KTMB site relocation:A boon to investors

Singapore and Malaysia capped a historic day in relations on Monday with agreement on a long outstanding bilateral issue.

After 20 years, both sides have arrived at a solution on the Malayan Railway Land in Singapore.

The leaders of the two countries agreed to move the station at the heart of the city centre in Tanjong Pagar to Woodlands Train checkpoint, near the border by the 1 July 2011.

The smiles said it all – of a retreat that has been fruitful with significant moves.

The centrepiece must surely be the issue of the railway land and lines, spelt out in the Points of Agreement (POA) signed in 1990.

Singapore Prime Minister Lee Hsien Loong: “Our focus has been developing our bilateral relationship at a time when we face many challenges in an uncertain and rapidly globalising world.

“There are many competitive alternative centres growing in Asia where we need to work together bilaterally in ASEAN and where we also need to clear issues which have been hanging over us for some time so that we can move forward and develop a win-win relationship.

“It is a matter for rejoicing. It is a good deal. Both sides are happy and this will benefit both sides considerably.”

Malaysia’s Prime Minister Najib Razak said: “A year ago, when we met, we decided that we wouldn’t allow outstanding bilateral issues to be in the way of developing and strengthening bilateral ties and move forward in areas where we could achieve common agreement between our two sides.

“With that positive mindset in mind, we have achieved much within a year starting with the officials from both sides who have been working very hard to find a common ground.

“Today is quite historic because we see now the light at the end of the tunnel with respect to an outstanding issue which has been lingering for almost 20 years.”

Having waited this long, the next move is to move fast.

PM Lee said: “There is urgency. This matter really cannot wait indefinitely because it is already 20 years. And there are many development projects in Singapore which have been held up because the POA has not been implemented as it should have been many years ago.”

So the 1990 Points of Agreement has now been supplemented by new terms and conditions to maximise the potential of the Malayan Railway Lands in Singapore.

When the Keretapi Tanah Melayu Berhad (KTMB station) moves to the Woodlands train checkpoint by 1 July 2011, Malaysia will co-locate its railway Customs, Immigration and Quarantine (CIQ) facility there.

On its part, Singapore would ensure that there are bus services to connect KTMB station at Woodlands with a nearby MRT station for the convenience of train passengers.

Another key issue settled is the development of several land parcels linked to the train line.

Both countries will also set up a company known as M-S Pte Ltd by December 31 this year.

Malaysia will have a 60 per cent stake under Khazanah Nasional Berhard while Singapore will have a 40 per cent share to be held by Temasek Holdings.

This company will handle the joint development of three parcels of land in Tanjong Pagar, Kranji and Woodlands as well as another three pieces of land in Bukit Timah.

These land parecls would be swapped based on the equivalent value for pieces of land in Marina South and Ophir-Rochor.

Both sides will conduct valuation studies.

Prime Minister Lee will visit Kuala Lumpur within a month to discuss the land swap.

The transfer of the land parcel to M-S Pte Ltd will take effect at the time when KTMB vacates the Tanjong Pagar Railway Station.

Mr Lee added: “Land prices have been moving over this last one year. You have seen the property market is quite active. That is the reason why we did not settle the land swap today. I wanted an updated valuation.

“On the basis of updated valuations, we will make them an offer and it is up to them whether they want to take the offer for the swap. It is substantial. These are very valuable pieces of land if they are developed.

“And that is why the POA as it was and even more now as it has been updated and rounded up is a win- win proposal for both countries because it enables us to develop the land.

“It enables M-S Private Limited to share in the upside of the land which is KTM land and I think enables us to move forward in so many other areas to cooperate and work together for mutual benefit without having this outstanding issue always there a question mark. If you can’t solve this, how can you talk about new things?”

“So with the understanding we have achieved at today’s meeting, we can more or less say that the POA agreement with some enhanced features should be finally put to rest particularly when PM Lee meets me in a month’s time.

“The spirit and political undertaking is to find a resolution on a mutually beneficial manner so that both countries can benefit the finalisation of the enhanced POA agreement.”

Both leaders also agreed the Tanjong Pagar Railway Station’s passenger terminal will be conserved given its historical significance. It will also be the centrepiece for the proposed new development on this site.

The job is now in the hands of a joint implementation team.

It has to complete its work by the December 31.

Property watchers said the current Malayan Railway station site at Tanjong Pagar offers tremendous opportunities for residential and commercial development. But these will likely take shape only in 2015 or 2016.

Singapore and Malaysia announced on Monday that the Tanjong Pagar railway station will be relocated to Woodlands by July next year.

Property observers say the Tanjong Pagar site, located in the Southern part of Singapore, is located on prime land. It’s near the city centre and a big shopping mall Vivocity.

The attraction is the size of the land spanning about five football fields.

A high-rise commercial development with a gross floor area of over a million square feet could be built there.

Though the size is zone for commercial use now, market watchers said residential units may be allowed too.

Donald Han, managing director, Cushman & Wakefield, said: “Currently it’s zoned under commercial, that means potentially you might be allowed some retail component, you’d be allowed commercial office as well.

“I think a developer, whoever comes in, to take over the land potentially can build a combination of retail as well as office. But that being said, a lot of the commercial prime properties of the outskirts of the main financial district may be allowed potential conversion of use to residential.

“So in some cases, you may get a combination of commercial and potentially residential, on top of this site. The site is huge so it can have a multitude variety of different uses in that sense, subject to of course, getting the necessary planning approval.

“If it’s going to be pure commercial, based on the land area, over the plot ratio, we estimate price per square foot, per plot ratio about S$600-650 per square foot, plot ratio. That translates to a price, total quantum of about S$650-700 million in that sense.

“If you get conversion of residential use, the value for residential, which is currently highest and best used in the financial district can potentially be about 25 to 30 per cent higher than the figures I quoted you just now.”

Analysts said relocating the railway station is also timely as Singapore plans to re-develop the Tanjong Pagar area into a new waterfront city.

And when the station moves to Woodlands in the north, that area is set to become more vibrant.

Mr Han said: “Right now, if you go into Woodlands, there is only the Causeway Bay shopping mall, that’s currently located. There are not many activities that are coming up.

“If you look at the potential relocation of the KTM, if it allows an integrated development to be located there, I think it will certainly help to increase land values and existing property values in the area.”

But all this will not be immediate and will take between three and six years.

Source : Channel NewsAsia – 24 May 2010

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