The impact of the KL-Singapore High Speed Rail

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The CRH3 high speed train at the Changsha South Railway Station in China. Will Malaysia have its own version in the near future? (Photo credit: Wikimedia Commons)The CRH3 high speed train at the Changsha South Railway Station in China. Will Malaysia have its own version in the near future? (Photo credit: Wikimedia Commons)

By Palau Shavin

Three times a week for the past year, Danny, a regional manager of an advertising company that specialises in digital media, leaves his wife and two children at their home in Taman Tun Dr Ismail in Kuala Lumpur to head to the Low Cost Carrier Terminal in Sepang to catch the early morning budget flight to Singapore.

After a day of strategy meetings and dealing with clients, he takes the evening flight back in time to for dinner, or, if he misses that, he gets to at least tuck in his children into bed.

The family had the option to stay in Singapore, but, with two young children and the prospect of no family support down south, his wife preferred not to move. Instead, Danny decided to commute.

“With advanced booking of tickets, the cost of flying down and back three times a week works out cheaper than paying rental for an apartment in Singapore. Also, we save on daycare fees as my wife’s parents take care of the children while we are at work,” he said.

If the high speed rail link from Kuala Lumpur to Singapore, which is scheduled to be completed by 2020, becomes a reality, thousands of people could opt to join Danny in commuting between the two cities.

The 330km journey – which includes five transit stops – will take a mere 90 minutes (for express), and promises to bring great economic benefit to Malaysians.

According to Minister in the Prime Minister’s Department Nancy Shukri, feasibility studies on the HSR link connecting KL to Singapore is in the final stages and should be completed by the end of this month.

It has been estimated that around 400,000 commuters will use the link daily once it is running, significantly cutting down congestion on the highways, and cutting carbon emissions.

The Land Public Transport Commission SPAD says the project has the potential to bring about significant economic benefit to Malaysia such as stimulating further economic activity between Kuala Lumpur and Singapore, attracting multi-national companies to relocate to Kuala Lumpur or locations in between because of improved connectivity, increase productivity, enhance property values, and increase levels of tourism.

Its construction is expected to add RM6.2 billion to gross national income, stimulate gross domestic product by 0.5% a year during construction period, as well as raise foreign direct investment in Malaysia.

Industry experts say the biggest gainers are likely to be property and construction sector companies. They predict increasing demand for properties in the Klang Valley, Johor and the possible stops along the route.  So far five towns have been named as possible transit stations: Seremban in Negeri Sembilan; Ayer Keroh in Malacca; and Muar, Batu Pahat and Iskandar Malaysia in Johor, with the journey time estimated at 120 minutes.

According to Paul Whiteway, Chief Operating Officer of iproperty.com: “We are seeing it [demand for property] now, and that will continue to increase in the medium to long term. A lot of Singaporeans are buying properties in Malaysia particularly in key areas such as Iskandar, Johor and the Klang Valley.”

Choong Khuat Hock, who runs a blog on the KL Singapore High Speed Rail, is also bullish on the impact on the property market.

For one thing, he said it would help generate demand for the large supply of condominiums in KL.

“With better accessibility, foreign companies may be attracted to place their operations in KL or Iskandar where operating costs are lower. The better accessibility would also make it easier to attract talent to work in KL or Iskandar.

“Increased tourist arrivals and business activities will also boost the sagging rental market arising from lower occupancy rates. Singapore will also benefit from greater accessibility for its integrated resorts and higher tourist arrivals, both from Malaysia and overseas,” said Choong, who is director of research and a fund manager at Kumpulan Sentiasa Cemerlang Sdn Bhd.

By Choong’s calculations, based on an estimated built up area of 1.8bn sq ft in the Klang Valley, property values could be boosted by a massive RM180bn if property values rise by RM100psf and the gain could rise to RM360bn if property prices appreciate by RM200psf. This excludes the potential gains for Johor and Malacca property, he said.

But the flip side is that the average middle income Malaysian who is already struggling to buy a home in urban centres such as Klang Valley will find properties prices – whether for rent or to purchase – spiral completely out of reach. They will be forced to move further afield – perhaps to Rawang and beyond, shelling out for toll charges and adding to the congestion on the roads.

Another concern is the changing façade of cultural landmarks and heritage areas in the city. The property boom could see owners of small plots of land in areas such as Kampung Baru, Masjid India, even downtown KL being pressured to sell out to developers. One only has to look at the changes wrought on Brickfields to see just how much it has lost its cultural flavour in the race to build, build, build.

The airline industry, too, is a little alarmed by the prospect of HSR. Experts have expressed concern that the HSR would effectively kill off Kuala Lumpur International Airport (KLIA) and the upcoming klia2.

According to a report by Centre for Aviation and Innovata or CAPA, the HSR link could result in a huge drop off in air traffic between Singapore and KL, and change the dynamics of competition between Changi and KLIA “particularly if the line includes stops at either or both airports”.

The report cautions that the construction of HSR in Malaysia could also alter the country’s domestic market should the line be extended to include other Malaysian cities.

Of particular concern are the low cost carriers (LCCs), which now account for about 60% of the Singapore-Kuala Lumpur market.

With the coming of the HSR, the report states LCCs frequencies will have to be cut significantly, and Singapore-Kuala Lumpur will lose its current status as the largest LCC route in the world.

UOB Kay Hian was quoted in the Star as saying the aviation sector would see losers.

“We reckon that the Malaysia Airports Holdings Bhd (MAHB) and AirAsia Bhd will be most impacted by the HSR on the Singapore-Kuala Lumpur route. About 12% of MAHB’s passenger throughput involves traffic from Singapore, and at least 60% to 70% of these passengers could opt for HSR instead of flying,” noted UOB Kay Hian.

Still, these minus points are but niggles in the bigger picture, and the potential benefits of the HSR link seem, on paper at least, to outweigh other considerations. All that remains to be seen is just who will win the contract and whether they can deliver the project on time, and on budget.

 

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