SINGAPORE: A real estate expert says the High Speed Rail (HSR) linking Singapore and Kuala Lumpur may adversely affect the economies of towns along the route.
Ku Swee Yong, the CEO of Century 21 Singapore, says while Kuala Lumpur and Singapore will enjoy the benefits of the linkage, the economies of six intermediate stations will shrink.
These are Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat and Nusajaya.
He says, in an article in Today Online, the economies of towns such as Port Dickson, Tampin and Kluang, which will be bypassed by the HSR, will be worse affected.
Ku bases his prediction on a study done in China on the impact of high speed rail upgrades by Dr Qin Yu, an assistant professor with the National University of Singapore.
In her paper No County Left Behind? Qin Yu concluded that “the reduction of transport costs for people between large cities may divert economic activities from counties to populous urban districts”.
Ku says the paper reveals that the major cities that host the terminus stations fare better, while the counties along the route of the high-speed rail saw 3 to 5 per cent declines in annual gross domestic product arising from a reduction of 9 to 11 per cent in fixed asset investment.
Ku says: “The (HSR) project has been repeatedly hailed by both governments as a “game changer” for our economies. Investment advisers are already spouting the economic benefits of the HSR and recommending various types of investments all over Peninsular Malaysia. However, to think that the HSR will change the game for the whole of Peninsular Malaysia, outside of Kuala Lumpur, we have to look deeper.”
He also says that depending on the price of the HSR tickets, some residents of Kuala Lumpur, Seremban and Malacca may find it ideal to work in Singapore, earning their incomes in Singapore dollars, while returning home every evening to be with their families.
This may lead to a further brain drain or skills drain from various Malaysian cities to Singapore.
Ku goes on to urge Singaporeans not to invest in properties in Malaysia for the moment, including in Iskandar, Johor.
He says development in Iskandar is slow, with many projects unfinished and finished properties not fully sold.
Giving examples of some of the projects that have been delayed or where property uptake has been slow, Ku says:
“Some developers in Iskandar have dropped prices to move leftover apartments, adding downward pressure on valuations. Buyers who took deferred payment plans and paid down less than 10 per cent of purchase prices are walking away from their investments.
“Some investors have gone further, requesting developers to refund their downpayments by citing the inability to secure mortgages as the banks have tightened up on loans to foreigners.”
He says the situation with commercial and industrial properties is similar.
“Malaysia held promise until over-development and overhyped promises propelled property valuations into the stratosphere, especially when Iskandar prices matched those in prime Kuala Lumpur districts.
“Investments from Singapore are unlikely to improve given the slump in trade, manufacturing and financial services in the Republic while corporate default risks are rising.”