Malaysia Property Market Can Flourish Without HSR

Experts believe the axing of the Kuala Lumpur-Singapore High Speed Rail (HSR) is likely to have a marginal effect on Malaysia’s real estate market, reported The Edge.

“I think some of the HSR’s hype (of bringing added value to locations along the alignment) was misplaced and might have been over-optimistic,” said Savills Malaysia Executive Chairman Datuk Christopher Boyd.

One reason is that there are already many good cross-border transport links between the two countries such as railways and air transportation. Moreover, the high expectations did not exactly result in large-scale investments within the vicinity of the HSR’s proposed stations likely due to its redundancy with existing transportation systems.

“Studies overseas have shown that in many cases, the benefits that HSR links are able to bring are often overestimated. Stations along the alignment can actually pull value away rather than bring value in.”

“It would have been a nice and convenient thing to have but it is not an essential or must-have thing to have now. It will come in time when the market is really ready for it. So (the scrapping of the HSR) is not a catastrophe or severe loss for either Malaysia or Singapore. I don’t think that is going to be a very big impact on land value,” he noted.

In agreement is Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) President Foo Gee Jen.

“Not many people are buying big tracts of land around the station locations. The investments are more small scale. The losses would be more in terms of time and planning. There was not much speculative buying around where the stations are supposed to come up.”

However, he expects the scrapping of the project to impact growth corridors like Melaka-Seremban and Muar-Batu Pahat, particularly the Negeri Sembilan’s Malaysia Vision Valley.

While the termination of the HSR could weaken investor confidence given the loss of potential spillover benefits, the government may reconsider the large-scale project when Malaysia’s debt is reduced from RM1 trillion.

“It is prudent to call off the HSR and other mega projects that can be revived when the government is in a stronger financial position.”

However, plans for major developments and infrastructure along the HSR are likely to be cancelled or put on hold.

“And for those who have paid high prices for the properties that had been planned along the alignment, they may suffer a setback. The properties in those areas are expected to lose their premium and the prices will be realigned to the level of the vicinity, but the drop of prices is not expected to be significant as our property market is still holding up,” he added.

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