Urban renewal is essential
Cities are living organisms that grow and change, and need care. When housing deteriorates or infrastructure crumbles, so will opportunities. For residents, it often means living in unsafe, unhealthy conditions with limited access to jobs, education and essential services. Social problems such as crime and unemployment tend to rise. For property owners, degeneration leads to declining property values, lower rental income or total abandonment altogether.
For Malaysia, particularly Kuala Lumpur, there is no question that many apartments or flats built decades ago are in poor condition — a fact that is visibly apparent. This is especially true of public housing that is poorly maintained, where the residents have limited funds to improve and upgrade, with some properties having even turned into slums.
Renewal or redevelopment can boost the value of the property and its neighbourhood, modernise essential services, attract economic activities and enhance the quality of life for residents. It safeguards both community well-being and economic stability.
As we said in August 2024, we believe the objective and intention behind the proposed URA is good. It is a challenge, as everyone knows. It needed to be resolved for the good of the residents, the neighbourhood, the city and the country. It gives a chance for the people to enjoy a better quality of life, with more economic opportunities. But … the devil is in the details.
Undue authority given to the state causes fears
The proposed URA itself is light on detail. What is abundantly clear, however, is that it gives the federal and state executive committees UNDUE AUTHORITY to declare an urban renewal project, select the developer and approve the development plan. Once approved, it then allows developers to initiate acquisitions to obtain the consent threshold. The proposed URA is silent on how urban renewal projects are to be initially selected for consideration. Will some “preferred or connected” developers have any influence? Why must the developer be chosen, and not subject to the highest public tender? These are privately owned properties. Yes, the owners can vote against the proposal but, then, it is the federal and state executive committees that appoint the members of the mediation committees! Unsurprisingly, the proposed URA has triggered strong public pushback, including concerns of gentrification and forced displacement — especially of the lower-income households — as well as non-transparent valuation process and fears of inadequate compensation.
See also: Transparency demands courage, clarity requires discipline — both are needed to build trust
We think it is important to remember that urban renewal is not just about buildings — it is everything about the people! It is about protecting communities and ensuring that cities are places of safety, opportunities and shared pride. And, yes, it must be driven by the people, for the people — not dictated top-down with a lack of clarity on how it will be executed. The role of the government is to facilitate, to listen, to guide, to help.
This brings us to the first inconsistency that raises the question of intent. If it is driven by the federal or state government, the consent threshold is lowered to 80%. But if the strata owners themselves initiate a redevelopment, the threshold remains at the impossible 100%. Again, remember, these are private properties. The owners themselves are literally denied the right to redevelop on their own initiative. But the government can unilaterally decide which properties are up for redevelopment. This also forces strata owners who wish to see their properties redeveloped to run to the state for help. If urban renewal is good, why deny that right to the actual property owners? We find this difficult to comprehend. Presumably, the fear is that strata owners might be misled by unscrupulous parties — and the state can protect them. Even if so, is there no better mechanism, with transparency, integrity and checks and balances?
Case study on Singapore’s urban renewal and en bloc transactions
Proponents of the proposed URA hold out Singapore as an example, where en bloc redevelopment has been successfully carried out for years. These days, we find a lot of “Singapore whitewashing” and since we inevitably will have to reuse this phrase, we shall abbreviate it to “SWW”, given Singaporeans’ love for abbreviations.
We concur with this view and therefore would like to share our comparative studies on how Singapore does it and what is proposed in the URA. This summary is in the table above. It is immediately clear that Malaysia’s proposed URA is structurally different from that adopted in Singapore.
In Singapore, the government sets up the necessary legal framework and provides the checklist of procedural requirements to undertake the sale and redevelopment of existing old developments. It does not intervene in the subsequent process. Redevelopment is initiated by homeowners, starting with the election of a collective sales committee, which then proceeds to engage the property agents, independent valuers and lawyers to draft the collective sales agreement, set the reserve price and, critically, conduct a mandatory public tender to select the developer.
For owners who object to the sale, there are predefined permissible grounds in the Land Titles (Strata) Act 1967 — primarily financial loss, if sales proceeds are insufficient to redeem mortgage and lack of good faith taking into account factors such as the sale price, distribution of sales proceeds and relationship between the purchaser and any unit owners — as well as precedents from actual cases (such as non-compliance with laws, technical irregularities and lack of transparency in the sales process). Mere inconvenience and sentimental attachment are not accepted as grounds for objection. The Strata Titles Boards (STB), which has no vested interest in the redevelopment, plays a crucial role in mediating disputes related to strata developments. For redevelopment proposals that are successful, the statistics also show that such projects typically generate hefty premiums over market prices for existing strata owners.
As we have said in our previous article, it is not our intention to pour cold water on the redevelopment proposal. In fact, it would be a pity if the proposed URA fails or is deferred due to a lack of transparency and clarity. We do believe that urban renewal is necessary and can create value for strata owners and society. And this is a huge overarching issue for Malaysia — the increasing lack of public trust in institutions is real and legitimate. It is creating scepticism, suspicion, distrust and pushback — even when the core of the policies is seen to be good for the country. The hard truth is that Malaysia has a very poor track record in protecting minority interests where big businesses and vested interests can be overly dominant. Indeed, wrongdoers are seldom prosecuted even when the transgression is clear. Even fewer ever face serious repercussions. Trust must be earned, through the consistent demonstration of a fair, accountable and honest track record.
