Cover Story: RM5.3 bil transit-oriented developments in the pipeline

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STATE-OWNED public transport operator Prasarana Malaysia Bhd has to date partnered five property developers in seven transit-oriented developments (TODs) along its rail lines in the Klang Valley.

These projects have a total gross development value (GDV) of RM5.27 billion, with Prasarana’s share being either a portion of the GDV, profit sharing or in some other way, in exchange for providing the land for developments.

Participation in the TODs is part of Prasarana’s strategies to monetise its infrastructure assets while expanding its non-fare revenue from the current 10% to 30% by 2018.

According to Prasarana, the TODs, with construction ongoing at this stage, are to be integrated with its existing or new LRT or monorail stations in Brickfields, Dang Wangi, Kelana Jaya, Ara Damansara, Bukit Jalil (Awan Besar), Puchong and Taman Tun Dr Ismail (TTDI).

The largest is the RM1.3 billion mixed-use development on a 4.61-acre parcel in Brickfields, next to Tun Sambathan monorail station. Prasarana, as land owner, awarded the development rights to Bina Puri Holdings Bhd (fundamental: 0.15; valuation: 2) in 2013.

The transport operator has also awarded two TOD projects, with a total GDV of RM2.04 billion, to Crest Builder Holdings Bhd (fundamental: 0.6; valuation: 2.4).

The first is the development of a 40-storey tower, dubbed The Bank @Jalan Ampang, on top of the exiting Dang Wangi LRT station, with a GDV of RM1.04 billion. The second is the development of serviced-residential suites and offices at the existing Kelana Jaya LRT station, with a GDV of RM1 billion.

According to Crest Builder’s filings with Bursa Malaysia, Prasarana shall be entitled to 21.2% of the Dang Wangi project’s GDV and 24.8% of the Kelana Jaya project.

 Meanwhile, privately-held Trans Resources Corp Sdn Bhd has been entrusted by Prasarana to undertake a commercial-residential project with a GDV of RM687.6 million at LRT station 2 Ara Damansara.

Another privately held developer, SM Land Sdn Bhd, has also been picked by Prasarana to build four tower blocks of serviced apartments with retail space near LRT station 1 Awan Besar in Bukit Jalil. The project has an estimated GDV of RM591.5 million.

Both companies are not listed, hence the details of the revenue terms with Prasarana are not known.

Other Prasarana TOD projects include the RM500 million development near LRT station 6 in Puchong, which will be undertaken by IOI Properties Group Bhd, as well as a joint venture between the transport operator and Naza TTDI Sdn Bhd to build a 26-storey condominium tower in TTDI, which carries a GDV of RM153 million.

As it explains on its website, Prasarana intends to transform all its underutilised land located at its existing and future LRT systems into an integrated mixed-use development connected directly to the transit stations.

Adopting the TOD model, Prasarana will undertake site-specific projects that are fundamentally shaped by their close proximity to rapid transit. This model is currently recognised as one of the most effective means to reduce the use of private vehicles and simultaneously increase the ridership of public transport.

With development revenue from the TODs as well as recurring income generated from the operation of certain retail components within the TODs or its transit stations, Prasarana is hoping to increase its non-fare revenue to 30% by 2017.

Ideally, Prasarana wants the contribution of non-fare revenue to be  40%, while the remaining 60% will still be made up by its fare-box revenue from its rail and bus operations.

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This article first appeared in The Edge Malaysia Weekly, on April 13 - 19, 2015.