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Saturday, July 30, 2011

Plugging the gaps in urban renewal

Urban renewal is necessary if cities are to thrive. When cities thrive, the country progresses. From Penang to Ipoh, Kuala Lumpur to Johor Baru, the major cities in Malaysia are heading towards urban renewal. It is not unique to Malaysia.

Singapore's most recent renewal programme is the Selective En bloc Redevelopment Scheme, or SERS (see inforgraphics) which started more than 15 years ago. Around Asia, urban renewal is an on-going process from China to Indonesia.

But the goal of such an exercise is not just to dress up a city with shiny new buildings cramped with people, nor to put in rail lines that lack connectivity.

Public policy, working in concert with private sector, should be to help people. Ultimately, the job of the urban government is not to fund buildings, nor help certain people to make loads of money. It is to care for the needs of the people.

The pace of urban renewal appears to be picking up in Malaysia. And due to the various renewal programmes undertaken in the country, the term “brownfield”, which describes contaminated or toxic industrial/commercial land that can potentially be re-used after the contaminants have been removed, has become almost synonymous with redevelopment and renewal.

In its strict definition, there is no brownfield project in the country. Datuk Abdul Rahim Rahman, executive chairman of Rahim & Co group of companies says:“I cannot think of any brownfield sites in Malaysia, other than dumping grounds. What we have today in different parts of Petaling Jaya is re-zoning. The term is loosely used to describe redevelopment, which we are undergoing today.

“What happened in Singapore a few years ago - the en bloc sales of Housing and Development Board flats - is also not brownfield. It is redevelopment of different parts of the city state,” he says.

Petaling Jaya City Council mayor Datuk Mohd Roslan Sakiman confirms this. “There is no brownfield sites in Petaling Jaya, only renewal programmes.

“Our renewal and rejuvenation programmes do not go into acquisition. A major part of Petaling Jaya is leasehold where people own the building, but not the land that the building is on. “The lease of the land and its extension come under the state land office. Our role is mainly as a facilitator. In the event there is an issue of en bloc sale, I would think this will be a problem,” says Roslan.

Turning over a new leaf

Unlike Petaling Jaya, a large part of Kuala Lumpur is freehold. As the momentum for urban renewal accelerates under the Government's Economic Transformation Programmes, more sites will be identified for redevelopment. Some of these sites may have multiple owners. However, the country still lacks legislation for en bloc sales of strata-titled residential and commercial properties, let alone en bloc sales of landed properties, which is complicated by the fact that public areas in such properties have been surrendered to the local authority.

Kuala Lumpur mayor Tan Sri Ahmad Fuad Ismail Ahmad Fuad says city hall has a flexible stance on redevelopment even on landed properties despite there being no legal precedence or legislation for such property transactions. (read interview with city hall mayor.)

In light of this, there is one big question that has yet to be answered when it comes to renewal and redevelopment what happens if multiple owners are involved, as in a block of flats, or rows of privately-held landed houses?

The announcement in early June of an urban renewal project in Bandar Tun Razak, Cheras to be undertaken by the Federal Territories and Urban Wellbeing Ministry together with city hall begs the question of when this country will have laws to smoothen transactions for en bloc sales.

SP Setia Bhd was picked for the RM2.8bil project in Cheras involving the redevelopment of the Seri Johor, Seri Pulau Pinang and Seri Melaka low-cost apartments and the Taman Ikan Emas low-cost homes.

The project, sprawled over 130.96 acres, will not affect any of the residents comprising tenants of the apartments and owners of the low-cost homes initially as they do not have to move out since the first phase will be developed on vacant land. But they must move out eventually. As compensation, the affected homeowners will each receive an apartment of 800 sq ft to 900 sq ft while existing dwellers will be allowed to purchase or rent from city hall.

It's complicated

Therein, lies the complication. Because existing laws do not provide for such sales and are also vague about “eminent domain” - the compulsory purchase of property with due compensation but without the owner's consent should residents decide not to take up the offer.

Under the “eminent domain” clause, when private property is compulsorily purchased, it is usually reserved for government use or for the construction of public infrastructure and in some rare cases, for commercial purposes.

For example, the Government may have a more compelling case for the use of eminent domain in respect of the Mass Rapid Transit project where for the Sungei Buloh-Kajang line, a number of residential and commercial properties will have to be compulsorily purchased.

At the height of a debate on amendments to lower the threshold for Hong Kong's en bloc sales rules in 2009, a South China Morning Post reader wrote in a letter that “the powers to compulsorily take away private homes are a draconian statutory provision that should be vested only in government - and used only for a defined public purpose. Making a profit for developers is not a public purpose”.

In any case, developers are averse to compulsorily purchasing properties as this smacks of arm-twisting or bullying, which will not go down well with the public and become a public relations disaster.

To make matters even more complicated, land is a state matter in Malaysia, but the National Land Council, which was set up in 1966 to ensure uniformity of law and policy relating to land administration among the peninsular states, may have a role to play. However, this may be disputed by the state governments.

The good and bad

There are arguments for and against such legislation for en bloc sales. At the heart of it, with rising property prices in urban locations, property owners will want to know how they will be compensated since for most, the house they are living in is their only tangible asset.

Tong: ‘Redevelopment of en bloc residential properties is one way to continue to refresh a growing city.’

Real Estate and Housing Developers' Association Kuala Lumpur branch (Rehda KL) chairman NK Tong says in an e-mail reply that for redevelopment projects to succeed in the long-term, they must be done in an equitable manner where property owners are fairly compensated.

He says this can be taken both ways - where owners receive fair market compensation for their properties and where a small percentage of owners should not unnecessarily be allowed to stop future redevelopment to the detriment of the majority's wishes.

Tong says Rehda KL and the authorities have been exploring this in detail and workshops have also been held on the issue.

“In Malaysia, the authorities are considering using a threshold of 85% and 75% for properties older than 10 and 20 years respectively. This will encourage more progressive redevelopment once a majority of owners have agreed to it,” he says.

Tong adds that study trips with the Federal Territories Ministry, city hall and Rehda KL have been conducted to Tokyo, Singapore and Hong Kong to specifically look into the issues surrounding redevelopment. He says for cities to remain competitive and vibrant within a thriving region, redevelopment of critical city sites need to be facilitated.

“Redevelopment of en bloc residential properties is one way to continue to refresh a growing city. This has to be with the consent of the majority of owners of these properties, and such consent can be achieved if they are fairly compensated,” Tong says.

Rising trend

There is no doubt that parts of Kuala Lumpur and Petaling Jaya will need urban renewal in the years to come. This is in addition to the areas identified for redevelopment under the Greater Kuala Lumpur/Klang Valley National Key Economic Area (NKEA).

Among the areas slated for redevelopment are the government quarters along Jalan Cochrane, the Royal Malaysian Air Force base along Jalan Sungei Besi, land along Jalan Davis, the former Pudu prison site and plantation land belonging to the Malaysian Rubber Board in Sungei Buloh.

Another area slated for redevelopment which has stirred some excitement in recent years due the role it plays in the Malay historical presence in the capital is Kampung Baru, which is actually seven villages spread over 378.93 acres.

A bill is now pending in Parliament for the redevelopment of Kuala Lumpur's oldest Malay enclave while Kampung Baru-based non-governmental organisations have agreed to the formation of a Kampung Baru Development Corp.

According to Federal Territories Minister Raja Datuk Nong Chik Raja Zainal Abidin, other areas of Kuala Lumpur proposed for urban renewal under the Sustainable People's Housing for Urban Renewal programme include San Peng in Pudu, Kampung Kerinchi and Sri Pahang in Pantai Dalam and other areas with flats over 30 years old.

While these projects are part of the Government's urban renewal programme to inject life into decaying and ageing townships and slum areas of the city, increasingly as the central Klang Valley becomes developed and space for development becomes scarce, en bloc sales will become more common.

The tightened rules for projects on or near hillsides and the move to preserve as much of Kuala Lumpur and Petaling Jaya's green zones will also mean the supply of land for development will become scarce.

What may be different is that later transactions will take place not under the auspices of the Government's urban renewal programme but on the initiative of private developers looking to acquire prime real estate.

Currently, most of the redevelopments involve developers acquiring office, factory or showroom properties where ownership is not fragmented.

There are many examples of such transactions as they are straight forward and some have already been developed into new properties.

Jaya One, a commercial centre developed by Tetap Tiara Sdn Bhd on a former Aluminum Company of Malaysia factory site along Jalan Universiti and IJM Land Bhd's redevelopment of PJ8, a former factory site cum showroom in Section 8 are two examples in Petaling Jaya while Mah Sing Group Bhd's Southgate project (the former Nichii showroom along Jalan Sungei Besi) is another.

Observers are saying that how the Taman Ikan Emas en bloc sale is done will set a precedent for other such sales. What makes it important is that this sale is for landed residential properties.

This en bloc sale is more complex as a result of the public areas surrendered to the local authority as compared to Sunrise Bhd's acquisition of the 24-storey Wisma Angkasa Raya along Jalan Ampang in 2008 or Mah Sing's acquisition of the Panasonic factory site in SS8 two years ago.

These properties would likely not involve any surrendered public areas whereas Taman Ikan Emas, being a housing estate will interest developers, who will want to know how the Government plans to overcome this legal obstacle.

An old property hand who was a two-term state legislator and also a member of the state executive council overseeing town planning asked some years ago where does the law stand on this?

Setting a precedence

MIDF Research analyst Syed Muhammed Kifni says how the property transaction involving Taman Ikan Emas works out between the developer and homeowners will be a test case and create a precedence for later urban renewal projects, whether under government auspices or private sector initiatives. “At present, there are no laws for en bloc sales and the law is unclear as to whether eminent domain can be used under these circumstances,” he says.

In a report dated June 16, Syed Muhammed posts the question of what would happen if any of the 858 existing homeowners (of the Taman Ikan Emas estate) decided to reject the offer for new apartments in lieu of their existing ones.

He says perhaps policymakers can look to Singapore to see how the island-republic facilitate en bloc redevelopment.

“There are two laws in Singapore - the Land Acquisitions Act involving the principle of eminent domain and the Land Titles Act passed in 1999 - which facilitate en bloc redevelopment,” Syed Muhammed says.

He believes the main obstacle hampering growth of en bloc redevelopment locally is the lack of legislation to facilitate its implementation.

The Singaporean way

“The Government will need to introduce new laws or make necessary amendments to the existing laws for the economy and more importantly, the residents, to benefit from the en bloc redevelopment project,” Syed Muhammed says.

A lawyer attached to a prominent firm in Bukit Damansara says he is not aware of any moves by industry players lobbying for amendments to laws or tabling a bill in Parliament for en bloc property transactions.

Tong says the Singapore model may be something that stakeholders here can look to for a workable model where fair compensation and safe guarding the rights of the majority are concerned.

He says in that sense, Singapore has had a workable model for many years now, where en bloc sales require a majority of homeowners to accept an offer before a transaction can go through.

In an e-mail response from UOA Holdings Sdn Bhd, senior manager Eugene Lee Chin Jin says in order for redevelopment to take place, some form of legal framework definitely needs to be in place.For example, collective sale upon certain level of acceptance.

On how such transactions can be expedited, via legislation or other methods, Lee says Hong Kong and Singapore have models which Malaysia can emulate.

“UOA Group has yet to undertake such a development except for the redevelopment of Wisma Socfin (some years back) into today's Wisma UOA Damansara 2. However, the major difference in this development was that the former building was wholly-owned by Socfin Plantations,” Lee says.

By The Star

Kampung Baru redevelopment – an ambitious project

Land dilemma: The redevelopment of Kampung Baru (beneath the KL city skyline) is potentially a very problematic one due to multiple ownership of land.

The impending redevelopment of Kampung Baru, which is located in the heart of Kuala Lumpur, will be one of the most challenging urban regeneration projects by the Government.

A source from a local council says: “The redevelopment of Kampung Baru is potentially going to be the most problematic, but it will also be one of the most ambitious ones ever undertaken by the Government by virtue of one single factor multiple ownership of land.”

Rahim: As many as 40 people may have ownership of a piece of land between 10,000 sq ft and 20,000 sq ft.

While two other prime ministers had toyed with the idea, it is only under Datuk Seri Najib Tun Razak that a Kampong Baru Development Corp Bill was drafted by the Attorney-General's office. The bill was first tabled last year in Parliament and according to Senator Datuk Abdul Rahim Rahman, who is also the executive chairman of Rahim & Co group of companies, it will most certainly be debated in the September Parliament session.

“There are certain misconceptions that need to be cleared. The first is that many assume the Government is going to buy up the whole 200 over acres. The Government is not going to do that. The Government will not use the Land Acquisition Act 1960. The redevelopment exercise will be through negotiations and will be counting on the rapport with the owners.

“The Government will spearhead the development through joint ventures. Developers and government-linked corporations are going to help finance the development and the landowners can be the shareholders.

“The second misconception is that the Government will force the owners to sell. This is not true. Landowners will be given the incentive to enter into joint ventures with developers to develop the place.

“The third misconception is that, once the bill is passed, gazetted and becomes law and this will take time the bulldozers are going to come in the very next day. This is not true. The redevelopment plan is a long-term one and will be carried out with the concurrence of the land owners,” says Rahim.

He does not believe the Land Acquisition Act should be used because this may create a lot of objections. However, there may be certain instances when the Government may have to acquire the land, as when roads are widened, and this may involve 10 houses or so.

“In cases like this, the government will compensate for this land and pay the market value,” says Rahim.

Rahim says the greatest challenge facing the regeneration of Kampung Baru is the issue of multiple ownership where one title has owners that go back three to four generations.

“This may mean that as many as 40 people have ownership of a piece of land that is between 10,000 sq ft and 20,000 sq ft the average size of the land there. It is too small to be developed on its own, so the land has to be amalgamated. That is why the Government has to come in with the political will to develop it.”

As for the actual physical development, the first step is to provide the infrastructure like wider roads. That means the drawing up of a master plan, says Rahim.

As for the Members of Parliament, Rahim says generally all agree that Kampung Baru should be redeveloped.

Kampung Baru took shape in late 19th century on 227 acres next to the Klang River just outside Kuala Lumpur. It was one of the projects by the British administration.

The main objective was to provide a place near the town centre where the Malays could live. By Jan 12, 1900, the Selangor Resident gazetted the area as Malay Agricultural Settlement. Rules were drawn up by the Resident under the Land Enactment 1887 to manage the area and to keep the settlement entirely Malay.

Over the years, the population grew and along this growth, land ownership became increasingly fragmented. From a purely agricultural settlement where land is accounted for in terms of lots, there are today strata titles because low-rise and high-rise structures exist together with traditional Malay houses.

Because Kampung Baru is located on Malay Reserved Land, non-Malays are not allowed to buy land, rent or to live there.

For multi-cultural Malaysia, urbanisation along cultural lines is a near impossibility, as Rahim explains, with examples from Penang and Singapore. What is important is meeting the social-cultural needs of the community.

Below are excerpts of a question and answer with Rahim:

As a senator as well as a property man, how do you think the redevelopment of Kampung Baru which can be emotional should be handled? The people sacrificing for the country, or the country taking a people-oriented and social stand?

We need to be very clear on the objective of the redevelopment. This should be conveyed clearly to the people of Kampung Baru. It should not be considered as “the people sacrificing for the country” as they are not in a position to be sacrified. The redevelopment plan should take into account not only economic benefits, but also its social implications and overall impact.

Redevelopment involving relocation has not been easy in Malaysia, learning from the Penang government's efforts to redevelop Penang Clan Jetties in Weld Quay (a collection of Chinese water villages) in mid-2000.

Based on a study conducted for this area, several villages were recommended to be redeveloped into commercial development and the residents were to be relocated to an identified location, and several other villages were recommended to be maintained as traditional floating villages but with improved infrastructure and beaufication work.

The redevelopment and relocation plans were rejected by the residents, the main reason being (they) wanted to maintain cultural diversity of the clans. As for the beautification plan for the other villages, that was well-received by the residents of the villages. Until today, the plan is still under review.

What can we learn from Singapore's renewal programmes and preservation of cultural or historical sites?

In the case of Kampong Glam (in Singapore), it was gazetted as a conservation area by the Urban Redevelopment Authority. Some of the conserved sites in Kampong Glam include the Sultan Mosque, the Hajjah Fatimah Mosque and the Istana Kampong Glam, the palace of the former sultan.

Today, after the redevelopment, Kampong Glam retains strong ties with the ethnic-Malay and Muslim community. It is sometimes referred to as the Muslim Quarter due to its history. The Muslim population still remains a significant presence in Kampong Glam and the area remains a centre for Muslim activities. The Sultan Mosque remains a major landmark and congregation point for Singaporean Muslims.

Both experiences in Penang and Kampong Glam show that any redevelopment plan needs to take into account the socio-cultural impact on the settlers. If the plan maintains the culture or identity of the original community, it might be well-received.

By The Star

Location a key factor for SouthKey’s JB project

Banking on location: Southkey Properties Sdn Bhd executive director Quek Cham Hong (left) with general manager J.E. Ng looking at a model of the SouthKey mixed integrated property development project.

SOUTHKEY Properties Sdn Bhd is banking on the strategic location of its integrated mixed development project in Johor Baru as the main selling point to attract local and foreign property buyers.

The project, known as SouthKey, is located on a 134ha site on the Majidee Army Camp area and is dubbed as the “last remaining large prime development land” about 4km north of the Johor Baru city centre.

“Apart from the project's strategic location, we also see Iskandar Malaysia as another strong pulling factor to help sell the project,'' executive director Quek Cham Hong told StarBizWeek in an interview recently.

The development is surrounded by established housing estates such as Taman Sentosa, Permas Jaya, Taman Suria, Melodies Garden and Kg Melayu Majidee with a catchment population of more than 120,000 within a 3km radius.

He says the development enjoys good accessibility and connectivity to the project via three major highways Tebrau Highway and Southern Link Expressway and Eastern Dispersal Link Expressway (EDL) which will be completed next year.

Quek adds it is only a few minutes drive from the Sultan Iskandar Customs, Immigration and Quarantine complex in Bukit Chagar via EDL, which traverses the eastern portion of the site connecting to the North-South Expressway.

“A proposed light rail transit route runs along the 1.5km Jalan Bakar Batu fronting the southern boundary of the site under the Iskandar Malaysia comprehensive transportation master plan will further enhance accessibility,'' he says.

Quek adds that the project's plus point is its location within the JB City Centre Zone A- one of the five flagship development zones in Iskandar Malaysa's 2,127 sq km.

The other four zones are the Nusajaya, Eastern Gate Development, Western Gate Development and Senai-Kulai.

He says the Johor Baru property market has seen a lot changes since the inception of Iskandar Malaysia on Nov 4, 2006, with demand for high-end properties on the upward trend.

Quek says the country's first economic growth corridor is moving in the right direction, attracting domestic and foreign investments in multi sectors including property.

Figures released by the Iskandar Regional Development Authority revealed that as of last December, Iskandar Malaysia has attracted about RM69.48bil investment, surpassing the RM47bil target for 2010.

In the first quarter of the year, RM3.7bil new investments were received, bringing the total committed investments to RM73.24bil since 2006 with Iskandar Malaysia targetting RM73bil in new investments from Jan 2011 to Dec 2015.

“The influx of domestic and foreign investors and new residents to Iskandar Malaysia will have positive impact on Johor Baru's property market,'' he says.

SouthKey is Selia Pantai Sdn Bhd's maiden project in Johor Baru a joint-venture company between Teluk Zamrud Sdn Bhd and Kumpulan Prasarana Rakyat Johor Southkey Properties is a member of the Selia Group.

The project is divided into nine precincts. Work on the first phase of the project on a 35.61ha site has already started with RM2bil gross development value (GDV) and is expected to be completed within the next five to seven years.

Quek says work on the second phase on the remaining 46.94ha area will begin in 2015, when the entire Majidee Camp is expected to be relocated to its new site in Batu Pahat by 2014.

Phase one is made up of 128 units of Lakefront strata-titles shop-offices comprising of 3, 4, 5 and 8-storey blocks with prices from RM918,000 to RM15.50mil and 70% of the units already sold.

The new launch under phase one next year will see Soho units and serviced apartments, business hotel, medical centre, retail shops, showrooms, neighbourhood retail complex and a college.

“We want to position SouthKey as the business address in Johor Baru and the only way to do it is to offer product differentiation compared with our competitors,'' Quek says it plans to attract companies and businesses from other locations within Iskandar Malaysia to relocate their offices to SouthKey and also those from the Klang Valley planning to set up branch offices in Johor Baru.

By The Star

Dijaya Corp thinks big

AFTER keeping a low profile in the past with sales below the RM500mil cap, property developer Dijaya Corp Bhd is changing course and moving into higher gear to become a more active developer with higher sales targets.

It is targeting sales of RM519mil for the current financial year (FY) ending Dec 31, 2011, RM820mil in FY2012, and RM1.24bil in FY2013.

The more ambitious sales targets will be supported by new project launches to the tune of RM839mil this year, RM1.7bil in 2012, and RM1.8bil in 2013. As at June 30, 2011, the company has unbilled sales of RM450mil.

Dijaya has an undeveloped landbank of 249 acres in the Klang Valley and Johor, that have potential gross development value (GDV) of RM12.4bil.

Tong: ‘Dijaya actively looking to expand its landbank’.

According to the company's 2010 annual report, it has some 11 acres of land left for development in Tropicana Golf and Country Resort, and 20 acres in Tropicana Indah Resort.

It also owns investment properties such as The Tropicana City Mall in PJ.

With two signature developments to leverage on, the 625-acre Tropicana Golf & Country Resort and 409-acre Tropicana Indah Resort Homes, Dijaya managing director Datuk Tong Kien Onn says the company will continue to build up its prowess in product innovation and ensuring superior quality and practicality in its projects.

Tong shares with StarBizWeek that the company is actively looking for opportunities to expand its landbank, and is in talk for three to four parcels of more than 200 acres each in Selangor.

Dijaya's most recent land acquisitions were sealed last month. It purchased an 88.5 acre parcel in Subang for RM385.5mil or at RM100 per sq ft, and 12.9 acres in Kampar for RM5.6mil or RM1 per sq ft.

On June 8, Dijaya's subsidiary, Tropicana Subang Development Sdn Bhd, inked a deal for the four parcels of freehold land on the outskirts of Subang from Chunghwa Picture Tubes (Malaysia) Sdn Bhd.

The land in Kampar was also from the same vendor.

The 88.5 acres at Pekan Country Heights borders Subang Jaya and Shah Alam.

Tong says the land will be developed into an upper medium range of mixed residential and commercial development with expected GDV of RM3.5bil.

“The residential development will comprise condominiums, linked and semi-detached houses and bungalows, while the commercial development will feature retail outlets, shopping malls and office lots as well as service apartments,” Tong explains.

He says the company has engaged GDP Architects to come out with the design plans and the development is expected to kick off early next year for completion in eight to 10 years.

The RM125mil Kampar project is still at the planning stage.

In the next two years there will be six new projects lined up for launch. The new launches will have an estimated GDV of RM2.5bil.

The first to get rolling next month will be Tropicana Cheras comprising terrace and semi-detached houses and bungalows worth RM185mil. The 26-acre project will take three years.

In October, Tropicana Avenue in Tropicana Golf and Country Resort featuring two floors of retail podium with offices and soho units above the podium block will be launched. The RM412mil project is targeted for completion in 2013.

The integrated commercial development of Tropicana Danga Bay will be unveiled in Iskandar Malaysia, Johor in September or October.

The RM3.8bil development will comprise service apartments, hotel, office tower, shopping mall, and retail cum office lots. It will take 10 to 12 years to complete.

Launches in the first quarter next year will comprise Tropicana Subang and Tropicana Bayou, gated and guarded residential projects on 66 acres in Balakong. The project will have GDV of RM400mil.

In June 2012, the Tropicana Gardens commercial centre will be launched on 14 acres opposite Giza Sunway in Kota Damansara. The lake-front project with GDV of RM1.8bil will feature service apartments, soho units, offices, a hotel and lifestyle retail space. It will take seven years to complete.

Tong says Dijaya will be focusing on integrated commercial projects and has a number of such projects lined up for the coming years.

With that strategy, contribution from commercial projects to revenue is expected to rise to 60% in the coming years from close to 50% now.

The company intends to keep some of its commercial space to build up its investment property portfolio and for regular rental income streams.

By The Star

City Hall is flexible

KUALA Lumpur is the largest and most densely populated city in the country. For that reason, urban redevelopment is likely to impact it more and earlier than other cities.

According to the 2010 preliminary population and housing census, the federal capital has a population of 1.62 million in an area of 242 sq km or a population density of 6,694 inhabitants per sq km.

Given that KL lies at the centre of the Klang Valley National Key Economic Areas (NKEA), certain pockets of real estate in the city have been identified for urban renewal.

And as the momentum of urban renewal accelerates, more sites will be identified for redevelopment.

Let’s put sentimentality aside where urban slums are concerned. —KL MAYOR TAN SRI AHMAD FUAD.

However, the country still lacks legislation for en bloc sales of strata-titled residential and commercial properties, let alone en bloc sales of landed properties, which is complicated by the fact that public areas in such properties have been surrendered to the local authority.

In a recent interview, KL mayor Tan Sri Ahmad Fuad Ismail says City Hall has a flexible stance on redevelopment even on landed properties despite there being no legal precedence or legislation for such property transactions.

He says City Hall has no problems as long as developers follow the various regulations for property projects but where land matters are concerned (for public areas surrendered to the local authority), the National Land Code (NLC) will have to be consulted.

The NLC controls changes in land usage and of land titles. The council has ultimate authority for matters regarding land development including conversion, sub-division, partition, amalgamation and re-alienation of land.

“We've very clear policies and we want to encourage urban redevelopment but the developer must follow our criteria on regulations such as zoning, density, parking allocation and open spaces, then there's no problem,” Ahmad Fuad says.

He adds that developers can propose or suggest to City Hall how to come to a compromise on the surrendered areas. “If the land is surrendered, it means it's surrendered but we can discuss with the federal land and mines office to come up with readjustments, so there are alternatives,” Ahmad Fuad says.

He says the Government is prepared to be flexible over the matter as long as it does not come at the expense of the public.

“There are no restrictions...developers can redevelop anytime. They can also on their own initiative talk to the property owners whose site they want to acquire but to pursuade them, the offer must be attractive,” Ahmad Fuad says, adding that the market will dictate the prices depending on supply and demand.

He says there is not much land available for what is planned in the years to come other than small vacant plots dotted around the city once hillsides and green zones are taken into account.

“The problem we face is the lack of land. Therefore we've to emphasise urban redevelopment. My personal view is let's put sentimentality aside where urban slums are concerned,” Ahmad Fuad says.

He says in the case of the Taman Ikan Emas redevelopment project, the low-cost home owners are getting a better deal since they are exchanging houses of 450 sq ft and 550 sq ft which needs constant maintenance for quality three-bedroom apartments of either 800 sq ft or 900 sq ft.

“I understand the concerns of property owners who don't want to sell when developers offer but that's because they're not sure of the background of the developer,” Ahmad Fuad says.

In the case of a like-for-like offer, where the developer offers housing units in exchange for the home owner's unit, he says there is no guarantee that a project will not be abandoned.

“There must be a mechanism to ensure that projects do not get abandoned, so the profile or background of the developer is important as well as progress reports, the trust must be there,” Ahmad Fuad points out.

On the other hand, he advises the public to be open-minded where the city's progress is concerned. “Please consider the genuine offers, don't reject them outright,” Ahmad Fuad says.

By The Star

Development needs people

In any renewal programme, the question to ask is the carrying capacity of the city because ultimately structures do not make a city, people do.

Very often, in the enthusiam of having new structures to bring glory to a city, the carrying capacity is forgotten, says PJ councillor Mak Khuin Weng.

In the case of PJ, Mak says the proliferation of residential areas and the doing away of parks and open spaces have resulted in PJ being one of the most densely populated cities in Malaysia, with a density ratio of 6,185 people per sq km, about 500 less than the density ratio of the country's capital of 6,694 people per sq km.

Lee: Sections 51 and 51A formed the economic base of PJ when it started in 1953. PJ was not a residential area then.

“Whatever renewal programme the council wants to do, it will have to consider the carrying capacity of the township. Issues like density limits and traffic congestion have to be taken into consideration. When a particular area is being redeveloped, that area cannot be viewed as a stand alone development. It cannot be done on an ad hoc basis. How that new project will affect the surrounding areas and their liveability has to be studied,” he says.

On Aug 6, PJ city council will be calling a meeting to update property owners in neighbouring Sections 51, 51A, and 52 and also Sections 7, 8, 13 and 14 on the local council's urban renewal plans. Its mayor Datuk Mohamad Roslan Sakiman says under this broad renewal exercise, three categories of work have been identified redevelopment, rehabilitation and regeneration.

The objective of the coming meeting is to inform and garner feedback, where possible, from property owners and to let them know about the renewal exercise under the PJ Master Plan.

“We like urban renewal because it helps to increase revenue for the local authority. It will also make PJ more dynamic and sustainable. But we will not use the Land Acquisition Act because we do not have the allocation for this.

“Our role is mainly as a facilitator. We tell them the vision we have under the PJ Master Plan and it is up to the property owners what they want to do. We will facilitate with the rezoning of the area as we did in Section 13, where we helped with the conversion of land from industrial to commercial.

“In Section 13, the factory and industrial lots were mainly single owners, but where there are multiple owners, there will be a problem, as in the case of Kampung Baru in the heart of the city, which has been slated for redevelopment,” says Roslan.

Facilitator role: Roslan says the city council will advise property owners and explain to them the vision under the PJ Master Plan.

Referring to the Singapore en bloc sales several years ago, Roslan says when the majority of owners of a block of apartments agree to sell, the rest have to follow.

“But we do not have such a scheme here,” says Roslan, referring to the en bloc sales in Singapore where owners were paid off and the building demolished to make way for the city state's renewal and redevelopment under the Selective En bloc Redevelopment Scheme.

“Unlike Singapore, we cannot afford to buy the land. We do not have the allocation to buy the land. So our focus is on the social level, as a facilitator.”

Using Section 52 as an example, the commercial centre of what is today known as PJ New Town, Roslan says the council would like to rejuvenate the place.

“We will tell them our plans, but the thing is, the shops and the houses around PJ New Town are privately owned. It is up to the property owners whether they want to develop or not. We cannot force them if they don't want to do anything.

Roslan defines redevelopment as when existing structures are demolished and new structures put up. These new structures may serve the same function as the previous ones, or they may change. This is happening in Section 13 today where factories have been demolished to be replaced with commercial office blocks, and in time to come, serviced apartments.

The council's One-Stop Centre director Lee Lih Shyan says the change in land use is something inevitable. “Sections 51 and 51A formed the economic base of PJ when it started in 1953. PJ was not a residential area then. The residential areas were eventually built close to these industrial areas as these factories provided employment opportunities for the people while Section 52 was established as the commercial base to serve these industrial zones.

“Today, many of these factories have moved out to Shah Alam. So we will demolish these industrial areas and convert them into commercial development. This is currently being studied. The land in these areas offer great potential for other uses. Because the houses are privately owned and have multiple owners, our goal then is to improve the general liveability of the area.

Mak: Whatever renewal programme the council wants to do, it will have to consider the carrying capacity of the township.

“The industrial function of these areas has come to an end. Commercial development will give these sites a new lease of life. The nearby residential areas will also benefit from this transformation,” says Lee

He cited Jaya33 and Jaya One as two success stories of Section 13. They were the former factory sites of Malaysian Feedmill and Aluminum Company of Malaysia respectively. Also in Section 13 is office block Plaza 33, currently under construction, which is sitting on what used to be the former Scissons Paint factory. Not far from Plaza 33, a serviced apartment project will be coming up.

The revenue to be derived from the change in land use is massive.

If it is any indication, a factory in Section 13 is planning to put up a nine-storey office building next to its building. The enhancement value is RM2.4mil and it will pay PJ City Council a one-time development charge of RM800,000. The yearly assessment rates will be worked out when the building is evaluated upon completion.

In time to come, PJ will also have four of the 31 my rapid transport (MRT) stations and due to municipal boundaries a station may be located in KL, while its car-park facilities will be in PJ, as with the Section 17 MRT station.

Cities grow and expand, and PJ is no exception. PJ councilor Mak says: “When it comes to urban renewal, it is not economic versus social benefits. Do not look at development from the viewpoint of commercial viability. Look at it from the viewpoint of liveablity.”

By The Star

Pavilion to expand to full capacity

Kuala Lumpur: Pavilion Kuala Lumpur, which is expected to be the key asset of a planned real estate investment trust that is heading for a listing, will be extended.

The mall, owned by Urusharta Cemerlang Sdn Bhd, now has a total built-up area of 3.68 million sq ft.

Urusharta Cemerlang is 51 per cent-owned by Urusharta Cemerlang Development Sdn Bhd and 49 per cent by Qatar Investment Authority (QIA).

Urusharta Cemerlang chairman Tan Sri Zainol Mahmoodf, when approached by Business Times to ask what the plans were for the land next door that was acquired, said: "We will be expanding the mall to its full capacity".

Last year, Urusharta Cemerlang (KL) Sdn Bhd bought the 29,127 sq ft land for RM210 million from Millennium & Copthorne plc. The deal at RM7,209.80 per sq ft made history as Malaysia's "most expensive per sq ft" deal.

Zainol, who was named as Urusharta Cemerlang KL shareholder, added that an announcement on the plan will be made soon. He declined to elaborate.

Kuala Lumpur Pavilion Sdn Bhd deputy chairman, Datin Cindy Lim, when asked if the planned listing of the REIT will take place this quarter or the final quarter of 2011, merely said: "It will be soon".

Kuala Lumpur Pavilion manages Pavilion KL.

A search showed that a company by the name of Pavilion Reit Management Sdn Bhd had been set up, and that Lim and her husband, Datuk Desmond Lim, were the shareholders.

In May this year, Business Times reported that there were plans to list Pavilion Kuala Lumpur with a possible asset size of between RM4 billion and RM5 billion. An office building may be included to form part of the REIT.

Zainol and Lim yesterday attended the launch of the latest precinct within the mall called Tokyo Street.

Tokyo Street, located on the sixth level of the shopping complex, has a total net lettable area of 27,100 sq ft. There are some 41 tenants of which 70 per cent were making their debut.

Joyce Yap, Kuala Lumpur Pavilion chief executive officer for retail, said the new precinct is aiming for sales of RM48 million within the first year of operation.

Tenants of the mall made some RM1.7 billion in the financial year ended December 31 2010 and now welcomes three million shoppers and targets to raise it to 3.5 million patrons.

According to Yap, the landlords and tenants have pumped in RM7 million and RM9 million, respectively, to create Tokyo Street.

She expects the retailers to see return on investment within the next two to three years.

Meanwhile, Japanese ambassador to Malaysia Shigeru Nakamura said the products are comparable in quality to those in found Japan and are reasonably priced.

Nakamura added that while there are many places around the world particularly in the US where there are Japanese retailers, he has not seen as many Japanese retailers in one place outside of Japan.

By Business Times

HK billionaires told to move gates closer to their homes

HONG KONG: Hong Kong's billionaires are finding it harder to buy peace and quiet these days.

After years of turning a blind eye, the government this month issued regulations demanding tycoons move the imposing gates of their luxurious estates closer to home, and out of publicly-owned land such as that lining the roads in this space starved city of seven million people.

Those affected by the order include Macau casino magnate Stanley Ho and Peter Woo, chairman of property and infrastructure focused Wharf Holdings.

“We consider it as a breach of the land lease,” said Teresa Sair of the Lands Department.

The Hong Kong authorities appear to be on a drive to appease an increasingly agitated public, frustrated with soaring property prices and the government's cozy relationship with major property developers.

Over the past few months, government officials have targeted individuals who have built houses with “illegal structures” on public land. Lawmakers have also been lambasted for erecting rooftop glasshouses on their homes without permits.

Now the billionaires are taking a hit. The government had set a July 27 deadline for the removal of the offending gates, but the South China Morning Post reported that only two of six targeted tycoons have obliged, or shown a willingness to do so.

The paper said that Woo, of Wharf Holdings, is one of the tycoons who is making preparations to remove gates at his two estates in Sheko, an exclusive beach side district in Hong Kong located on the south side of the island.

Gambling kingpin Ho, however, has yet to comply with the order, as has Sino Land chairman Robert Ng, Central Development's chairman Hui Saifun, and Tong Yunkai, president of the Confucian Academy, the paper added.

By Reuters