EPF development of RRI land should be an affordable housing project. Here’s why

Corporate Notes by Gurmeet Kaur

WHILE we wait with bated breath on how the Employees Provident Fund (EPF) is going to develop the Rubber Research Institute (RRI) land in Sungai Buloh, here is a wish – that the whole project be turned into an affordable housing project. Here’s why.

At 942.92ha, the RRI land development is the city’s largest suburban property project. Using a high plot ratio and if the units are priced at, say, RM400,000 and below, this would be a huge help to the young urban crowd who are looking to buy their first property.

We all know the difficulty that just about every wage earner is facing in the Klang Valley – the ability to afford a decent home.

File photo of Rubber Research Institute grounds in Sungai Buloh, before it was sold to EPF.

Migration to urban centres coupled with the fast growth of the population has created a big demand for houses in and around major cities, especially in the Klang Valley. But at the same time, private property developers have shifted their focus to high-end housing, obviously attracted by the higher margins.

This has left a big gap in the middle-income housing supply. It is estimated that the middle-income sector makes up half of the country’s population. So, a solution to their housing woes would surely go a long way in tackling the affordable housing problem in the country.

To be fair, there are already initiatives by a few agencies under the Federal and state governments implementing affordable housing schemes. They include Syarikat Perumahan Negara Bhd, Projek Perumahan Rakyat 1Malaysia and Government-linked housing developers like Sime Darby Property.

But given the sheer size of the RRI land bank, the supply of units that would come from its development would be massive and could easily serve much more than the 15,000 population target that the EPF is envisaging.

So, rather than trying to figure out complex joint ventures with high-end developers, the EPF should just tender out construction works for building affordable homes after a solid development plan has been put together by the experts.

The EPF can take a leaf out of the books of countries like Japan, which have good planners for this type of high-rise affordable homes.

No doubt, quality planning is important so that the development does not end up like one of those terrible places where developers’ shoddy planning and greed have created almost “ghetto-like” enclaves in creating their version of affordable housing.

With a 7.5-km green park of 64ha being the highlight of the RRI development, the township could be the model of an affordable housing project.

What makes the RRI land more suitable is the fact that it is going to be an MRT hub. So imagine all the thousands of families living there and using the MRT to work. Wouldn’t that be great to reduce congestion in the city?

File photo of progressed earthworks in preparation for the MRT depot at Sungai Buloh.

But then again, why should the EPF do it?

If the EPF does take this approach, would it mean that it is going to be losing money on this project? After all, the EPF’s subsidiary Kwasa Land Sdn Bhd – the project’s master developer – paid a high sum of RM22.50 per sq ft or RM2.3bil for the land in RRI from the Malaysian Rubber Board.

Still, with this land cost, one can make a decent return on the investment if the development is done in a prudent and efficient way. There are many options available to EPF to ensure that it gets a decent return and yet build the massive number of homes at affordable prices. For example, the commercial development aspects of the project could cross-subsidise the affordable aspect of the project.

So, the EPF should not miss out on this opportunity to have a huge positive impact on one of the most nagging problems among us KLites.

Source The Star, June 27, 2013

KLCC Property seeks anchor tenant an undeveloped land near KL City Centre

KUALA LUMPUR: KLCC Property Holdings Bhd (KLCCP) is in talks with several parties to secure an anchor tenant for Lot D1 by the end of the year.

Group chief executive officer Datuk Hashim Wahir said the group was “working hard” to achieve its goal. He, however, declined to provide details on the potential tenant.

“At the moment, we are targeting to secure the anchor tenant, and if we can get the final investment decision by the end of the year, then it would take approximately four years to complete the development,” he said after the group’s AGM.

It had been earlier reported that KLCCP preferred multinationals as the anchor tenant of Lot D1, and that the KLCCP Stapled Group was capable of developing projects similar to Menara 3 Petronas.

Lot D1 is an undeveloped parcel of land located in the vicinity of the Kuala Lumpur City Centre, with about 1.4 million sq ft of gross floor area. It is located in between One KL condominium and Mandarin Oriental Hotel, and is currently occupied by a temporary structure.

Hashim said the group was aiming for a 6% to 8% growth in its operating profit for financial year 2013 on the back of its completed corporate exercise of becoming a stapled securities as well as from a higher income contribution from its office segment.

“We are expecting a revenue contribution of more than 50% from the office segment in financial year 2013 from 44% in the last financial year,” he disclosed.

The growth would come from the group’s recent acquisition of the remaining 49.5% shares in Midciti Resources Sdn Bhd, the owner of Petronas Twin Towers, from KLCC Holdings Bhd.

Despite the impending high supply of office space in the market, Hashim said the impact on the group would not be significant, underpinned by high occupancy rates for its commercial properties by “credible companies” and long-term tenancies.

“Our recent launch Menara 3 Petronas’ 95% occupancy rate, the 100% occupancy of Menara Dayabumi, and ExxonMobil are here to stay,” he added.

He is optimistic that both office and retail segments would experience robust growth for the long term, as currently both segments contribute some 80% to its revenue.

However, it would be a challenging time for its hotel segment, as the market is getting more challenging with more hotels sprouting up around the area.

“The supply must be in tandem with the demand. Hence, we are working with the Tourism Ministry and Kuala Lumpur City Hall to attract more tourists into the country,” Hashim said.

He also noted that the group was always open to assets that fit its profile.

Source The Star, 27 June 2013

UOA buys Jln Ipoh land for RM130mil for mixed development project

PETALING JAYA: UOA Development Bhd has bought six parcels of land or 11.1 acres at Jalan Ipoh in Kuala Lumpur for RM130.3mil, with plans for an integrated mixed development. With the acquisition, the company said in a filing that it would collectively own approximately 28 acres of prime land in the said location, and was expected to commence development of the land next year.

However, development cost for the project have yet to be ascertained, pending the finalisation of detailed development plans.

It said the development will be highly accessible via major highways such as Duta-Ulu Klang Expressway (Duke) and Jalan Kuching.

In addition, it said the location was surrounded by densely populated residential areas such as Taman Kok Lian, Taman Impian, Taman Sri Kuching and Taman Rainbow.

The company said the transaction was done via its unit Tiarawoods Sdn Bhd with vendor Ng Kim Khin@Ng Beh Leow.

The land totalling 483,322 square feet is free from encumbrances except for some tenants who are currently occupying Lot 950 and Lot 4052.

To deliver the land to UOA, Tiarawoods will eject the squatters on Lot 950 and terminate a use of way.

Source The Star, June 27, 2013