Due to the scale of the project, its development time frame could stretch between 20 and 25 years or longer, subject to market demand
by NUR HANANI AZMAN / Pic by TMR FILE PIX
PROPERTY analysts believe the Bandar Malaysia project could resume once there is a clear path to sustainable economic recovery to support new demand and expansion of existing businesses.
Nawawi Tie Leung Property Consultants Sdn Bhd ED and regional head of research and consulting Saleha Yusoff said due to the scale of the Bandar Malaysia project, its development time frame could stretch between 20 and 25 years or longer, subject to market demand, and by then, the market will be in another property cycle.
“So, the developer has to adopt a smart-development approach with a master plan flexible enough to adapt to potential changes in market drivers, lifestyle and requirements.
“The development has to be phased (in stages) given the oversupply situation in almost all commercial sectors and the gross floor area to be released must reflect the potential market absorption at each stage,” she told The Malaysian Reserve (TMR) in an email reply.
The Bandar Malaysia development appears to have stalled after the sale of a 60% stake in Bandar Malaysia Sdn Bhd (BMSB) to IWHCREC Sdn Bhd (ICSB) by TRX City Sdn Bhd lapsed on May 6, 2021.
According to a joint statement by the Ministry of Finance, TRX City and ICSB, the parties agreed to mutually terminate the share purchase after the conditions precedent in the agreement were not fulfilled within the condition precedent period and no extension was sought.
At the time of writing, TRX City did not respond to questions sent by TMR.
Saleha said Bandar Malaysia’s future will also depend on how the project will be executed and by whom, given the political risk of the country, as well as how it will be funded.
She noted projects like KL (Kuala Lumpur) Sentral and KLCC have been successful without the benefit of having a high-speed rail.
“The potential of value to be created by the KL-Singapore high-speed rail (HSR) project is to be gained in the future (as the construction will take about seven years).
“We do not think the success of Bandar Malaysia relies solely on the HSR project as even now it already has the connectivity needed to attract investment,” she added.
Saleha said the Bandar Malaysia project has yet to be marketed commercially and there is no mental image of Bandar Malaysia as a product, as such, buyers’ sentiment will not be affected per se.
“Foreign buyers are niche markets and we expect their market share is less than 10%. Hence, the impact is minimal.”
Juwai IQI group co-founder and CEO Kashif Ansari said the project site land still carries a significance to it as deals come and go.
“There are structural hiccups here and there, but it does not mean that land has lost its value on the basis of one transaction. Maybe the economic transaction cost of the land differs from the players perspective and due diligence option.
“The most important question is when the stakeholders will be ready to move in terms of economic benefits for all once the deal is struck in future. For every land transaction, economic cost is involved whereby stakeholders view from the long-term position.
“In our opinion, Bandar Malaysia has huge upside and potential for long-term investors who view the value of land and economic benefits for all,” he told TMR.
CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen does not expect prices for the surrounding area to drop due to the stall in the project because the overall property market in the Klang Valley has already undergone a price correction.
He said the surrounding areas are already established and matured areas, and are ready for development even without the HSR.
“However, the current market sentiment does not augur well for the development of Bandar Malaysia, especially with the cancellation of HSR. The overall development needs to be overhauled, maybe starting with reviewing the land value of Bandar Malaysia.
“It will be quite challenging to come out with viable development plans for Bandar Malaysia if it continues to carry high land costs and currently there are quite limited development options for Bandar Malaysia. The alternative plan is to shelve the development until the market sentiment improves,” he told TMR.
Transportation consultant YS Chan opined the mega project will not resume in the foreseeable future as the world has been changed drastically by the Covid19 pandemic.
“Until the pandemic is fully under control, there won’t be any mammoth projects till the economy is back to its pre-pandemic days. This could easily take a decade. In any case, without constructing the HSR to Singapore, Bandar Malaysia will not be an attractive proposition for investors,” he told TMR.
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