RAC plans to develop 4 railway sites worth over RM1b

The plots of land are in Ipoh, Kempas, Shah Alam and KL, near BNM headquarters

By P PREM KUMAR & AFIQ AZIZ / Pic By ISMAIL CHE RUS

Railway Assets Corp (RAC) plans to develop more than 81ha of its plots of land with the private sector, as the corporation speeds up the monetisation of its assets worth billions of ringgit.

The proposed redevelopment of the identified plots, including in strategic areas such as Ipoh, is estimated to be worth RM1 billion in total gross development value (GDV).

RAC — which inherits the landbank that include railway tracks utilised by Keretapi Tanah Melayu Bhd (KTMB) across Peninsular Malaysia — will commence the request for qualification (RFQ) process for the development of the four strategic parcels of land.

RAC’s plots are seen as strategic as they are located at the centre of state capitals, largely to support the country’s rail network.

Two of the most precious sites in Kuala Lumpur (KL) — Brickfields and Sentul — have been redeveloped and the values of the sites ballooned to billions of ringgit. Private developers have always been eyeing to develop RAC’s assets.

The plots of land which RAC plans to develop are in Ipoh, Perak; Kempas, Johor; Shah Alam, Selangor; and KL, near Bank Negara Malaysia (BNM) headquarters.

RAC GM Azhar Ahmad (picture) said the total GDV estimation of RM1 billion for the four sites is very “modest” and based on valuations conducted in 2005.

“We are in the middle of getting the latest valuations of these sites. If we take into account the latest valuation and the potential staggered developments, the total GDV could be higher than RM1 billion,” he told The Malaysian Reserve in an interview recently.

After the open RFQ process, RAC will call for the request for proposal (RFP) and subsequently choose the developers or partners to develop the land.

“Based on the qualifications, we will then invite qualified developers or partners to participate in the RFP,” he said.

The four sites for the proposed development are part of a larger business plan which comprises eight railway land sites, totalling more than 160ha.

“We have put a business plan for 2019-2021, and identified eight pieces of land to be developed.

“We have undertaken a market feasibility study to look at what would be the possible developments and business model that we want to approach on a case-by-case basis,” he added.

Azhar said RAC might jointly develop or dispose of the sites to a private party, depending on cost-benefit analysis conducted by the corporation.

“RAC itself is not interested to become a property developer. But we are looking into how to unlock (the value) either through joint ventures, or by RAC becoming a master developer, or even direct disposal,” he said, adding that all the processes relating to asset disposals or development must seek the approval of its board.

“Whatever is good, in terms of value and business model for RAC, we will go for it. But being in property development, I think it is something that is too early for us. However, we must start somewhere to get the ball rolling,” he said.

Based on a 2017 assessment, RAC — which reports to the Transport Ministry — controls some RM35 billion worth of assets including properties, lands, rolling stocks and railway systems operated by KTMB.

Based on a 2005 valuation, railway sites parked under RAC are valued at RM8 billion.