Building on Reserve

Building on Reserve

Joanna Sze

IT began with a car ride. Rahmah Abdul Rahim, 28, was travelling with her

folks to visit the family’s oil palm estate in Ulu Selangor in April 2004.

Along the way, the conversation steered towards the possibility of a

building project on a piece of land the family owned.

`We figured that property development makes faster money than the

plantation business,’ she tells Housing & Property. Following the trip,

enquiries were made, drawings prepared and plans submitted. Within a mere

12 months, Rahmah started booking sales for Plaza RAH, a high- rise

condominium project.

What’s noteworthy, though, is that this mixed development, rising 23

storeys high, will be a first in Kampung Baru, a traditional Malay enclave

right in the centre of the city.

`This project is a kick-start in the re-development of Kampung Baru,’

said Federal Territories Minister Tan Sri Mohd Isa Abdul Samad at the

project’s launch last month. `The government has the aim of transforming

Kampung Baru into a modern residential and commercial area. This will be

in keeping with its surrounding areas.’

In recent years, there has been renewed attention given to the

development of land with restrictions in interest, such as Malay

Agricultural Settlements (MAS) and Malay reserve land. Presently, there

are at least two freehold projects on such landbanks in the Klang Valley

– Plaza RAH in Kampung Baru, a MAS area; and Kiara View, a semi- detached

residential development in the Sungai Penchala Malay reserve.

The MAS reserve areas were the first indigenous land established under

Land Enactments in 1897 as a trial for the implementation of Malay reserve

land in 1913, which were gazetted to protect and preserve Malay land

ownership. As a result, such land, both undeveloped and developed, cannot

be transferred, sold or occupied by non-Malays. The restriction on

ownership, fragmented lots and multiple ownership of such real estate,

however, have hampered its development, thereby depressing, somewhat, its

marketability and financial viability.

`Malay reserve land has been neglected for a while and is not in the

mainstream of property development,’ says Anthony Chua, director of valuer

KGV-Lambert Smith Hampton. `Previously, there has been no significant

project on such land, mainly flats and medium-cost apartments.’

A New Era?

The oldest Malay residential area in Kuala Lumpur, the 96-hectare

Kampung Baru has been left behind in the surge of modernisation after its

heyday in the 1940s and 1950s. Shadowed by the Petronas Twin Towers, the

village now sits on one of the most prime `undeveloped’ real estate in the

city. (In a 1994 study, the land was reportedly valued at between RM1.05

billion and RM20.9 billion in total.)

Previous attempts at development by the government and private sector,

though, met with a stalemate as owners held out for higher, and often

unreasonable, prices. Some 8,700 sq ft lots have as many as 30 co- owners

each, and it takes just one person to hold out for the deal to fall

through. For example, Mas Melayu Sdn Bhd, a consortium of 11 companies,

invested millions in an effort to develop Kampung Baru systematically, but

the venture ground to a halt due to squabbling among landowners, many of

whom are descendants of the original settlers.

In Rahmah’s case, though, things were a little easier as the development

site was her playground of yesteryear. `We were born and raised here,’

says Rahmah, executive director of family concern RAH Properties

Corporation Sdn Bhd. Her father, Datuk Abdul Rahim Mohd Ibrahim, who owns

Class A Bumiputera construction company Pembinaan RAH Corporation Sdn Bhd,

is executive chairman, while her brother, Mohd Ibrahim Abdul Rahim, and

cousin Wan Aishah Wan Hamzah are also involved in the business.

Two of the six lots on which Plaza Rah will be built belonged to

Rahmah’s late great grandfather. A big boost was the fact that three of

the neighbouring lots were owned by one party, Dewan Perniagaan Melayu

Malaysia (DPMM), which let go of the land at an average price of RM150

psf.

`DPMM made the project possible,’ Rahmah says. `Incidentally, a few

years ago, DPMM approached us to buy our lots, but we didn’t need the

money at that time.’ The owner of the remaining lot approached RAH

Properties, giving the family almost half a hectare to build on.

The development, which includes 20,000 sq ft of commercial space, sports

a modern look minus and fancy architecture to fully utilise the land and

minimise wastage. `In Kampung Baru, it’s not possible to build landed

property due to the price of land,’ says Rahmah.

`The old mentality of Malays was that they need landed property to rear

chickens and for their children to run around,’ adds her brother, Mohd

Ibrahim, a civil engineer by training. `But that mentality has changed,

especially among younger Malays in Kuala Lumpur.’

Primed for Action

Over at Sungai Penchala, developer Seni Nusantara Sdn Bhd unveiled its

maiden project – a 6-hectare upmarket guarded residential development

with a total of 97 landed units, making it probably one of the largest

comprehensive Malay reserve developments in the Kuala Lumpur.

According to the 2004 Property Market Report, there were 13 land

transactions in Segambut and Sungai Penchala-Bukit Lanjan, which accounted

from RM68.66 million, or 32.4%, of the RM212.01 million worth of

development land transactions in Mukim Batu. Land prices in these areas

also recorded significant increases of between 15.7% and 53.5%.

`The increase in demand was due to Sungai Penchala-Bukit Lanjan being

located near the high-end residential area of Mont’ Kiara, the development

of Country Heights Damansara and the opening of the Penchala Link that

eased traffic-commuting time to the city centre,’ the report reads.

With Seni Nusantara’s development located on elevated land, just across

the street from Sunway City Bhd’s exclusive Kiara Hills, its biggest asset

is definitely location. And to drive home the point, the developer has

chosen to drop the `Sungai Penchala’ address and identify the project as

`Kiara View: Your Natural Haven at Mont’ Kiara.’ `The location itself

sells as it’s very prime,’ says marketing and sales manager Farah Lim

Abdullah.

Such prime development plots are hard to come by. `The problem with

Malay reserve land is that the ownership of land is fragmented, with

multiple owners of a single plot,’ says Farah. `Supply is limited. One

parcel is not big enough to do a comprehensive development. For a 1.8-acre

lot, we’re dealing with 3.5 beneficiaries.’

Seni Nusantara was fortunate, though. The original landowner had

apparently accumulated about 15 small tracts in Sungai Penchala over the

past 10 to 15 years. In early-2004, the developer, who prefers to remain

low profile, bought eight of these plots for RM28 psf. `We decided to go

for low-density landed property as we’re surrounded by many high- rises,’

says Farah. `Furthermore, landed properties have good value.’

No Reservations!

Sales response to these projects indicates that there are many Malays

jumping at the chance to own a property at these locations. Kiara View,

for example, has sold 36 of its 38 units in phase one in no time. Its

second phase of 59 units, which was to be launched this month, has already

been almost completely booked, too. Buyers are mainly professionals in

their 40s and 50s, while a number are distinguished and high profile

personalities, as can be seen from the showroom crowd.

Besides the location, the price tag on the houses makes compelling

financial sense for buyers. The two-storey semidees, with built- ups of

3,833 and 3,844 sq ft, are priced from RM1.4 million to RM1.7 million,

while the three-storey ones, with built-ups of 4,644 sq ft, sell for

between RM1.5 million and RM1.8 million. A similar semi-detached house in

the vicinity with an `open’ title would fetch about RM2 million to RM2.5

million.

`As this is the first big Malay Reserve development, we decided to offer

the properties at a 40% to 45% discount to “open” titles due to the

restriction on ownership,’ says Farah. `We think that in the long run, the

discount will narrow to between 25% and 30%.’

Previously, she adds, there was no market for such properties,

especially high-end ones, due to lack of understanding and misconception.

`It’s an educational process for the public,’ she says. `Now, there are

many Malay buyers who can afford it. We target owner-occupiers and

investors seeking rental income, as these groups of buyers don’t plan to

sell their homes for a long time, so they don’t care whether it’s on Malay

Reserve land or not.’

For Plaza RAH, its apartments range from 887 sq ft to 1,178 sq ft and

are priced from RM200 to RM240 psf, that is, between RM177,540 and

RM284,759. Many new launches in the city are priced at easily double that.

`We limited the price to below RM300,000 per unit to suit the budgets of

our target market,’ says Rahmah. `About 50% of the 301 units has been sold

since April 1.’

This has proven to be a real hit among those who want an affordable view

of the city’s most famous skyscraper. In fact, she adds, many non- Malay

buyers thronged the sales office in the hope of getting a unit only to

leave disappointed.

But before developers start jumping on the bandwagon, Chua of KGV-

Lambert cautions, `Property on Malay reserve land is limited to Malays. It

is important to note that in most projects, the 30% of units allocated for

Bumiputeras are sometimes not taken up.’

Setting the Trend?

Will these projects signal the start of more development of indigenous

land? `I am not sure this is actually a discernible trend,’ says

academician and land law expert Salleh Buang. `It may be so, but it could

also be plain coincidence. It is too early to tell – we still have to

continue to see the next couple of months.’

Things seem to be set for change, though. Late last year, amendments to

the Malay Reserve Land Enactment have been proposed. This will give owners

of the 4.7 million hectares Malay reserve land nationwide the chance to

lease their land to non-Malays for up to 60 years or allow the joint-

development with them, no doubt boosting the commercial value of the land

and benefit landowners. `Once the amendments are passed, the value of

Malay reserve land is expected to be enhanced,’ says Farah.

`Hopefully this will lead to better returns, better livelihood in their

future, better infrastructure and better quality of life,’ adds Salleh.

Similarly, at Kampung Baru, many are keeping their fingers crossed. `I

congratulate those who put up that project (Plaza RAH),’ says Datuk Paduka

Raja Wan Mahmood Pawan Teh, president of the Kampung Baru Development

Association (KBDA), which represents landowners in the area. `I hope

others will come up with such projects. Our intention is to see Kampung

Baru developed in a manner that is in keeping with the surrounding

development.’

The government has announced a masterplan to redevelop Kampung Baru, but

the working outs are still being debated, put together and refined. The

KBDA, for one, has submitted its memorandum with its take on how to

preserve Kampung Baru as a historical Malay enclave while reviving it as a

place that residents are proud to call home.

The prospects are promising, as Elvin Fernandez, managing director of

valuer Khong & Jaafar, points out. `Kampung Baru area is a potentially

prime commercial area,’ says Fernandez. `We are moving into a new upcycle

for commercial properties, especially with new modern office buildings.

`If the land ownership and land assembly issues in Kampung Baru are

sorted out, then it can potentially be redeveloped in a big way and

substantially profit existing landowners,’ he adds. `It is important for

the persons and companies involved to plan it well and make a huge success

of it.’

But as there has been many false starts before, no one’s getting their

hopes up yet. `These are good signs,’ says Salleh. `However, I’m afraid

that it might not lead to anything much or conclusive in the future,

unless there is some sort of plan and the commitment on the part of all

parties to see it through.’

In his recent column in a local daily, he listed down some of his ideas

for the redevelopment plan for Kampung Baru, which called for new and

innovative development initiatives, an enabling law, a redevelopment

authority, incentives and continuous and active residents’ participation,

among others.

`If there is going to be a time for the nation to think big (not small)

and long term (not short term), the time is now,’ he wrote. `The objective

is to make Kampung Baru no longer a place lost in a time warp, but to

transform it into the Inner Metropolis of the future.’

Plaza RAH may be a small step, but a step in that direction nonetheless,

and Rahmah is optimistic that one day, Kampung Baru will be a Bukit

Bintang in its own right.

The implementation comes down to the kampung people,’ she says. `If the

government can work hand in hand with developers, then it can be done.’

Copyright 2005

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