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Savills Malaysia Optimistic HSR Resurrection Will Reignite Excitement

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Savills Malaysia is expecting a revived sense of excitement from both Singaporean and Malaysian stakeholders after news that the Kuala Lumpur – Singapore High-Speed Rail (HSR) project was back on.

HSR Brings Back Buzz of Excitement

According to Datuk Paul Khong, Managing Director of Savills Malaysia, with the Kuala Lumpur – Singapore HSR project back on track, we foresee that this project will create much buzz and excitement again to the local properties lying along the HSR designated stations.

“This project runs Southwards from Kuala Lumpur and connects directly into Singapore, a city with an estimated six million population. It will pass through various cities in South Malaysia namely Iskandar Malaysia, Batu Pahat, Muar, Melaka, Seremban, Putrajaya and Kuala Lumpur with an estimated eight to nine million population,” he explains. “The HSR project will connect and benefit both countries from various angles especially the tourism and property sectors.”

He adds, “Singapore Airport welcomes about 60 million passengers per annum while Kuala Lumpur International Airport records about 30 million. This continues to post a huge opportunity for growth for both countries. The HSR project is a huge infrastructure project and comes as a long term cost to the country.”

When talking about the influx of investments coming in from both countries after the announcement, Datuk Paul says that there will be no immediate influx of investments.

“The HSR takes about seven to ten years to complete and property developments along this alignment will look at a 10-year development horizon. There is no immediate influx of investments being envisaged here and it will not benefit the country in the short term. It is expected that more land banking activities will be seen in and around the proposed HSR stations. The construction and other related sectors will benefit directly from the project and its spillover but the real economic impact will only be felt once the HSR is up and running, connecting both countries,” he says.

Foreign Investment in Malaysian Properties Expected to Increase

With the revival of the HSR project, the uptrend of foreign investors and home-buyer take-ups for Malaysian properties are expected to increase.

“Malaysia has many liveable cities and is rated as one of the cheapest cities in the Asia region. Current local property price levels are very affordable for Singaporeans as well as many foreign investors. Malaysia high-end condominiums are generally priced at only a fraction of the price i.e. about 20% to 25% value of their Singapore counterparts,” he says. “Good comparison here is a super high-end penthouse in Sculptura at Ardmore (Singapore) that was reportedly sold to Facebook Co-Founder Eduardo Saverin in 2017 for about S$6,000 per sq ft (i.e a hefty RM18,000 per sq ft). This uptrend will continue, especially with the HSR project.”

Aside from the HSR, the Rapid Transit System (RTS) connecting Johor Bahru and Singapore was also announced. Datuk Paul weighs in on this and explains that with both the RTS and HSR now ongoing, they will really enhance real connectivity between the two countries thus impacting property values positively.

“These projects link Malaysia to Singapore physically closer together on the ground and creates an easy, effective and convenient transportation platform for all,” he says.

He continues, “With better connectivity, it immediately enhances property prices generally making Kuala Lumpur, Johor Bahru and Singapore all, just a train ride away in a very timely manner. The population now has more choices to buy properties and live near the HSR stations and still enjoy good connectivity into the future. The HSR project may not be the most critical factor in investment decisions but it is a positive factor working in its favour as well as providing more options for buyers to now look for properties all around or further away for secondary properties if price points and/or budget is an issue.”

Changes to routes and stations to be revised

Datuk Paul further explains that when the HSR was originally announced earlier, land and property prices were actively trading and moving Northwards. But with its subsequent cancellation in 2018, many property owners had to take an impairment in value.

“This time around with its recent revival, developers/investors are more cautious in their pricing despite the spike in development interests again.”

When the HSR was first announced in 2010, it was planned to be 350 kilometers long and is expected to reduce travel time between Kuala Lumpur and Singapore to 90 minutes. The train would also make stops at several Malaysia cities such as Melaka and Seremban as it travels along the West Coast of West Malaysia. The line would start from Bandar Malaysia in Malaysia and end at Jurong East in Singapore. In 2018, the newly appointed Prime Minister of Malaysia announced that the HSR project was postponed due to high costs.

Referring to this, Datuk Paul says that with the revival of the HSR project, some changes to the routes and lines are expected in the HSR project as the government is reported to be revisiting its construction costs, station locations, and alignment.

Johor Bahru on the radar

In terms of the Johor Bahru market with the emergence of the RTS and the revival of the HSR project, the Johor Bahru market, despite currently being subdued, would ease over time.

“As of the first half of 2019, Iskandar Malaysia recorded a cumulative committed investment of about RM302 billion and about 57% (i.e. RM172 billion) has been realised. Iskandar Malaysia will continue to be one of the top choices for property developers and investors due to its geographical location like being the Shenzhen of Singapore,” he exclaims.

He concludes, “Though the Johor Bahru market is presently relatively slow, this situation should ease overtime in the medium term especially when industrial investments continue to pick up and with the progression and completion of HSR and RTS.”

To keep up to date with the latest news, visit the Ohmyhome blog. Need end-to-end assistance in buying your next property in Malaysia? Learn more about our Buyer Agent Services, where our team of trusted professionals will take care of your home buying journey from search, mortgage advisory, deal closing, to legal conveyancing.

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