HSR erasure to lower property value

THE recent S$102.8 million (RM320.27 million) settlement between Malaysia and Singapore for the cancellation of the highspeed rail (HSR) mega project is expected to devalue properties within the localities of the stations that were earlier planned along the proposed line.

CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen said properties around the HSR line, which previously saw a rise in prices, may undergo correction to an acceptable level.

“The number of prospective buyers and the viability of development lands at these locations may reduce considerably without the HSR,” he told The Malaysian Reserve (TMR).

The planned 350km rail line, which both sides initially agreed to build in 2013, was to have run from a terminal station in Bandar Malaysia in downtown Kuala Lumpur (KL), to a terminal station in Jurong East, Singapore.

The project was supposed to start from Bandar Malaysia to Sepang-Putrajaya, Seremban, Melaka, Muar, Batu Pahat and Iskandar Puteri, before reaching its last destination in Jurong East.

Since the announcement of the project, land prices in the chosen areas had appreciated as investors began to plan various ancillary developments that were expected to experience further growth with the completion of the HSR.

Transportation consultant YS Chan said those areas would return to “backwater status” and investors would have to wait until urban development reaches the localities — perhaps decades later.

Chan said areas that looked set to be the next hot spots, especially Bandar Malaysia which was earmarked for transit-oriented development projects, have lost steam without HSR.

“Bandar Malaysia is the last huge piece of land in the central part of KL and much bigger than the railway yard where KL Sentral is built, with not only Keretapi Tanah Melayu (KTM), light rail transit (LRT) and monorail lines but also the express train to the KL International Airport (KLIA).

“The only train connection planned for Bandar Malaysia was the HSR and if connected to Singapore would make travel between these two iconic cities a breeze,” Chan told TMR.

Chan said the airbase vacated by the Royal Malaysian Air Force (TUDM) at Jalan Sungai Besi was the most suitable for a huge mixed development project.

However, it is not as suitable for a transport hub other than occupying stations for various types of trains — HSR, mass rapid transit (MRT) and LRT.

“Without HSR and with the end of pandemic not in sight, there will be few buyers for new properties to be built. There is already a huge glut of mall and office spaces, and many luxury condominiums remain vacant.

“The world has changed much and it would be foolish to continue with business as usual (pre-pandemic),” he added.

Located at the site of TUDM base in Jalan Sungai Besi, Bandar Malaysia will be a mixed, transit-oriented development with a gross development value of RM140 billion.

The only saving grace could be the fact that HSR’s developers had not acquired any land for the construction of the mega project.

MyHSR Corp Sdn Bhd CEO Datuk Mohd Nur Ismal Mohamed Kamal told TMR that the progress of the land acquisition was until the gazettement of Section 4, for the purpose of freezing of the HSR corridor and conducting the soil investigation study.

“The Section 4 gazettement has lapsed since 2019,” he said.

The settlement between the two governments was recently announced following the termination of the bilateral agreement (BA) on the HSR project on Dec 31, 2020.

The S$102.8 million represents a full and final settlement in relation to the termination of the BA.

Singapore and Malaysia signed the HSR BA in 2016. However, the construction of the HSR project was subsequently suspended, from September 2018 to Dec 31, 2020, at Malaysia’s request, with the understanding that the extension of the suspension period until Dec 31, 2020, would be the final extension.

Malaysia’s suggestion to remove the assets company to manage the HSR was the primary concern that led to the project’s termination.

As for Bandar Malaysia, it was reportedly ready to take off with the settlement of the RM1.24 billion payment due to TRX City Sdn Bhd, a wholly owned subsidiary of the Minister of Finance Inc, by IWH-CREC Sdn Bhd.

The settlement had been paid by IWH-CREC, under a revised share sale agreement and shareholders’ agreement, which include a 10% deposit and RM500 million advance payment to TRX City.

Under the agreements, IWH-CREC would take up a 60% stake in Bandar Malaysia Sdn Bhd, the project’s master developer, from TRX City, with the remaining 40% held by TRX City.

IWH-CREC is a joint venture between Iskandar Waterfront Holdings Sdn Bhd (IWH) and China state-owned enterprise, China Railway Engineering Corp (M) Sdn Bhd (CREC).

Bandar Malaysia will be home to the Express Rail Link (ERL), KTM, MRT2, MRT3 and the existing ERL railway which connects KLIA and KL Sentral transportation hub.

MRT2 had already designated two stations in Bandar Malaysia, which were set to be completed by 2021.

Meanwhile, the Setiawangsa-Pantai Expressway — formerly known as DUKE 3, slated for completion by 2021, which is linked to 12 other highways into KL — would be aligned to Bandar Malaysia.

Ministry of Finance, when contacted, diverted TMR’s inquiry to the Economic Planning Unit (EPU).

At press time, the EPU and IWH-CREC have yet to respond on Bandar Malaysia’s latest development.

Source: TheMalaysiaReserve