- The commercialisation of Bandar Malaysia appears to be taking shape after The Star reported that 1MDB Real Estate Sdn Bhd (1MDB RE) has received the planning approval for its proposed Bandar Malaysia redevelopment project. The ‘approval-inprinciple’ that 1MDB RE received from the KL City Hall was based on its Bandar Malaysia master plan.

- This entails a mixed-used development with an average gross plot ratio of 4.05 on the 486-acre tract of land, which currently houses the Sg Besi Airfield. More importantly, the planning approval marks another step in 1MDB RE’s quest to redevelop the site into a transit-oriented development (TOD).

- In our previous reports, we had written that property consultancy firm CH William Talhar was appointed as transaction advisor for Bandar Malaysia. Back in June, interested parties were invited to submit expressions of interest (EOI) to participate in the project by 10 July.

- According to another report by The Malay Mail, the Request for Proposal (RFP) exercise attracted local private developers, government-linked companies and foreign parties. Out of this total, we understand that four bidders were shortlisted. These parties are now in the midst of conducting detailed due diligence to become development partners in this project. The final outcome should be known by yearend.

- Bandar Malaysia is among several prime government redevelopment projects (TRX, KWASA Damansara and Menara KL118) that are set to take off over the next few years. Bandar Malaysia is central to Greater KL’s transformation program. The project site is located approximately 7km from KLCC, and 3km from the TRX. It currently houses the Sg. Besi airfield.

- A key attraction for Bandar Malaysia is its potential to transform into an integrated transport hub within the city centre. This can happen with the proposed High-Speed Rail terminus, which will be located within the development together with other future transport options that include the MRT lines 2 and 3, KTM Komuter, Express Rail Link (ERL) to KLIA and KLIA2, Bas Rapid Transport (BRT), as well as connections to 12 major highway networks.

- All said, we however believe it is still in the early days before we can ascertain the potential plays for the Bandar Malaysia project. Apart from being located in a greenfield area amid keen competition from other mega redevelopment projects near the city centre, we are also unable to determine the financial and economic viability of this project due to the absence of other key details (e.g. land cost, efficiency factor, development components).

- We maintain our OVERWEIGHT stance on the property sector. Our sector BUYs are Mah Sing Group, MRCB, E&O and Titijaya Land.

Source: AmeSecurities Research - 27 Oct 2015