Should I buy Transit-Oriented-Development (TOD) property?

Happy New Year, my friends!

Hope Year 2024 brings you a lot of happiness, blessing and prosperity.

In this post I would like to take your attention to a TOD property. 

Have you heard about Transit-Oriented-Development (TOD) property?

TOD is a type of urban development that integrates residential, commercial and public spaces around public transport hubs, such as train stations, bus terminals or light rail stations. TOD aims to create walkable, livable and sustainable communities that reduce traffic congestion, air pollution and greenhouse gas emissions.

But should you buy a TOD property in Malaysia? 

Here are some of the benefits and challenges of investing in TOD properties.

Benefits of TOD properties:

- High demand and rental yield: TOD properties are attractive to tenants who value convenience, accessibility and lifestyle. They can save time and money on commuting, enjoy a variety of amenities and services nearby, and have more opportunities for social interaction and recreation. As a result, TOD properties tend to have high occupancy rates, rental rates and capital appreciation.

- Government support and incentives: The Malaysian government has been promoting TOD as part of its urban planning and development strategy. It has introduced various policies and incentives to encourage TOD projects, such as tax exemptions, development charges waivers, density bonuses and land use flexibility. These incentives can lower the cost and risk of developing TOD properties and increase their profitability.

- Environmental and social benefits: TOD properties can contribute to the environmental and social well-being of the city and its residents. By reducing the reliance on private vehicles, TOD properties can help to reduce traffic congestion, air pollution and greenhouse gas emissions. By creating mixed-use and vibrant communities, TOD properties can also enhance the quality of life, social cohesion and cultural diversity of the urban population.

Challenges of TOD properties:

- High initial cost and competition: TOD properties are usually located in prime areas with high land prices and development costs. They also face intense competition from other developers who want to tap into the lucrative TOD market. Therefore, investors need to have sufficient capital and financial resources to enter the TOD market and compete with other players.

- Regulatory and technical issues: TOD projects involve multiple stakeholders, such as government agencies, public transport operators, developers, residents and businesses. They also require complex planning, design and construction processes that comply with various regulations and standards. Therefore, investors need to have good knowledge and experience in dealing with the regulatory and technical issues related to TOD projects.

- Uncertainty and risk: TOD projects are subject to various uncertainties and risks, such as market fluctuations, policy changes, operational challenges and unforeseen events. For example, the COVID-19 pandemic has disrupted the public transport system and reduced the demand for TOD properties. Therefore, investors need to be prepared for the potential impacts of these uncertainties and risks on their TOD investments.

Examples of TOD projects in Malaysia:

- KL Sentral: This is the largest TOD project in Malaysia that covers 72 acres of land around the Kuala Lumpur central railway station. It features a mix of residential, commercial, office, hotel, retail and cultural facilities that cater to different needs and preferences. It is also connected to various modes of public transport, such as trains, buses, monorails and airport express.

- Sunway City: This is an integrated city development that spans 800 acres of land in Subang Jaya. It offers a range of residential, commercial, educational, healthcare, leisure and entertainment options that are linked by a network of pedestrian walkways, bicycle lanes and electric buses. It also boasts the first Bus Rapid Transit (BRT) system in Malaysia that connects to the Light Rail Transit (LRT) system.

- Kwasa Damansara: This is a new township development that covers 2,330 acres of land in Sungai Buloh. It aims to create a green, smart and connected community that leverages on the Mass Rapid Transit (MRT) system. It will feature various types of residential units, commercial centers, offices, schools, parks and recreational facilities that are designed to promote sustainability and livability.

TOD properties are a promising type of property investment in Malaysia that offer many benefits but also pose some challenges. Investors need to weigh the pros and cons of investing in TOD properties carefully before making their decision. 

They also need to do their due diligence and research on the location, developer, project features and market trends of the TOD properties they are interested in.

Hope you find this information helpful, do not hesitate to leave your comment below should you have further questions. 

Signing off for now, 

Ashlin REN01427