The rising value of Bandar Malaysia

Mark RaoFriday, May 19, 2017

Companies that are interested to participate in the multibillion Bandar Malaysia development will need to have the financial might and expertise to develop the elaborate infrastructure on the former Sungai Besi air base site, said an economist. 

The economist said for one, the evaluation for the 196ha site — equivalent to the size of 486 football fields — on the fringes of the Kuala Lumpur City Centre had increased significantly, making the project more expensive. 

“The new partner will need to have deep capital and the capability to support such an extensive and infrastructure-heavy project,” the economist, who asked not to be named, told The Malaysian Reserve

“If Bandar Malaysia cannot secure this partner, then this will represent a setback for the project.” 

The economist said the present oversupply of corporate buildings and offices in the Klang Valley would also pose a challenge for any developer for the Bandar Malaysia project. 

“The project will need to find a developer with the risk appetite to manage short-term challenges and could sustain to gain the long-term value.” 

The consortium comprising Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC) — the original master developer of the Bandar Malaysia development — was axed from the project. 

Valuation of the project had risen to US$10 billion (RM43.3 billion) from the previous estimate of US$6 billion, according to reports. The abandoned share sale for the 60% interest in Bandar Malaysia with IWH and CREC was RM7.2 billion. 

Bandar Malaysia was planned as a mixed-use development that would also act as the hub for the Kuala Lumpur-Singapore high-speed rail project.

Following the collapse of the IWH-CREC deal, China’s Dalian Wanda Group Co Ltd was tipped as a potential candidate to develop Bandar Malaysia. 

The economist added, “There are not many developers presently available in China or Malaysia who can act as a suitable partner for the now US$10 billion project.” 

A property analyst said the 196ha land would have appreciated in tandem with market forces and the potential infrastructure that could be developed on the site. 

But the analyst said the land’s value would only become clearer when bids for the projects are submitted by potential partners.

TRX City Sdn Bhd had also said it intends to retain 100% ownership of the land due to its rising value. 

“The move by TRX City is motivated by the fact that the Ministry of Financy’s unit sees a lot more value they can extract by fully holding onto the land,” the property analyst said. 

Land and properties near Bandar Malaysia had risen significantly since the project was announced by the government, breaking the Kuala Lumpur state average of RM2,525 per sq ft for landed properties. 

Properties in nearby Salak South Garden and Taman Desa are now averaging RM2,578 per sq ft and RM3,311 per sq ft respectively. 

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