Whenever I passed by old buildings in the cities that are dilapidated, I always imagine the possibility of revitalising them.
The reasons are simple. The redevelopment will not only rejuvenate the cities but also enhance the lives of residents staying in the buildings and the vicinity.
With rapid population growth and expanding public infrastructure in our country, it’s time to look into new legislation to facilitate en bloc sales legislation for the redevelopment of selected urban areas in Malaysia.
In April, the Federal Territories Minister said the government is planning to table a new law on urban renewal to redevelop our urban areas. Currently, only en masse sale is practised in our country as there is no legal provision for en bloc sales of strata properties.
Under en masse sale, it literally means all or nothing. Consent from all unit owners is required before an en bloc sale can go through. It is impossible to redevelop a building if only one owner refuses to sell.
The en masse sale of Desa Kudalari, one of the first condominiums in Malaysia, fell through as it did not gather 100% consent from its unit owners. The condominium is over 30 years old and strategically located in KL City Centre. The low-density project has 186 units and had attracted interest from 12 bidders. However, nothing can be done because no one could obtain 100% consent from all the unit owners.
The developer of Desa Kudalari, the late Datuk Tan Chin Nam, was a respectable pioneer in promoting high-rise living. He had completed many renowned projects during his time.
In the case of Desa Kudalari, if he was given the opportunity, I am sure he would have liked to redevelop the project as the building is located in such a prominent area as the Kuala Lumpur City Centre. However, he was handicapped by the lack of en bloc legislation.
Another example is Penang. We are very proud for George Town, to be recognised as a Unesco World Heritage Site and many historical buildings are well kept and protected. However, there are also some old buildings which are run down and not suitable to be kept.
Those old buildings are not maintained or renovated. In some cases they have almost collapsed. The owners are not renovating them as the cost cannot be justified with the rental collection.
The above are good reminders for the government to review current practices.
When we look at other countries such as Singapore, properties less than 10 years old require a 90% agreement of the owners to sell for any redevelopment.
For buildings above 10 years old, only 80% of all owners have to agree to have an en bloc sale.
In Hong Kong, an en bloc sale can proceed if 90% of owners agree to sell. However, they can also have an en bloc sale with 80% consent, provided a building is more than 50 years old, or it is an industrial building over 30 years old and not in an industrial zone.
Singapore and Hong Kong serve as good examples for our government to emulate for redevelopment in certain urban areas.
For city rejuvenation, it should not be all or nothing as it is almost impossible to obtain 100% agreement from all parties.
In any voting process, such as the AGM of strata properties, we only require a simple majority to carry through a resolution.
To ensure the en bloc process is fair and transparent, we can learn from Singapore and Hong Kong’s models, in which 90% of consent is required for buildings less than 10 years old, while a lower consensus of 80% for buildings above 10 years old, would be appropriate.
We understand different people may have different interests and concerns. However, as a community that lives together with mutual respect, we should move forward with the majority view.
If the majority wants a tender to take place, they can conduct a tender process to decide which developer offers the best package to owners.
Cities will outgrow their initial sizes and infrastructure as the population grows. En bloc sales are hence essential to ensure our cities stay vibrant, especially in the older quarters.
Until and unless we have practical redevelopment legislation in place, our urban areas will not move further as the city ages and population grows.
Datuk Alan Tong has over 50 years of experience in property development. He was the World president of FIABCI International for 2005/2006 and awarded the Property Man of the Year 2010 at FIABCI Malaysia Property Award. He is also the group chairman of Bukit Kiara Properties. For feedback, please email email@example.com