BY Chris Prasad
A deteriorating economy has severely diminished the lustre of our once vibrant property market, and yet, the property gurus tell us that there are still pockets of opportunity available for those who are vigilant.
However, the “buy now or you’ll regret it later” mantra is quickly losing its potency as we now face a market that is scarce on new property launches and experience dwindling buyer appetite. Not only do buyers have less to choose from, but they are also (understandably) more judicious about any purchasing decision.
Investors too are rolling back on purchases, as the current scenario hints at property value reductions rather than gains. While property was never meant to be a short-term game, most astute investors would prefer to enter a market at a low point during an upward cycle rather than the other way around.
Despite this, there is one emerging development concept that has the potential to counter this trend, even in the current economic climate, based on the fact that it appeals on three fronts that matter greatly to contemporary urban dwellers – connectivity, convenience and rapid capital appreciation.
Transit oriented developments, or TODs for short, has become a buzz-term in recent times, providing a rare silver lining to investors who are still on the lookout for platforms that offer healthy investment growth within a relatively short period.
A TOD is a mixed-use residential and commercial project that is designed to maximise access to public transportation hubs and inner-city connectivity. Such developments often incorporate features that are conducive to, or encourage, transit ridership.
It is an approach to development that focuses on land use around transit stations or within a transit corridor. TODs are typically characterised by elements such as moderate to high density, pedestrian orientation, a number of transportation option, reduced parking dependency and high quality design.
The key rationale behind this type of development is that it is a response to current urban conditions; which include rising energy prices, road congestion, climate change, shrinking household sizes and increasing demand for urban living space.
A study conducted by the Center for Transit Oriented Developments (CTOD) in the United States, found that residential properties within a 1.5 mile (2.4km) radius benefit from immediate price gains when a TOD project takes shape in a locale – even during the construction period.
According to CTOD, improving the accessibility to a transit centre within a 1,900ft will correlate to an approximate 11 per cent increase of property prices, while those in the more immediate vicinity can expect up to a 13 per cent hike in prices. This has been termed as the “TOD premium effect”.
In Malaysia, specifically within the Klang Valley, market watchers say the TOD premium effect could be higher, due to the current insufficiency of transit options and pent-up demand for inner city accommodation that is being driven by a rapidly rising population.
Studies conducted by various local authorities have similarly found that homebuyers, renters and employers are increasingly drawn to areas with convenient access to transit and other urban amenities such as neighbourhood shopping and services. This high level of demand is reflected in the prevalence of higher rents and land values near transit points across the country.
With better inner city population distribution and transit efficiency in mind, the good news is the government has now thrown its support behind the TOD concept and it is initiating a number of projects through entities such as Prasarana Malaysia Bhd.
This will add to a number of TOD projects that are already currently being undertaken in the Klang Valley by noteworthy private developers such as Malaysian Resources Corporation Bhd, Kwasa Land Sdn Bhd, Mah Sing Group Bhd and GuocoLand (Malaysia) Bhd, to name a few.
However, Prasarana is the asset owner of the country’s two LRT networks and the monorail service, making it an ideal entity to expand the growth of the TOD concept. It has already announced plans to develop seven such projects within the Federal Territory and Selangor, with a combined gross development value of RM4 billion, over the next four years.
The first endeavour by the group will be Latitud8, a RM1.1 billion mixed development that will take shape over the busy Dang Wangi LRT station. The project is 49 per cent owned by Prasarana and 51 per cent owned by Crest Builder Holdings Bhd, and will offer both residential and commercial properties for sale.
Construction on the 43-storey building started last month and is expected to be completed by end-2019.
Apart from Dang Wangi LRT station, Prasarana said that LRT stations in Taman Tun Dr Ismail, Ara Damansara, Awan Besar, Kelana Jaya and IOI Puchong Jaya will be incorporated into TOD projects. Also on the cards is a plan to convert the Tun Sambanthan monorail in Brickfields into a TOD development.
Meanwhile, Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor urged more private developers to engage in TOD concepts.
“We want Kuala Lumpur to be a business-friendly and a liveable city. Through TOD, people who live in the city can easily commute to their work places or any destination without having to worry about travelling along congested roads and highways,” he said.