KVMRT II to create property-buying spree, says Maybank IB

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KUALA LUMPUR (May 14): Maybank Investment Bank (Maybank IB) research has
reiterated ‘overweight’ on both construction and property sector as the KVMRT
II work is in line of its schedule.

The research house’s top ‘buys’ are Gamuda Bhd, IJM Corporations Bhd, WCT
Bhd and Sunway Bhd.

The research firm believes that the final alignment of KVMRT II was
likely to create another property-buying spree close to the new MRT stations.

The construction cost of KVMRT II is estimated at RM24.9 billion, which
is based on actual KVMRT I contract rates compared with KVMRT I’s total cost of
RM22.2 billion.

The cost for KVMRT II is higher compared to KVMRT I as the second
construction is a longer line and there are more stations than KVMRT I.

“The construction KVMRT II will be divided into two phases, which is
phase one would connect Sg. Buloh to Serdang at a cost of RM22 billion,
meanwhile phase two would connect Serdang and Putrajaya for RM2.9 billion,” it
said.

The research house noted that the construction phase two would commence
two years after construction of phase one begins.

In addition, the radial line (KVMRT II) connecting Sg. Buloh and Serdang
would take precedence over the Circle Line (KVMRT III).

“It (KVMRT II) is expected to have the highest ridership compared to
KVMRT I and III and other LRT lines, as it will serve densely populated,
lower-income neighbourhoods including Damansara Damai, Kepong, Kg. Pandan, Batu
and Serdang.

KVMRT II would have the highest ridership of 550 pax per day and 11,100
pax per kilometre as compare to other KVMRT lines and LRT lines, with ridership
of 360 to 460 pax per day to 10,000 pax per kilometre, said the research house.

In a meeting with Gamuda’s group managing director, Dato’ Lin Yun Ling,
he believes that the government is highly committed to implement KVMRT II and
III, as the socioeconomic benefits that could be reaped from the KVMRT far
outweigh its costs as compared to the government’s other development plans.

The civil works on KVMRT II are expected to commence in mid-2015, which
is immediately after the completion of KVMRT I.

“The approval of KVMRT II by the cabinet is expected in July 2013, while
the tendering and appointment of the project delivery partner will take place
in early 2015, as land acquisitions and public feedback would take about two
years post approval,” said the research house.

The research house also said that the key beneficiaries in completion of
the KVMRT II includes 1MDB’s Tun Razak Exchange Project, SP Setia (Selayang),
YTL Land (Sentul), UEML (ex-Angkasaraya) and IOI Corporations (via IOI
Properties; Putrajaya).