Significance of infrastructure to property development

In searching for the ideal property, property investors look out for the connectivity of road infrastructure since bridges and transportation hubs are vital elements to ensuring that property prices within an area would increase.

Malaysia is poised for continued growth, on the back of a resilient domestic demand, inflows of foreign investments and the ongoing implementation of Government initiatives under the Economic Transformation Programme. In fact, the announcement of projects such as the Kuala Lumpur- Singapore high speed rail, the Tun Razak Exchange, the construction of the capital’s MRT system along with the ongoing developments in Iskandar, caught the attention of the international community as these projects underscored Malaysia’s bright economic future.

The completion of key mega project and influx of foreign companies and talent will enable the country to experience an increasing vibrant economy. Given Malaysia’s burgeoning international community and growing middle class, property developers will surely find greater demand for safe and secure communities near public transportation and amenities, an increasing consciousness for sustainable solution, ever increasing quality, as well as a greater divergence in demand for residential communities situated outside the city centre and convenient city living.

But with a thriving economy and greater infrastructure development, new centres of activity and business will emerge, demanding the development of supporting infrastructures like residential, hospitality and retail. The nation will also see a re-evaluation of city limits as more land is needed to cater to an ever prospering economy.

Malaysia has been listed as Asia’s second most attractive market for infrastructure investment in 2014 by Arcadis.

Notably, Malaysia scored highly across the investment criteria, taking it ahead of other big regional economies such as China, South Korea and Japan.

Globally, Malaysia takes on the 7th spot, ahead of Australia, the US and the UK.

The findings come from the second Global Infrastructure Index, which looked at several factors including tax rates, ease of doing business, government policy, GDP per-capita, availability of debt finance and quality of existing infrastructure.

According to Richard Warburton, Arcadis Head of Infrastructure for Asia, infrastructure serves as the country’s backbone and catalyst for long-term economic development.

And considering Malaysia’s average annual population growth rate of 1.4 percent, investment in new infrastructure is imperative, he said.

“Combined with Malaysia’s goal of a high-income status by 2020, plans are already underway for specific cities and urban clusters under Greater Kuala Lumpur/Klang Valley to be developed into vibrant, productive and liveable cities that are comparable to other major cities in the world.”

In Asia Pacific, the top 10 most attractive countries for infrastructure investment in 2014 are Singapore, Malaysia, Australia, Japan, China, Thailand, South Korea, Indonesia, India and the Philippines.

Warburton noted that countries with attractive structured infrastructure scheme and right political environment for sustained long-term economic growth will stay ahead in attracting international investments.

Real estate’s most valuable feature is its location. Location does not simply mean that a particular house is situated in a booming area. The whole idea of location include the area’s accessibility, amenities and transportations.

With this, investing in properties situated near urban public transportation system is important since public infrastructure cannot be easily replicated in other property developments.

Buying properties based on amenities such as sky garden, infinity swimming pool and Jacuzzi is not wise because these features can easily be duplicated in other property developments. An ideal property in the Klang Valley is that located within 500m walking distance to urban public transport system.

Urban public transportation systems mean the existing Ampang Line LRT, KTM Komuter, Kelana Jaya Line LRT, Monorail, as well as the upcoming systems MRT Sungai Buloh – Kajang Line, Kelana Jaya Line LRT Extension, Ampang Line LRT Extension and probably the Monorail Extension.

It has to be noted that these public transport system require huge amount of money to develop and the involvement of federal government. No developer can construct it by themselves. Thus, owning a property near these transport systems provides a great advantage compared to other properties in terms of attracting tenants and resale.

Why 500m walking distance? Aside from being the most comfortable walking distance for Malaysia’s weather, living near or within 500m walking distance to public transport provides property owners a hedge against fuel price hikes.

Given its limited supply, petroleum is becoming increasing expensive. If driving a car becomes so expensive that driving to work has become impractical, living near the station offers property owners advantage as well as added value to their properties.