PROPCAFE™ Diary: Capping of Plot Ratio. Does it matter? – Part 1

Recently PROPCAFE read with interest that DBKL wishes to cap the plot ratio of new developments in KL.

Currently, there are development projects in the capital city that have been given plot ratio of more than what is permitted under KLCP2020.

Developers or investors in the past had been willing to pay premium price for tracts in the city centre expecting that the high plot ratio would enable them to make up for it.

Hence, a lower plot ratio will not be good news as less units are allowed to build on the same plot of land which will in turn affect the profitability of the development projects.

Under the current circumstance, developers will either have to scale down their projects or to re-submit their plans to seek approval for higher plot ratio. –  theedgemarkets

For the full article, readers can click the link DBKL caps plot ratio

It had baffled PROPCAFE the basis of plot ratio given to developers for past few years. Where certain new developments has significant higher plot ratio versus the existing development. 

For a start we need to understand what is a plot ratio. A plot ratio is a built up area of a development approved over an area of piece of land. Typically plot ratio used on commercial zone land which covers Serviced Apartment, Offices and SOHOs. For example if a plot ratio of 4 approved on a 1 acre of land, it means 174K sqft is allowed to be built.

Typically local council will allow higher plot ratio to be built on City Centre on the basis of better infrastructure and connectivity, primary purpose for office which require lesser common area and obviously more expensive land. However for past decade it has became common even for residential to be built on commercial due to higher demand and flexibility to build more units (and area) on commercial land. In fact many of the residential title land are converted to commercial land.

However PROPCAFE observed that plot ratio approved by DBKL for commercial office and serviced apartment has increased significantly for past few years. In general a plot ratio of 4 is general rule of thumb.

For example Rica Sentul that launched two years was approved with Plot Ratio of 4 which is a “standard” commercial land’s plot ratio. However development like M Vertica in Cheras by Mahsing was approved with plot ratio of 10 with 3600 units on 11.25 acres of land.

Despite the mind boggling ratio and units, developer is only required to build single dedicated flyover ingress from Jalan Cheras to M Vertical. To put as perspective, Sky Suites @ KLCC by Monoland is approved with plot ratio of 10 and TRX Exchange is approved with plot ratio of 14. Do not get us wrong. We were merely pointing out the inconsistencies of the plot ratio award.

Why a plot ratio matter? Well for serviced component, it will determine your life quality as resident. There are more units packed on same piece of land. there will be more residents sharing the common area, roads  etc. How crowded is the swimming pool and gym?

Are the lift sufficient especially peak morning and evening? Can the infrastructure support drastic increase of population? How about privacy and exclusivity? How about the carparks? How about the wear and tear of common area?

As investors, you will have more competitors either for subsale and tenant. the digestion period will be longer where vacant units may take longer time to be absorbed by market as tenant and buyers have more choices.

Developers and local council need to strive a balance plot ratio which will local infrastructure can accommodate and provide healthy lifestyle to residents. To be fair, a low plot ratio is also not a good thing as residents will need to fork out high maintenance fee to manage and maintain the common area. 

The next time you check out a new development, make sure you also ask about the plot ratio and compare it around. 

PROPCAFE will share more with the next article of 10 things that you need to know about the impact of plot ratio to your property! Stay tuned!!!

Happy hunting! 


2 Replies to “PROPCAFE™ Diary: Capping of Plot Ratio. Does it matter? – Part 1”

  1. I would like to read an article on Arte Cheras if there is such a write-up.

    1. Thanks for the suggestion. Sometimes the review needs the click from both parties i.e. PROPCAFE and Developer. Detail review needs developer to disclose more information as well and not many developers willing to share it as sometimes we can be quite critical. Will take note on this project and hopefully we have resources to cover it soon.

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