by Dr. Mahathir bin Mohamad on Tuesday, November 30, 2010 at 10:00am
1. In the 1980's and early 1990's there was a great construction boom in Tokyo. Land was sold at USD 3,000 per sq foot. Everyone was rushing to buy expensive land because the market for apartments and office space seem to be forever.
2. Then suddenly the market dried up. The boom became bust. Since then Japan has not been able to really recover.
3. It was the same with Hong Kong. The economy collapsed because of overbuilding.
4. In a way the sub-prime crisis which triggered the financial and economic collapse also had to do with the building industry. 5. I once thought that the tower crane should be included in the coat-of-arms of KL City Council because they were all over the city. KL grew at a rapid pace and the skyline changed almost every day. 6. KL is still growing. New high-rise apartments, condominiums and office buildings are mushrooming everywhere. It is really amazing. We really look like a newly developed country. 7. Can this growth go on forever? True, KL's population and that of Greater KL (including non-Wilayah areas) have been growing fast. At independence, the population was only 350,000. Today Klang Valley has a population of almost 6 million. Obviously the businesses and the workers at all levels need space to live and work. 8. But it is not impossible that the provision for these would not outstrip the rise in population and their spending power.
9. Shopping complexes are being developed sometimes next to each other. Surely it will cause the shoppers to be divided between them. There will not be enough to support all the complexes. Some will survive, some will die.
10. Already we have seen a few hyper-market chains going out of business. Will this not happen to a few of the shopping complexes? Will this not happen to the other major development projects?
11. And we are told of new giant projects. The Sungai Buloh KL City Centre, the new KL Financial District and the 100-storey Merdeka Tower Project.
12. Some people say that even the Petronas Twin Towers are empty. Well they are not fully occupied. This is because of a policy to allow only prestigious corporations and institutions to have the Twin Towers as their address. In any case, Petronas has enough requests for space to decide to add extra space for the shopping complex and a forty-storey tower.
13. I should really be advising Petronas to abandon its current project. But here I am talking about overbuilding in KL. Really I shouldn't. But I am really concerned over the possibility of the bubble bursting.
