would start from the existing Sri Petaling station, pass through Bandar Kinrara, Bandar Puchong Jaya and Bandar Puteri Puchong before ending in Putra Heights.

The 17.7km Ampang extension will also have 13 stations. Both the Kelana and Ampang extension lines will connect at an interchange in Putra Heights.

The OSK analyst said in contrast to the Kelana Jaya extension line, the Ampang line would pass through many new but fast growing townships in the south-east of the Klang Valley.

Foreign research house Credit Suisse said in its Sept 14 note that the rollout of this RM7bil project was the next major catalyst for upward re-rating of the construction sector in the country.

By The Star (by Danny Yap)

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