KL is already on the global map as one of the most progressive cities of Southeast Asia. Its position as a regional hub is expected to strengthen with the implementation of a comprehensive transformation plan that will propel KL and its surrounding urban centres, known as Greater KL, into a vibrant metropolis that is on par with other iconic global cities. The city’s transformation is aimed at enhancing its attractiveness as an economic centre, its liveability and its connectivity. The biggest initiative undertaken under Greater KL’s transformation plan is addressing the growing demand for an efficient integrated public transportation system.
Since the government’s announcement in 2011 of its plans to radically improve public transportation by constructing an integrated network comprising of MRT lines, extensions to our existing LRT lines and new BRT lines, much focus has been on the impact of this massive project to property prices in the Greater KL property valuers and developers expect Klang Valley’s MRT project to have significant effect on prices of residential and commercial properties along the MRT route. Most industry experts agree that prices of properties in areas surrounding key stations along the lines will enjoy an increase of 20% to 30% in the next few years. Generally properties within the 500 metres radius of MRT stations are projected to have the most appreciation in value.
Property prices in KL lag behind neighbouring cities such as Singapore, Hong Kong and Shanghai. A strong reason that can be attributed to the ability of these cities to command higher prices for real estate is the efficient intra-city connectivity they offer to their residents and visitors. Studies of the world’s most successful cities repeatedly present efficient transportation as their key driving force.
The MRT project’s varying influence on property prices
Singapore’s MRT is often cited as a case study in sustainable urban transport development. Property values in Singapore have been influenced to a large extent by the locations of its MRT stations. Factors that have had a direct impact on Singapore’s real estate include the actual time when property owners can expect the price to rise. Property owners who are overzealous tend to raise their expectations as soon as an MRT station is announced in their area. However prices only rise after the station is operational and in some cases where tenant occupancy is high, cases of property prices falling is common. Tenants do not wish to be subjected to the noise and inconvenience of living in an MRT construction area.
Another factor that affects the value of property around an MRT station is the demographics of the residents in the area. This factor is also supported by studies conducted in cities in the US such as Los Angeles and Boston. In wealthier areas, the presence of an MRT station has minimal impact on property prices. Most residents are likely to own cars and have much lower dependence on MRT. In KL, the Land Public Transport Commission (SPAD) too experienced some short- term resistance from the residents of Taman Tun Dr. Ismail, one of the city’s more up market residential areas when the MRT lines and station were first announced. However for mid-range properties where tenants are foreign students or short-term workers who rely on public transport, the MRT has a positive impact on both tenancy rates and property prices.
The route of the line is yet another key factor that impacts property prices as reflected by case studies of markets such as Singapore, Hong Kong and London. Routes that take passengers to and from key market centres of the city i.e. employment zones – business centres or industrial hubs as well as shopping or entertainment areas register the highest increase in property value.
The exact distance to the train station is yet another key influencer of property prices. The phrase, “walking distance,” has been used rather loosely by developers to push properties in the vicinity of MRT stations. Studies have clearly shown that 500 metre distance radius is critical in determining the price of a property. A study in the US found that being located right next to an MRT station can actually decrease the value of a property. In this case, the noise and disruption caused by the trains as well as commuter traffic overshadows the convenience of station accessibility.
Greater KL’s connectivity forms the critical foundation upon which all its other transformation aspirations can be realised. The city’s economic and social developments are dependent on its ability to provide its growing population with an efficient and well planned transportation infrastructure to sustain continued progress.
Given the far reaching implications of the overall integrated rail network on industries such as the property, construction and tourism, the government is faced with the heavy responsibility to ensure that country’s biggest and most expensive project does not suffer the usual compromises that are associated with many of its past projects