KL City Plan 2020 and the case of ‘special’ approvals for plot ratios

It’s a great thing when developments are guided by long-term vision. One such example is the Kuala Lumpur City Plan 2020 (KLCP2020).

Let’s face it, there are no cities that qualify as the “most liveable” in the world. Developments are done either haphazardly or based on the whims and fancies of the authorities in charge every year.

As it is Kuala Lumpur is ranked only 98th in Asia as most liveable city for Asian expats. This ranking is even lower than George Town in Penang which comes in at 97th place.

Among the most important factors for “liveability” is infrastructure because it is becoming quite impossible to support the increasing number of cars on our roads every year. There were reportedly 600,000 cars sold in 2018.

According to a report in Edgeprop.my, property projects must now obtain fresh approval from Kuala Lumpur City Hall (DBKL) before going ahead with their plans.

While property projects already granted development orders are not affected, those granted development orders but which haven’t commenced their projects are required to apply for an extension.

According to DBKL’s City Planning Department director Nurazizi Mokhtar, property developers must submit a full report to the mayor for a review which includes the impacts of the amendment.

If it is approved, DBKL will gather the public’s views before giving final approval.

Currently, many development projects have plot ratios exceeding what is permissible under the KLCP2020. Due to this, developers and investors have been willing to pay a higher price for land in the city.

A lower plot ratio is not as desirable since fewer units can be built on it thereby resulting in lower profits for developers.

Government statutory bodies are not required to resubmit reports for approval if the parcels bought were granted plot ratios of more than 10 in the approval in principle.

This is exactly why the KLCP2020 was needed long before development approvals were given. Now there will be many renegotiations taking place, and some may feel it unfair that there will be those who get special approval while others don’t.

What is good however is that moving forward, approvals in principle can be avoided altogether.

What’s more, the process will become more transparent and no developer or investor need pay a premium simply because of “special” approvals for plot ratios above what is stated in the KLCP2020.

It will also discourage speculation which is extremely important or else, the issue of affordability will continue to haunt Malaysian households for a long time to come.

This article first appeared in kopiandproperty.com

Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.