1. Lying on my bed in the hot afternoon after exam paper, I flipped over the colorful pages of The Edge Malaysia and read through a lot of articles regarding Malaysia plans to transform into a high-income nation.
2. Moments later on Facebook, a friend of mine shared an article from Bloomberg which is about Singapore’s GDP has overtaken Malaysia’s, a country 478 times its size.
3. As a Malaysian, I really wish to see the transformation of my country towards a developed state which will give our people a better life. Here, I would like to share some opinions on Budget 2011 especially the controversial PNB 100-storey tower.
4. I’m particularly interested about the Greater KL Plan, one of the 12 National Key Economic Areas (NKEA) identified under the ambitious Economic Transformation Programme (ETP), which aims to double gross national income per capital to RM48, 000 from the present RM23, 700. (This means our wealth will double in less than 10 years, wow!)
5. The budget surprisingly focus seems to be on intensifying Public-Private Partnership (PPP) initiatives in the form of allocation for the development of infrastructure support and various high-impact projects such the MRT (will write more through personal experience in 2 best MRT system in the world Taipei & Singapore), the Kuala Lumpur International Financial District (KLIFD) and Warisan Merdeka.
6. “Cities only grow or die, they don’t stand still” – said New South Wales premier Kristina Keneally at the recent Global CEO Conference 2010 in Sydney.
7. “Who does this century essentially belong to? Some say it belongs to Asia, China, Europe, India. I would say that this century belongs to cities. More and more of the global population will be living in cities. In fact by 2050, some estimate that 70% to 75% of population will live in cities, big and small. So whether we like it or not, cities would be the primary source of growth.” – Chief Minister of Penang, Lim Guan Eng
8. And Kuala Lumpur is the only global city, or Alpha world city in Malaysia. Some others Alpha world city are Seoul, Madrid and Moscow while Hong Kong, Paris, Singapore, Tokyo, Shanghai are Alpha + world city. New York and London top the list in Alpha ++ world city.
9. Greater KL Plan is to introduce more life into the city, given its aim to almost double the population to 3 million from the current 1.8 millions. We now have 1.8 million people in KL but the business will be very much different with 3 million population. . Seoul, Tokyo and Shangai buzz with business activity because they have more than 10 million populations each.
10. Besides it plans to attract 200 new MNCs by 2020. Attracting 100 such firms will contribute about RM40 billion in annual GNI to Greater KL. There are now 1,600 MNCs based here, compared with 17,000 in Shanghai and 6,000 in Singapore.
11. However I shall discuss more on putting most of the resources into a single city while neglecting cities like Penang in different article.
The controversial 100-storey Tower Warisan Merdeka by Permodalan Nasional Bhd (PNB)
12. The critics question the need for such a massive project at a time when the property market could be facing a glut. Although the money is funded by PNB own its own, many argue that it could be put in better use but not another mega infrastructure development.
13. PNB said it expected an 8% to 10% annual return from the project, which will tentatively have a gross floor area of 3 million sq ft.
14. PNB have enough money to finance the entire project, the 100-storey would be a 5 starts green building. On paper, it looks good but there’re a lot of questions that needs to be answered.
15. “The same happened when we wanted to build the Petronas Twin Tower” - The government defended the projects, saying it’s not wasteful and will have a strong multiplier effect and create many economic activities. And this 100-storey tallest tower will be the pride of nation and put us on the world map again.
16. However, when Petronas constructed the KLCC, it was the only large- scale integrated development in the city at when demand for high-grades offices was strong but this time, it is different.
*This can be deduced simply by analyzing available data on occupancy rates and office supply in the city. Table 1.1, downloaded from Ministry of Finance’s National Property Information Centre (Napic) website.
17. Quoted The Edge Big Money, in the third quarter of this year, the incoming supply of office space in KL stood at 10.4 million sq ft. These will take another 3 to 4 years before they flood the market. Meanwhile, assuming the 3 million sq ft from PNB’s Warisan Merdeka come on stream in 2015, the city will have a total 13.4 million sq ft of office space.
18. This does not include other mega projects announced recently such as the 34 ha Kuala Lumpur International Financial District, the redevelopment of Royal Malaysian Air Force base near Sungai Besi, minutes way from the city centre there’s development in Mon’t Kiara- Dutamas as well the massive Rubber Research Institude townships in Sungai Buloh.
19. Then now there is already vacant office space in hand. Accoding to Napic, 58.5 million sq ft or 80.5% of KL office space is tenanted in 3Q of this year.
20. In the 1990s, before the Petronas Twin Towers were completed, the occupancy rate in KL reached a high of 98.1% in 1997. With the completion of KLCC, the occupancy rate fell to 82.1%.
21. In terms of timing, the completion of KLCC could not have been better.
22. And let us not confuse by the time when Malaysia achieved average GDP growth of 7.2% annually during the booming 1990s and had one of the highest FDI in Asia.
23. While PNB may move to this new tower and take 50% of it, however it will vacate Menara PNB, which it occupies. Nearby, the Felda Group is slated to move to Menara Felda in Platinum Park in a few years, leaving another old building empty. There’re opportunities as well as risk in every development.
24. This is what the data shows. Numbers do tell stories.
25. Although this project has a financially strong backer, PNB should study thoroughly before fully embarking on this plan. The 3 main points are KL office vacancies, traffic and not less important, design of the tower.
26. Most of the countries are in a race of building the tallest skyscraper in this 21 century.
27. By the time of completion, PNB 100-tower will not be the highest tower in this region too. It will be ranked as 8th, 9th or even 10th worldwide. When KLCC was completed it was the tallest. So just merely by "height" will it put us shining on the world map?
28. One of the example is Cambodia, which approved a 555 meter high tower in this early September. Yes, it will be built in the centre of its capital - Phnom Penh. Cambodia will have a 555 meter tower, which is taller than our Warisan Merdeka and KLCC, but does this mean that it's more developed than us?
29. Real estate agent Previndran Singhe of Zerin Properties once said: “It is good to have iconic developments. But we should do away with the perception that iconic developments mean tall buildings.” I fully agree.
30. I wish the current design is not the ultimate model as it is not attractive enough. Honestly speaking, it’s just like yet another tall tower. And it's not attractive enough. PNB should come out with a more attracting design. Something like this which has a "WOW" factor?
Penang Global City Centre (PGCC) which had been scrapped. But I do like the design and the zero carbon footprint ideal.
A new skyscraper proposed in Bangkok