BY the first quarter of 2025, Parliament is scheduled to table the Urban Renewal Act, which is expected to have a significant impact on urban development in the country.
What does this mean for urban development and the possibility of redevelopment in our cities?
The main point of contention with the Urban Renewal Act (URA) is that it will lower the consent threshold required for the en-bloc sale of strata title properties.
The current requirement is a unanimous (100%) resolution under Section 57 of the Strata Titles Act 1985 (Act 318).
Under the proposed changes, this threshold would be reduced to 80% for buildings under 30 years old, 75% for buildings over 30 years old, and 51% for abandoned developments or buildings.
This aligns with regional peers like Singapore, which has an 80% threshold for buildings over 10 years old, Western Australia, which has a 90% threshold for buildings under 30 years old, and New Zealand, which requires a 75% threshold.
At present, the requirement for unanimous approval from all strata title holders makes the redevelopment of existing strata-titled property extremely rare.
One such attempt was the redevelopment of the Desa Kudalari Condominium in 2016.
Built in 1984 as one of the first luxury properties in the KLCC area, it had become a shadow of its former glory and was in dire need of extensive, costly structural repairs amounting to RM12.5 million.
By this point, only 15% of the development’s 186 units were inhabited by the original owners, with 30% left empty and another 55% rented out to outside tenants.
Despite both the management corporation and 87% of owners agreeing to the offer made for the property, resistance from owners seeking more than double the offered price and absentee owners rendered this attempt at redevelopment unsuccessful.
The few multi-family developments that have been redeveloped in Kuala Lumpur are legacy public housing, such as Sulaiman Court in 1986, the walk-up flats of Pusat Bandar Datuk Keramat in the early 2000s, Tunku Abdul Rahman Flats in 2015, and Razak Mansion in 2016.
The redevelopment of Razak Mansion is particularly noteworthy due to the unanimous consent that was given for the project.
Built between 1960 and 1967, Razak Mansion comprised 657 units across 13 four to five-storey blocks.
When the area was slated for redevelopment, residents were compensated with a one-to-one replacement in 1Razak Mansion, a single-block apartment building that accommodated these residents.
The new units were larger at 800 sq ft compared with the 400-500 sq ft units in Razak Mansion and included new facilities such as a multi-purpose hall, market, surau, and shop lots.
The development of RC Residences also introduced 5,748 market-rate housing units into the market, increasing the supply of new housing and positively affecting the affordability of the housing market.
According to Housing and Local Government Minister Nga Kor Ming, there is currently no law governing urban renewal and redevelopment.
The ministry has also identified 534 potential sites for urban redevelopment in Peninsular Malaysia, with 139 of these located within the Federal Territory of Kuala Lumpur alone.
The total area of the sites within Kuala Lumpur is equal to 13.4% of the city’s total area, with a combined Gross Development Value of RM355.3 billion.
While the ministry cites the need to redevelop dilapidated and under-maintained structures, opponents argue that the URA could lead to abuse by powerful interests in the real estate sector, with sites potentially being overdeveloped for private profit.
Those opposed to redevelopment could also find themselves forced to relocate, displacing families and communities.
Concerns have also been raised about the welfare of existing residents if the URA is passed and the consent threshold is lowered.
These concerns centre around ensuring owners are fully informed before giving consent, receiving just compensation in the event of redevelopment and maintaining existing community bonds, particularly for long-time elderly residents who may have nowhere else to go.
Even previous residents of Razak Mansion, who provided unanimous consent for redevelopment in exchange for larger, more modern units, are now struggling to pay the RM120 maintenance fee, which is 240% higher than the previous RM35 maintenance fee.
These expenses, which cover the upkeep of modern facilities, lifts and other costs such as painting and waterproofing, are unaffordable for many elderly residents, who were not fully informed of the financial implications during the redevelopment process.
However, passing the URA would allow for the redevelopment of abandoned and derelict structures, especially in historic city centres.
This is particularly important when the cost of refurbishing and renovating buildings to meet current energy efficiency standards becomes too prohibitive.
The URA would facilitate the renewal and redevelopment of the urban core and inner-city neighbourhoods that have been neglected due to a continued focus on suburban development.
Redeveloping the historic urban core is necessary because cities like Kuala Lumpur cannot sprawl indefinitely.
At some point, the time and energy spent commuting from ever-more-distant suburbs outweigh the cost savings of living farther away.
In Greater Kuala Lumpur, for instance, “super commuters” travel daily from locations as far as Tanjong Malim, Perak and Seremban, Negeri Sembilan.
Similarly, in Greater Penang, commuters travel from as far as Taiping, Perak and Alor Setar, Kedah, while in Greater Johor Bahru, people commute from Ayer Hitam and Kota Tinggi.
This phenomenon is driven by the lack of new housing in historic urban areas, forcing households and individuals to seek affordable housing in more distant suburban developments.
The repopulation and renewal of historic city centres can help combat suburban sprawl, ensuring places such as Kuala Lumpur, Ipoh and George Town are not reduced to ghost towns, catering primarily to tourists and suburban visitors.
Enabling redevelopment in the urban core is also a fiscally responsible decision due to the high cost of subsidising infrastructure in low-density suburban areas.
Every kilometre of water and sewage pipes, power lines, fibre optic cables and roads serve more people in dense urban areas than in suburban areas, with suburban infrastructure ultimately being subsidised by the more productive, higher-density urban centres.
Currently, it is the blighted inner city that subsidises the wealthier outer suburbs.
Redeveloping these underinvested areas would reduce this subsidy and revitalise the historic city centre.
The URA presents a golden opportunity to rejuvenate urban areas, particularly in the urban core, and allow redevelopment where it was once not possible.
The welfare of existing residents can be maintained by ensuring units are valued by an independent valuator, ensuring that owners receive fair compensation or a one-to-one replacement in the new development.
While there are concerns about conflict, it should be noted that many of these properties already experience conflicts over the maintenance of common facilities, parking and other issues.
The consent threshold must strike a balance between property rights and the need to redevelop the city as development patterns change.
It cannot be so low that developers can win over a small majority and demolish buildings for easy profits, nor can it be so high that redevelopment becomes impossible due to a minority of absentee or resistant owners.
The ongoing debate about the URA also highlights the need for a stronger maintenance culture, ensuring properties are well maintained to extend their lifespan and reduce the need for redevelopment.
As Malaysia aims to become carbon-neutral by 2050, considerations such as carbon scoring and allowing market forces to determine the number of parking spaces in developments should also be incorporated into the URA.
Ultimately, our cities are dynamic engines of growth and innovation that must evolve.
They cannot remain frozen in time to satisfy the nostalgia of a few individuals who wish to preserve their childhood homes.
Urban renewal and redevelopment are essential to maintaining vibrant, thriving cities for the future.
Nischal Ranjinath Muniandy is a senior researcher at the public finance unit of Ideas. Comments: letters@thesundaily.com
