Property prices have become one of the most talked about issue among Malaysians these days. This is not surprising since sky rocketing prices pose a problem to those looking to acquire property.
Among the many questions haunting home buyers is whether infrastructure projects such as the Mass Rapid Transit (MRT) can really help boost property prices.
An informal survey of property agents and a transport consultant indicated that there are two schools of thoughts regarding the matter.
Convert residential to commercial zone
Driving from Bandar Utama to Taman Tun Dr Ismail (TTDI), Kuala Lumpur on the Lebuhraya Damansara-Puchong (LDP), a person will notice that the MRT construction has already began at Jalan Pinggir Zaaba, TTDI.
From there, the line links to the Sprint, heading towards Damansara Heights. Before arriving to the junction which leads to Bangsar, one will see a row of shops housing OCBC Bank and Victoria Station on the left. Pillars have already been installed near the homes backing the Sprint. There are around 150 homes on Jalan Kasah from end to end, of which 30 are situated on two cul-de-sacs.
Houses have already been put up for sale in both locations. However, property agents reveal that they are witnessing a drop in prices and demand.
They noted that prices of properties affected directly by the MRT fell between 20 percent and 30 percent.
Double-storey linked homes within the area previously cost RM1.2 million to RM1.3 million. Today, a double-storey terrace unit is being sold at RM1 million while another is priced at RM950,000. Both properties have no takers.
Notably, the MRT viaduct on which the train runs will likely cover half of the two-lane road within one section of the road fronting around 20 homes. Measuring from 15m to 20m high, the MRT viaduct will be higher than the homes there. Drawings submitted to City Hall by a group of owners showed that the viaduct will be 14.5m away from one of the homes.
If this is done, the value of the properties there will increase and it is up to the owners if they want to continue to stay, or to sell out.
Those who are not too adversely affected may protest. Once an area is commercially zoned, there will be commercial traffic, which makes it inconducive for those who may want to stay.
The other view
The landed properties will not be significantly affected in the long term, albeit there will be a decline in demand and prices in the short term. Converting the area to commercial zone when it involves the MRT project will only set a precedent. It will also be a mistake.
Specifics are important. Thus, a house situated right next the station will command lower value compared to the next one a few rows away.
Aside from MRT, below are some of the factors that can also affect the price of a property.
Leasehold or freehold
Home buyers generally prefer properties with a freehold tenure. This is because ownership in this kind of property remains intact with the titleholder at no time limit unless legally transferred to another person.
Meanwhile, leasehold properties have a maximum lease period of 99 years, after which it will be returned to the government or the present owner will have to forego a fee in order that he may lease it further.
As such, properties with freehold tenure perform better than leasehold properties in terms of long-term capital appreciation.
Proximity to school, workplace & retailing outlets
Owners of properties located near these amenities are expected to pay a premium for the luxury. This is because availability of hypermarkets and shopping centres add value to the premise.
Green spaces
Given the current shortage of green spaces, most buyers prefer to buy within an area with views of green space and natural landscape. The opportunity cost of having a native tree within the area is the amount that the property developer could have received from selling more properties instead. This is reflected in the higher price of said properties.
Security
As crime rates in Malaysia increases, there is a growing demand for gate-guarded and fully landscaped developments with perimeter walls, CCTV and security personnel. Developers insert a premium in the housing prices in these communities.
Farah Wahida, Editor of PropertyGuru, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my
