Financing Urban Redevelopment in Kuala Lumpur, Malaysia: Prospects and Challenges

Urban regeneration has always been seen as an expansive and pervasive measure-s to policy making decisions. Despite the challenges in this period of economic uncertainty and financial constraint, urban regeneration is viewed as a key driver of economic, physical and social growth. However sustainable economic growth demands considerable investment to finance the development and associated infrastructure. The traditional practice to finance the development is by way of public investment. This places a huge burden on governments in terms of raising sufficient investment. One possible alternative financing tool is value capture. Large public investment in infrastructure can substantially increase the value of land in close proximity to the development. Capturing the value of this benefit through land use policy and alternative financing instruments is increasingly important to urban regeneration projects. This study explores an alternative financing mechanism designed to capture the uplift in land value due to development activity. This paper examines how the concept of “value capture” in terms of its prospect and challenges can be applicable to stakeholders in urban regeneration decision making in Kuala Lumpur city centre. Here the particular interest is to explore the arguments for value capture as a tool for funding and how this does relates to land management and land markets in urban regeneration context. A case study in Kuala Lumpur demonstrates the potential for application and effectiveness of a land value capture model as an alternative financing vehicle in promoting urban regeneration. Initially a literature review is conducted on the subject matter as well as in depth interviews with the property players and discusses various aspects of its applicability in the context of Malaysia. The outcome of this paper comprises recommendations for more viable strategies and policies that land value capture offers to finance urban regeneration and make a significance contribution to research which is currently on going.