Kuala Lumpur, one of the fastest-growing cities in Malaysia, is known for its high population density.
A huge number of working adults move in to the city for its abundant job opportunities, but are faced with insufficient housing options due to land constraints.
In light of this, en bloc sales have been one of the means to combat this issue, in order to redevelop older properties or urbanise rural areas.
Essentially, an ‘en bloc’ is a procedure where residents collectively agree to sell all the units in a building to a single buyer.
However, in Malaysia, getting everyone to reach a unanimous decision seems almost impossible. Thus, en bloc sales in Malaysia have rarely been successful.
En bloc in other countries
To enable more successful en blocs in Malaysia, the Malaysian government has been learning from other countries.
For example, in Hong Kong, an en bloc sale can take place when 90% of a development’s residents agree to the sale. In Singapore, a building that’s less than 10 years old only requires 80% of its residents to agree.
En bloc in Malaysia
Unlike Singapore and Hong Kong, the developer can only proceed with the sale if 100% of its residents are in agreement.
It only takes ONE person to voice his/her disagreement to halt the en bloc sale of the building altogether.
Desa Kudalari, a condominium strategically located in KLCC, previously attracted interest from 12 bidders.
However, the plan fell through as the developer could not obtain a 100% consent from the unit owners.
As this is a common occurrence in Malaysia, the government is worried about a slowdown in redevelopment projects.
As such, Khalid Samad, Minister of the Federal Territories, is planning to introduce new legislation to circumvent the current en bloc situation. This would help ensure a smoother urban renewal process.
The en bloc process
In the case where a building can proceed with an en bloc sale, the community of residents would need to seek out interested property buyers.
They could also be approached by an investor or a negotiator from a real estate developer. In the event that the building has more than one interested buyer, bidding will take place.
The highest bidder seals the deal, and an application will be sent to the Strata Titles Board for approval. The sales proceeds are then divided equally amongst the residents in the development.
Successful en bloc examples in Malaysia
While it may sound all doom and gloom above, here are some examples of en blocs in Malaysia that actually went through successfully.
1) Razak Mansion
In 2013, Razak Mansion, a 50-year-old estate, successfully went through an en bloc. The developer, Impianika Development, managed to obtain 100% consent from residents for an en bloc.
According to reports, 557 residents gave up their old units in exchange for new apartment units. The rest of the residents who were renting Razak Mansion flats were also offered new apartment units at RM42,000.
Through a public-private partnership with the government, the redevelopment of Razak Mansion into 1Razak Mansion was completed in 2017, comprising 658 three-bedroom apartment units.
2) Datum Jelatek Residences
Back in April, Angkatan Koperasi Kebangsaan Malaysia Bhd (Angkasa) purchased 379 units in Datum Jelatek Residences.
These units would be placed under a rent-to-own scheme for civil servants, making it more affordable for them to live in the city.
Situated in Taman Keramat, KL, Datum Jelatek is a RM1.2 billion integrated development directly connected to Jelatek LRT station.
Opening in early 2020, the mall component of Datum Jelatek has already achieved 60% occupancy.
En bloc sales: Renewing Malaysia’s urban landscape
En bloc sales have been identified as one of the means for Malaysia to progress further economically.
With more land, more vital infrastructure can be built, providing the country with greater access to public transportation, sewage facilities, water, and power.
This would go towards fulfilling Malaysia’s aspiration to become a self-sufficient and industrialised nation by 2020.
Notably, governments have also looked to en blocs as an avenue to maximise land usage in a highly populated city.
If Malaysia’s new en bloc legislation manages to pave the way for more successful en blocs, Malaysia will be able to look forward to more efficient land use in the long term.
If you want to make sure that you have a say in your development in case there’s ever an en bloc sale about to take place, make sure that you already have your Strata Title, so that your voice will be heard!
Disclaimer: The information is provided for general information only. PropertyGuru International (Malaysia) Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.