Is buying a home near the MRT3 circle line a smart move?

The question on most minds these days is where to buy or invest to take full advantage of this if you are in the market for a new home? Here, we look at some salient factors and important considerations to take into account for those who want to invest or buy near the MRT3 line.

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Poised to be fully operational by 2030, the Mass Rail Transit 3 Circle Line (MRT3) is generating considerable buzz in the Klang Valley.

Back in play after being temporarily shelved due to economic and pandemic-related disruptions, the revived loop line heralds good news on many fronts; as a transportation solution relieving congestion in the commercial nucleus of the city, as an ecological boon that reduces our reliance on carbon-emitting automobiles, and as a catalyst for improved property and land prices in impacted areas resulting from better connectivity and increased convenience.

What do you need to know about the MRT3 Circle Line?

In truth, the impact of the MRT Circle Line is broader and more wide-reaching than the immediate areas in proximity to its planned route, say property market analysts.

Designed to be the final piece that completes KL’s integrated rail system, MRT3’s 50.8km loop alignment will circle the perimeter of the capital city. Aimed at increasing public transport usage in the city, the circle line will link with existing MRT, LRT, KTM and Monorail lines leading in and out, as well as within, KL.

According to the Ministry of Transport, the project will be completed in phases with Phase 1 of the line expected to be completed by 2028 and Phase 2 by 2030. It said 40.1km of the line will be elevated, while 10.7km will be located underground. In total, there are 31 planned stations, with 24 stations located along the elevated section of the line and 7 located underground.

In addition to 10 interchange stations along the MRT3 route, 15 station sites will offer a “park and ride” experience for better convenience, with 11,650 car-parking bays in total.

The table below lists upcoming MRT3 stations highlighting those that offer interchanges. Planned underground stations are identified in blue.

Chief executive officer of Ho Chin Soon Research Ishmael Ho points out that MRT3 is a missing piece of the puzzle to Kuala Lumpur’s integrated rail system, designed to connect to a number of existing lines via several planned interchanges.

“A good answer to the question of where to invest is: Follow the infrastructure,” said Ho.

“The circle line works as a connector. It will have many interchanges that will facilitate better interconnectivity in the Klang Valley, linking with existing rail lines. That means even if you stay all the way in Puchong, Klang or Sungai Buloh, the MRT3 affects you,” he added.

Like most property observers, he anticipates that areas surrounding the new MRT3 line will see the most significant uptick in property transactional activity over the next few years, due to the fresh development focus and rising values that the prospect of enhanced connectivity will bring.

The important “central” role MRT3 will play a vital link for the Klang Valley’s entire urban rail network will also ultimately attract a premium for properties in its proximity.

Which areas will benefit from the MRT3 line most?

Although the economic (as well as socio-economic) impact of MRT3 is expected to be a broad one, most property market observers agree that highly-populated areas along the route, that are already experiencing rapid urbanisation and infrastructure enhancements, will be among the most notable beneficiaries in the lead-up to the opening of the circle line.

This includes communities and suburbs that feature a strong presence of affordable housing options, serving a segment of the population that will primarily rely on public transportation solutions.

Here are some earmarked areas that are poised to benefit from improved interconnectivity with the city:

Pantai Dalam

Pantai Dalam has long-been a focal point of affordable living options for working-class KL denizens who prioritise access to the city. MRT3’s planned interchange with KTM’s Port Klang line will increase its importance for commuters coming in from southwest of the city.

The vicinity is already benefiting from its proximity to Bangsar, Kerinchi (Bangsar South) and KL Sentral, as well as high-profile developments emerging along Jalan Bangsar – including SP Setia Bhd’s RM7 billion KL Eco City development.

MRT3’s influence in the area will only serve to enhance its already rising profile and be a rapid catalyst for the transformation of its still largely backdated landscape.

Those already in the area could benefit from a sizeable jump in land value, which in turn could spark land sales and new gentrification efforts in the surroundings, raising the lifestyle prospect there to the level of its more celebrated neighbours.

Old Klang Road

Robust development along the Old Klang Road stretch is already transforming the landscape there, with many new high-rise apartments and condominium projects targeted at urban professionals. This is specifically the demographic that will be attracted to MRT3’s promise of better connectivity with the pulse of KL City.

Already a popular hub among buyers, Old Klang Road was among the top transacting locales in 2021, despite the ongoing pandemic. The addition of an MRT3 station will likely add to its current lustre, while also spark fresh development activity in the near future.

A highly populated area with over 250,000 (and rapidly growing), future development activity could result in more transit-oriented residential and commercial developments, as well as more retail presence.

Setiawangsa

Setiawangsa is an eastern suburb of KL, located less than 4 kilometres from the city centre and located right next to Ampang. Its strategic position offering lush hillsides while being “not-too-far” from the city has given it unique appeal as a green escape for Klang Valley dwellers.

The area is home to a mix of working-class locals, well-heeled KLites and a handful of expatriates who appreciate the healthier surroundings at Puncak Setiawangsa and Bukit Setiawangsa (the latter being unofficially dubbed as the Hollywood Hills of Kuala Lumpur).

This lifestyle appeal is poised to be more attractive with the inclusion of the Setiawangsa MRT3 station, which will bring the bright lights of the city closer by circumnavigating the heavily congested and often burdensome Ampang traffic.

Setiawangsa currently offers a wide range of housing types and prices, ranging from affordable apartments to luxury condos. This prospect is likely to cast a wide net over potential buyers once MRT3 comes into play.

It is highly likely that the area will attract more upper-end developments in the future, but the rising value of land in the area will also positively impact the existing local population.

Should you buy a property near the MRT3 line?

Overall, the development of rail lines has already proven to have a considerable impact on real estate prices along its corridor. More than this, the Malaysian experience has shown us that this impact includes an improvement on living standards for the surrounding urban population, as this infrastructure enhancements tend to attract upgraded residential and commercial developments.

This is not a phenomenon unique to Malaysia. Even in the global context, rail networks have proven to remarkably enhance the profile of impacted areas, translating to an appreciation of property values.

A study published by the Malaysian Institute of Planners (MIP) entitled “Does rail transport impact house prices and rents?” in 2021 found that there was a strong direct geographic relationship between the scale of property value and proximity to stations in global cities with established rail networks.

Using the Hedonic model of valuation, the study found prices surrounding the New York Rapid Rail network decreased by US$2,300 per 100ft away from the station areas. Similarly, in Houston, Texas and Shanghai in China, prices increased by 1% every 100m closer to the main metro stations in these cities.

In Malaysia, the MIP found that initially, prices increased by RM10,560 (straight-line-distance model) for houses located within 1,000m from LRT stations in Kuala Lumpur (based on 2013 data). Updated in 2019, the data now shows that prices generally increased by a 30% margin for houses located within an 800m radius of rail stations.

“Catalytic mega projects like the MRT3 Circle Line will always have an impact on property,” said Ho. “This is because such projects will connect the areas of high economic activities, which in turn will help the property market boom.”

In addition, he said Greater KL is growing at 2.4% per annum and will have an additional 2.7 million residents by year 2030. This has two main impacts, namely the need for more housing and the need for a better transportation system that will help alleviate traffic congestion.

In an increasingly congested urban landscape, properties that offer convenient transportation solutions within established self-sufficient vicinities will only grow in demand, and become an important necessity for urban professionals.

Should you invest in a property near the MRT3 line?

The rail proximity study conducted by MIP also established a relationship between rental prices and distance to rail stations. As an example, it cited that in the United States capital of Washington DC, rental costs decreased between 2.4% and 2.6% for every 100m away from DC Metro stations.

Other factors come into play in KL when it comes to rental, as the city’s population is not yet fully dependent on public transportation. Real estate agents say that while proximity to rail transportation is a definite plus among most renters, the level of priority still depends on the type of tenant you are targeting with your property.

“Generally, younger professionals place a higher premium on this factor because it fits with their fast-moving lifestyle, with convenient access to work, retail and entertainment hubs. These are either individuals, young couples or starter families who can appreciate this type of rapid mobility. So high-rise units or compact landed homes do better in terms of attracting stronger rent because of its proximity to a station,” said real estate agent Y. Devi.

She said this was especially true for affordable and mid-priced high-rise units, because this attracts a specific demographic that stands to benefit the most from improved public transportation solutions.

According to the National Property Information Centre (NAPIC), high-rise projects near train stations benefit the most, which can see an average rental gain anywhere between 1.2% to 6.6%.

“However, for larger more established families, the situation is different. For example, it is difficult to go on large shopping excursions with more than four or five people via rail, let alone cart all that shopping back home by hand. Parents will also prefer to transport their children to school via the safety of a vehicle rather than public transportation, which means they will also be driving to work after that. The cost will also be high to purchase individual tickets for every member of a large family, compared to the convenience of a car,” Devi explained.

As such, a plan to invest in a property close to an MRT3 station will certainly benefit from long-term value appreciation, but it will have to be a smart buy in terms of short-term rental earnings. A purchase plan must include an understanding of the demographics of a targeted area and the type of demand for a selected type of property.

The right type of property can generate lucrative rental income, but a mismatch will likely mean you will have to wait for the long-term gain of capital appreciation for your investment to reach fruition.

The pros and cons of living near an MRT station

While a property purchase with easy access to a rail network may seem like a “no-brainer” in terms of property value appreciation, there are other factors to take into consideration in terms of your lifestyle, living environment and security.

Here is a list of pros and cons when it comes to living close to a station:

The positives

• Value appreciation: Values generally appreciate quicker for properties located near transportation hubs, and experts agree that there could be a quick 10% to 20% hike compared to properties located in remote areas.
• Greater reach: Quick access to interconnected lines means less barriers to your urban lifestyle and a life less impacted by the stress of congestion.
• Long-term convenience: Convenience is a high priority for most property seekers, and the long-term demand rail proximity will attract puts a lucrative premium on your property.
• Rental popularity: The right property choice will have sustained rental demand among urban dwellers that are young, mobile and conscious about daily costs.

The negatives

• Dealing with peak hour traffic: If you’re close to an important rail access point, then that’s where everybody is going to be at peak hours. Be prepared for the early morning and end-of-day rush around you.
• Noise pollution: The LRT and MRT trains start operating as early as 6am and run all the way up till 11pm. Depending on how close you are to the station and the crowd, this could be a daily annoyance.
• Less than desirable view: If your house or high-rise unit faces a station, you might find yourself wishing you were in the countryside instead, as flora and fauna is far better on the eye than steel and concrete.
• Increased safety issues: Unfortunately, more people in your vicinity means reduced security, because crowds do traditionally attract criminal activity, specifically pick-pocketing and snatch theft.

Overall, the prospect of buying a property near an MRT3 station will result in a number of positives, not the least of which are immense potential for capital gain and lucrative rental earnings for investments. However, the likelihood of an ideal outcome is still situation-depended and requires you to exercise due diligence when deciding on the specific location or type of property.

When purchasing a property, do consider homes that are a comfortable walking-distance from station but not directly adjacent to it, to avoid crowding and noise pollution. Areas that are already being enhanced with modernised infrastructure will also benefit the fastest from MRT3 in terms of neighbourhood profile and overall value.

When purchasing for investment, look closely at existing demand for the area and specific types of property that will appeal to a demographic that prioritises connectivity. This will enhance the appeal of your investment and ultimately translate into stronger rental yields.

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