City property landscape changing rapidly
Iproperty.com spoke to three of Malaysia’s leading property experts, James Tan, associate director of Raine & Horne, Elvin Fernandez, managing director of Khong & Jaafar Group of Companies as well as Siva Shanker, president of the Malaysian Institute of Estate Agents on the changes we can expect to the value of real estate in the areas surrounding the new rail lines.
All three experts specified areas close to the vicinity of new stations as potential property hotspots. According to Tan, these areas provide connectivity and accessibility by facilitating the easy movement of people and goods. They improve interconnectivity of regions and activity centres while providing access to different modes of transportation.
What is considered close?
Fernandez believes that commercial properties that enjoy high visibility as well as middle and lower middle class residential properties which are between 10 -15 minutes walk from the stations will benefit the most.
According to Shanker, studies show that walking 500 metres to a station as the absolute threshold for Malaysia’s humid climate. For distances greater than that, he said commuters will drive and park at the stations. Both Shanker and Tan raised the issue of the lack of parking spaces to accommodate the expected increase in commuters as a factor that impacted the commercial value of properties in surrounding areas.
Tan cited the current parking problems experienced at the Kelana Jaya LRT station as a clear example. He said given the limited number of parking spaces available at the station, commuters resort to parking in the commercial areas across the station causing traffic congestion throughout the day. This has inadvertently affected the property values in these areas. Shanker also highlighted the need to establish the necessary public transportation infrastructure to encourage rail travel. He said it was necessary to have parking areas which are safe and secure as commuters who find it hard to park their cars would choose to drive instead of using the MRT/LRT services.
Property prices: Will they increase?
On whether infrastructure projects such as MRT/LRT/BRT do in actual fact boost property prices and if they do, what is a reasonable level of price appreciation upon completion of construction, both Tan and Shanker were positive about an increase in prices. Shanker elaborated that an initial surge in prices was experienced when the announcement of the confirmed lines was made. He is expecting a further increase of 20% plus 10% from 2015-2017 in properties along these lines.
Fernandez on the other hand did not think they would rise nor was he inclined to the idea of prices going up. He felt any rise in price should be viewed within the concept of shifting values instead of increase in the total absolute value. He said prices will increase in tandem with rising fundamentals such as household income. With a higher market, preference for well located commercial and residential properties around stations will increase. This higher demand will be in reflected in higher property prices.
The concern if these emerging hot spots would rival current popular commercial areas such as Bukit Bintang was also raised with them. All our three experts were sure that Bukit Bintang will remain unrivalled. Fernandez explained that with the better accessibility provided by the rail network, the value of premier commercial centres such as Bukit Bintang will continue to rise.
To the question if affordable housing will be available in these new hotspots, both Tan and Shanker were of the opinion that there will be not any schemes catering to the lower income segment.
Houses located very close to the rail lines
With the expected rise in noise level and inconveniences to residents whose homes are located close to the rail lines, we also asked the experts on the possible depreciation of property values. Tan and Shanker both agreed that prices will still increase but only slightly and over a short-term. Fernandez however feels that the prices of houses affected by noise or any other factors brought on by the lines or the stations will likely depreciate.
Lastly we asked the experts if they could name upcoming hotspots still hidden from the public radar. Tan named areas around Ara Damansara, Putra Heights, Pandan Jaya and Bandar Kinrara, while Shanker identified Cheras, Seri Kembangan and Kajang as areas to keep our eyes on.
For details on specific property hotspots, read the second part of this article which features more of our interview with James Tan of Raine & Horne as well as with Ho Chin Soon of Ho Chin Soon Sdn Bhd.