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Monday, June 28, 2010

The big spillover benefits of Greater KL plan

PETALING JAYA: The redevelopment of a number of major goverment-owned assets to transform Kuala Lumpur and the other satellite towns in the Klang Valley, or the Greater Kuala Lumpur, into a leading global city has the potential to create significant spillover benefits to the country’s economy if it is planned holistically and is well executed, property industry players said.

Their concern is whether there will be an overall authority to oversee the redevelopment exercise so as to ensure the projects complement the current environment and are spaced out well to prevent an over supply situation.

Under the Greater Kuala Lumpur Strategic Development Project, an initiative under the 10th Malaysia Plan, the Government is to revitalise the city by re-developing strategic federal assets including the Sungei Besi military airport, Pudu Jail, Kuala Lumpur Financial District and the planned township development on the Rubber Research Institute (RRI) land in Sg Buloh.

Datuk Michael Yam says largescale redevelopment allows a wholesale repositioning of KL

Newly elected Real Estate and Housing Developers Association (Rehda) president Datuk Michael Yam said such large-scale redevelopment would enable a wholesale repositioning of Kuala Lumpur as a world-class city, “embracing all the contemporary features not currently available in existing developments, which grew out of organic demand and ad hoc non-contiguous ventures.”

“Developing large parcels of land enables better integration of services, infrastructure and other components, and is generally more long term and sustainable,” Yam, who took office on June 19, told StarBiz.

He said the development plans needed to be carefully thought out and planned, “not only to achieve profit targets, but for other more holistic benefits including social, environmental and sustainable objectives for the long term.”

“The supply should be of high quality and value, and needed to be developed in phases, in order not to upset the supply and demand equilibrium.”

Yam also said the need for a new, more effective and efficient structure of the approval and decision process to avoid costly delays and from falling short of targets. “Strong financial oversight, corporate governance and supervisory measures by a monitoring team should be established with active private sector participation.”

Meanwhile, the Government can use the highly profitable parcels as a source of additional income to cross-subsidise housing for the poor. This will provide a boost to the public sector’s effort in ensuring affordable housing for the low-income group.

Datuk Eddy Chen ... ‘Each asset or land area must come under a unified master plan.’

Rehda patron Datuk Eddy Chen said the projects should be developments of a high-value nature that have the potential to lure foreign direct investment in assets and properties that are of international standards.

“Each of the asset or land area must come under a unified master plan that has its own unique theme and designated role to play.

This is to avoid inter-city competition and overlaps. For example, while one city can be a financial district, another can be the centre of regional headquarters for multinational corporations, and others for MICE and corporate tourism activities.”

Chen, who was a former president of Rehda, said such cities needed to be well-planned with components for work and play, citing a good public transport system as the main mode of travel was also paramount.

Hall Chadwick Asia chairman Kumar Tharmalingam said the proposed redevelopment of the government assets “shows there is a complete shift in paradigm in how the Government is going about to unlock the value of its assets.”

“Having a government company to undertake the projects is a clever approach as it would give an assurance of implied sovereign guarantee that the Government will actively pursue the completion of the projects,” Kumar said.

He said many foreign funds including private equity and pension funds would be keen to invest their funds in those projects.

“By having open tenders for the development of these assets, the private sector will have the opportunity to participate,” he said, citing the Employees Provident Fund joint-venture development of the Sungei Buloh land that would be opened for bidding as an example.

Located on 1,320ha, the massive development is estimated to cost some RM10bil.

As for the 160ha Sungei Besi airport, Kumar said with the project’s strategic location and the sizeable land, it should become a new gateway to the city if planned cohesively. “To ensure that the place remains vibrant even after office hours, there should be facilities not just for work, but also to live and play there.

Mah Sing Group Bhd group managing director cum chief executive Tan Sri Leong Hoy Kum said high-value project initiatives to redevelop the government assets would provide more opportunities for the players.

“It is a good way to allow greater participation from industry players with the expertise to add value to the assets,” he said.

By The Star

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