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Monday, January 31, 2011

All eyes and ears on second MRT

KUALA LUMPUR: The second mass rapid transit (MRT) line, which circles the Kuala Lumpur city centre (KLCC) orbital and known as the “circle line”, is already in the final planning stage.

The details are expected to be announced in March.

“Its alignment must depict the current and future business districts in Kuala Lumpur,” said Minister in the Prime Minister's Department and chief executive officer of Pemandu Datuk Seri Idris Jala during an Economic Transformation Programme (ETP) update to analysts and fund managers recently.

In the longer term, a third line to Port Klang was being comtemplated, he said. The circle line is expected to cover the hotspots surrounding the KLCC, Jalan Bukit Bintang, the new Kuala Lumpur International Financial District in Dataran Perdana, KL Ecocity, Pusat Bandar Damansara and Sentul, among others.

Meanwhile, the “blue line” the first line which is a 50km alignment that covers Sungai Buloh to Kajang, via Pusat Bandar Damansara and Bukit Bintang is slated for completion in 2016. The network of all the three MRT lines will be fully operational by 2020.

“Greater KL now has a population of 6 million people. By 2020, we will have 10 million people. If we don't have the MRT, the city will be choked. Right now, nearly everybody drives. This is not sustainable,” said Idris.

He added that currently 13% of people commuted using urban transportation. Under the ETP, Idris said this should increase to 50%, adding that the funding structure for the MRT would be disclosed by end-February.

“Apart from reducing travelling time, the MRT will also cause property prices to appreciate because of better accessibility. If your house is near the MRT station, prices will go up because of the commercialisation created around the area,” said Idris.

Some analysts are wary of the ambitious plans laid out by Pemandu.

“As usual, it's a case of execution. Will the Government be able to actually implement the project? We'll need to see it being done to believe it. More importantly, how is the Government going to fund this project?” asked a construction analyst.

Another analyst said the Government was likely to reduce cost by getting developers to co-fund some of the MRT stations.

On implementation, he said that Pemandu would have learnt from past lessons of the LRT, monorail and commuter train.

Some brokers have notably been able to analyse the impact of the proposed MRT comprehensively.

In a Malaysia Market Strategy Report titled “Property boom-boom” released on Jan 26, global investment bank UBS' head of research Chris Oh said Malaysia was set to enjoy improved connectivity in the coming years with the proposed infrastructure rollout of the MRT system and possible high-speed rail linkage between Kuala Lumpur and Singapore.

He said the MRT captured the imagination of the people, developers and investors. He expects property value around a radius of 20km of the city centre to rise significantly.

The preference would be on developers who have vast landbank with high-density mixed development around MRT stations.

“Interest in Malaysian property will be fuelled by foreigners looking out for higher returns (via undervalued currency and low entry costs) than their home countries (Singapore and Hong Kong) and the absence of significant restrictions on property ownership by foreigners,” said Oh.

Singapore-based DBS Research was the first to issue a property sector report titled “Entering a Golden Era” on Jan 14, analysing the impact of MRT on the property sector.

The analyst, Yee Mei Hui, said: “The MRT system is expected to be a structural catalyst for the rise in value of the real estate surrounding MRT stations.”

In the report, the firm was projecting boldly that land values in MRT hot spots could jump by up to six-fold over the next five years.

She said the MRT would have a strong structural impact on the Kuala Lumpur real estate, given that the KL city had been under-invested since the last wave of mega-projects in the late 1990s.

The new MRT will create new opportunities for high-density mixed developments, urban renewal and new suburban townships.

In turn, this has boosted the potential for land prices to reach new peaks with higher plot ratios and more commercial developments. Other than existing prime areas, she identified KL Ecocity, Pusat Bandar Damansara and Sentul as new locations for high-density developments to watch out for.

By The Star

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