The reliance on planned infrastructure projects by property buyers and investors has been hot news in Malaysia this week.
This scenario underlines how property buyers and investors, and developers, wherever they are in the world, need to truly understand the future intentions of current and any new governments.
In this case, land had already been acquired by property developers in both countries, and property buyers and investors had signed purchase agreements at potentially well-located developments on both side of the border.
It is unclear whether any compensation will be due as a result of the subsequent cancellation by Malaysia.
On Monday, the newly-elected Malaysian government’s opted to cancel the planned High-Speed Rail (HSR) link between Kuala Lumpur and Singapore which was first mooted in 2013.
It aimed to reduce the travel time between the two Southeast Asian capitals to just 90 minutes.
Many property buyers and investors had purchased properties on the strength of the HSR, which had been in planning for many years.
Johor Real Estate and Housing Developers Association Branch Chairman, Datuk Steve Chong Yoon On, told Malaysian media the news will be hard on property developers who have invested in land near proposed stations.
He added there will be an impact for some people who bought properties that were supposed to be close to stations.
“The HSR project is now scrapped, but who knows – when our economy is much healthier in the future, the HSR project might be reconsidered,” he added.
Chong said interest in properties near planned station sites may cool, but he did not expect prices to drop drastically.
New Malaysian Prime Minister, Tun Dr Mahathir Mohamad, revealed on Monday that Malaysia is pulling out of the HSR deal with Singapore.
He had labelled it: … “an unnecessary project and will not earn Malaysia a single cent”.