Can Bandar Malaysia be a game changer?

New landmark: Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz (right) being briefed by Lim at a cheque presentation ceremony for the Bandar Malaysia. The development is expected to transform the Klang Valley and Kuala Lumpur into a modern metropolis with an international appeal. — Bernama

“NEXT station, Bandar Malaysia, Kuala Lumpur, Malaysia’s Rail Transportation Hub and a 21st Century Intelligent City”.

“To connect to the High Speed Rail to Johor Bahru and Singapore, please use Platform 2. To connect to the KTM’s ETS, please use Platform 3. To connect to KTM Komuter Line, please use Platform 4. To connect to MRT Line 3, please use Platform 5. To proceed to the KLIA and KLIA2, please use Platform 6. To disembark from the station, follow the signs provided”.

“We thank you for choosing the MRT Line 2 and we hope you have a pleasant trip to your next destination”

The above message is purely imaginary and set sometime in the year 2030 when the massive RM140bil gross development value (GDV) Bandar Malaysia project begins to take shape and with all its rail connections ready to serve not only the Bandar Malaysia community but greater Kuala Lumpur as a whole.

In addition to the rail connectivity, Bandar Malaysia will also be well connected by road infrastructure with interchange that connects the “City Within A City” to the Setiawangsa-Pantai Expressway (SPE) or otherwise known as Duke 3, which in turn will be well-connected to other main existing highways in-and-out of Kuala Lumpur.

The project can finally kick-off after the long hiatus as the cheque presentation ceremony was completed with the payment of RM1.24bil from IWH-CREC Sdn Bhd, in which the joint-venture company owns a 60% stake in Bandar Malaysia while the remaining 40% is owned by the Finance Ministry (MoF).

IWH-CREC itself is 60% owned by Iskandar Waterfront Holdings (IWH) and 40% by China Railway Engineering Co (CREC). IWH, in turn, is 63% owned by Tan Sri Lim Kang Hoo while the balance 37% stake is held by Kumpulan Prasarana Rakyat Johor (KPRJ). In essence, Bandar Malaysia is effectively 40% owned by MoF, 24% by CREC, 22.7% by Tan Sri Lim and 13.3% by KPRJ.

Spanning over 486 acres, Bandar Malaysia, the former Sungai Besi Air Base, was valued at RM12.35bil when IWH-CREC won the winning bid via a tender. At a price tag of about RM583 per sq ft, the development of Bandar Malaysia over a period of 20 to 30 years is expected to transform the Klang Valley and Kuala Lumpur into a modern metropolis with an international appeal.

Inked in early 2016, the development of Bandar Malaysia, by the time it kickstarts next year, is already five years behind schedule and this was of course due to deal being called off sometime in May 2017 and political factors that swept the nation at the 14th general election in 2018. Of course, the Pakatan Harapan government had revived the project later on and now continued under the Perikatan Nasional government.

With the political backing and structure in place, all the stars are now aligned for Tan Sri Lim and with that, great expectations are now placed as to what Bandar Malaysia could bring. As we are all aware, any massive infrastructure development has a huge spill-over effect on the economy as a whole as the value chain of property development spans across many other industries.

It not only results in sustained demand for materials but also creates employment and indeed the buzz for the stock market.

Bandar Malaysia itself could contribute significantly to the construction sector as the GDV of RM140bil over a 20-30 year period translates to about RM5bil-RM7bil GDV a year. With an international appeal, Bandar Malaysia could reposition Malaysia as a choice for multinationals to be relocated here and why not, after all, with the infrastructure in place, Singapore would only be just as long as it takes to watch a football game.

Talking about games, can Bandar Malaysia be a game changer? It is hoped that it can attract foreign investors to occupy the massive development, which by previous presentation materials showed total gross floor area of some 84 million sq ft based on assigned plot ratio of 4.0.

On paper, the development is indeed holistic and inclusive as it has also made provision for the development of 10,000 units of affordable housing component. Bandar Malaysia is also expected to encompass mid-to-high-end residentials, Grade A offices for global businesses as well as a financial centre.

The “City Within A City” is also expected to be eco-friendly with a huge central park while other components include medical and educational facilities and not to mention a one-stop shopping and entertainment as well as catering to the Meeting, Incentives, Conferencing and Exhibition (MICE) market.

While it may take at least five to 10 years from now to really see the impact of Bandar Malaysia on the rest of the Klang Valley property market, the impact on certain market segment may be rather immediate. This will likely impact the 70-acre RM40bil TRX Financial District, which is slated to be completed in perhaps another eight to 10 years.

Bandar Malaysia will also impact high-end residential living along the KLCC enclave while the Bukit Bintang shopping belt and KL Sentral transit-oriented development too may be swept away by the tidal wave of everything being in Bandar Malaysia.

It is hoped that these current major and upcoming pockets of key development within Kuala Lumpur will complement Bandar Malaysia as the latter cannot be seen as cannibalising others. On the other hand, Bandar Malaysia must succeed and failure is not an option as we cannot afford Bandar Malaysia to be part of our ever worrying statistics of overhang properties.

A game changing Bandar Malaysia must focus on the game to ensure it’s a win-win for all and not a winner takes all mantra.

Pankaj C. Kumar is a long-time investment analyst. Views expressed here are his own.

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