Malaysia’s urban redevelopment bill asa catalyst for sustainable growth and heritage preservation
THE Housing and Local Government Ministry’s introduction of the proposed Urban Redevelopment Bill is to be applauded as it signals a structured, progressive shift toward modernising our urban areas.
With Malaysia’s urban centers aging rapidly, this bill will be crucial in facilitating responsible and sustainable urban redevelopment while addressing the unique challenges of densely populated environments.
Learning from international exemplars such as Singapore, South Korea, and Japan can offer valuable insights into creating a resilient, efficient, and inclusive urban redevelopment framework within our local context.
According to an article published by The Star, Zerin Properties chief executive officer Previn Singhe highlighted that the bill’s emphasis on regulatory clarity and streamlined processes could position Malaysia as a regional leader in attracting investments.
Analysts project that structured urban renewal could unlock RM50bil in private sector investments over the next decade, particularly in high-growth areas like Kuala Lumpur, Penang, and Johor Bahru, which are poised to become hubs for tech innovation and sustainable infrastructure.
Learning from International Urban Renewal Models
Singapore’s Urban Redevelopment Authority (URA) is particularly instructive. The URA's well defined policies and adaptable consent thresholds have proven effective in balancing development goals with community needs.
For buildings over 10 years old, Singapore allows redevelopment with 80% owner consent, a model Malaysia is considering by lowering our threshold to between 75% and 80% for older buildings.
This flexibility in Singapore has not only expedited necessary redevelopment but has also reduced legal and logistical bottlenecks that can hinder urban renewal. Other cities, such as Tokyo and Hong Kong, have seen positive results with similar initiatives.
Tokyo’s redevelopment processes use a two-thirds majority, streamlining approvals and accelerating project implementation in alignment with national urban planning goals.
This pragmatic approach has allowed Tokyo to modernise its infrastructure while maintaining a cohesive urban environment.
In Malaysia’s context, adopting a comparable model would make redevelopment projects more feasible, especially in high-density areas like Kuala Lumpur and Penang, where hundreds of potential sites could benefit from an updated framework.
However, it is essential to ensure that any adaptation of international models complies with Malaysia’s legal and constitutional framework.
Concerns have been raised regarding the bill’s alignment with the Federal Constitution, particularly regarding property rights.
Legal experts have pointed out that any attempt to acquire private property for redevelopment must strictly adhere to constitutional provisions to avoid legal challenges.
It is imperative for policymakers to address these concerns transparently to ensure public confidence in the redevelopment framework.
FIABCI-Malaysia national committee member Foo Gee Jen, said that while the government is preparing authorities for redevelopment, the decision to proceed must ultimately lie with property owners – not the authorities.
He emphasised that en-bloc redevelopment should be owner-initiated, not mandated by provisions in the draft bill (Part II), which may allow authorities to gazette projects without owner consent.
He highlighted DBKL’s recent move to identify 139 potential redevelopment sites under the KLSP 2040 as an example, cautioning that such decisions should not be made unilaterally.
Foo added that urban redevelopment and rejuvenation are no longer optional but necessary. However, the process must respect ownership rights and be driven by those who are most affected—the property owners themselves.
Role of the urban renewal authority and efficient dispute resolution
Another critical component of the bill is the proposed Urban Renewal Authority, which could serve as a dedicated body to oversee and guide urban redevelopment.
In Singapore, the URA has played an instrumental role in coordinating between stakeholders, managing approvals, and aligning projects with the broader urban vision.
Malaysia’s new authority could take on a similar role, particularly to streamline and standardise the process, mitigate bureaucratic delays, and ensure that redevelopment aligns with Malaysia’s long-term urban planning objectives.
The bill’s proposal for a land tribunal is equally significant, as it addresses potential disputes between landowners, developers, and the public.
The land tribunal would ensure efficient and fast resolution of conflicts, which is especially relevant given the range of interests involved in urban redevelopment.
Foo further emphasised the need for an independent and balanced dispute resolution mechanism.
The composition of the proposed tribunal should not be a mere ‘carbon copy’ of the same authority that approved the planning and development orders.
Instead, it should include a wider representation of stakeholders – such as professional bodies and relevant non-governmental organisations (NGOs) – to ensure transparency, protect minority rights, and uphold fairness throughout the redevelopment process.
FIABCI-Malaysia secretary-general Datuk Hoe Mee Ling, suggested that the implementation of redevelopment can be carried out in stages.
For instance, an initial phase could commence in a designated area such as Kuala Lumpur city.
The execution by a specified task force would serve as a learning curve, allowing for enhancements to standard operating procedures (SOPs) to ensure a holistic redevelopment approach.Over time, this task force could provide guidance at the state or national level.
In addition, there have been concerns about how the bill might affect Malay reserve land. Prime Minister Anwar Ibrahim has clarified that the bill will not compromise Malay land rights and has reaffirmed the government’s commitment to ensuring that redevelopment policies do not disadvantage specific communities.
This assurance is crucial in preventing unnecessary anxieties among stakeholders and reinforcing the importance of inclusivity in urban renewal initiatives.
Previn, in the article also notes that the Urban Renewal Authority’s mandate could extend to
curating “investment corridors” in partnership with state governments.
For instance, Penang’s Silicon Island project and Kuala Lumpur’s Tun Razak Exchange (TRX) are cited as templates for blending redevelopment with global investor demands for smart, ESG-compliant urban spaces.
Guide to sales process and valuation guidelines for en-bloc redevelopment
Foo emphasised the importance of a clear, transparent framework to guide the en-bloc sales process and ensure fair valuation practices. He outlined several key considerations:
1. Transparent and competitive process
The en-bloc sales process must be conducted in a transparent and robust manner. To ensure fair market value is achieved, the asset should be fully exposed to the market via a competitive tender or open bidding process.
2. Structured owner engagement and consent mechanism
The entire sales process must involve a series of general meetings with property owners – not limited to a single townhall – to secure consent.
Drawing from Singapore’s model, consent is typically managed through a sales committee comprising three to 14 members. This committee is tasked with overseeing the sale, with up to three owners appointed to represent the majority interest in the application.
Additionally, a valuation framework and guidelines for collective sales should be established to ensure proper oversight and viability of the proposed transaction.
For example, Singapore’s “Selective En-bloc Redevelopment Scheme” (SERS) targets aging public housing in prime areas, with the goal of unlocking higher economic value through relocation and redevelopment.
3. Financial viability and feasibility study
As a rule of thumb, the redevelopment value should be at least 2.5 to three times higher than the current value of the property to ensure the economic feasibility of the en-bloc sale.
A detailed feasibility study is critical to determine the highest and best use of the asset. Additionally, the valuation must take into account transitional costs such as relocation expenses and interim rental costs, especially in cases where replacement housing is not immediately available during the redevelopment phase.
4. Common apportionment methods
Determining fair distribution of sale proceeds is another critical component. Common methods include:
• Share value: Used when units have similar floor areas and share values
• Strata/floor area: Applied where unit sizes and value rates are relatively uniform
• Average of strata Area and Share Value: Used when there is a wide variance among units
• Valuation-based apportionment: When individual unit characteristics and market values differ significantly
These practices aim to ensure that the redevelopment process is fair, inclusive, and economically viable for all stakeholders involved.
Preserving cultural identity through inclusive urban renewal
One of the most exciting aspects of this bill is its balanced approach to urban revitalisation and heritage conservation. In cities like Hong Kong, urban renewal often involves preserving culturally significant structures within development projects, ensuring that progress does not come at the cost of heritage.
By integrating conservation into the redevelopment process, Malaysia’s bill can set an example of responsible urban growth that respects cultural identity while accommodating modern needs.
Given Malaysia’s rich cultural tapestry, especially within urban centers, this approach will resonate strongly with both local communities and the broader public.
Attempts should be made to displace any community at site in the name of redevelopment.
At the same time, measures must be put in place to ensure that redevelopment does not lead to gentrification that forces original residents out of their neighbourhoods.
Affordable housing provisions, relocation support, and community engagement must be embedded in the redevelopment strategy to ensure that urban renewal benefits all segments of society rather than just developers and investors.
Industry feedback and collaboration: REHDA’s insight
The recent statements from the Real Estate and Housing Developers' Association (REHDA) highlight the industry’s support for the bill.
REHDA’s emphasis on structured guidance for redevelopment reflects the needs of property developers who are eager to engage in projects that require clearer, more practical regulations.
Developers face challenges with the current consent threshold in the Strata Management Act, as the 100% requirement is often unachievable.
By addressing this issue and lowering the threshold, the government would empower developers to build more swiftly, turning potential development areas into vibrant and functional urban spaces.
FIABCI-Malaysia vice president Tan Siow Chung, believes that while international models provide valuable insights, the greater focus should be on the economic and social benefits of urban renewal.
Redevelopment must go beyond increasing property values; it should enhance the quality of life for original residents by improving infrastructure, modernising public amenities, and ensuring safer, better-planned neighborhoods.
Successful redevelopment projects in Malaysia, such as the transformation of Razak Mansion into 1Razak Mansion, serve as excellent case studies.
The initiative provided former residents with modern housing while optimising land use and community spaces. Similar efforts, if expanded nationwide, could rejuvenate aging housing estates while preserving community ties and improving overall urban livability.
The economic and social impact of the urban redevelopment bill
Urban redevelopment is a multifaceted process that can lead to significant improvements in urban areas.
While it offers economic benefits and opportunities for community enhancement, it also poses risks such as gentrification and displacement.
Therefore, it is essential for policymakers and developers to prioritise community involvement and sustainable practices to create inclusive and resilient urban environments.
Balancing these interests is critical for the long-term success of redevelopment initiatives
If the bill is approved and effectively implemented, it has the potential to transform
Malaysia’s urban landscape by attracting new investments, improving property values, and revitalising communities.
A streamlined, structured approach to redevelopment can foster a conducive environment for businesses, stimulate economic growth, and create job opportunities.
Dr Yu Kee Su
FIABCI Malaysian Chapter president
