by Alia Salleh
Introduction
Discussions over how redevelopment is undertaken in Malaysia have previously been limited to stakeholders who are immediately affected by it. As urban redevelopment cases are deemed to solely involve contestations over private property, they often garner limited solidarity and attention compared to other national issues like living cost or major corruption cases.
However, the proposed Urban Renewal Act (URA) has shifted the conversation and contestation over urban redevelopment into a national discourse. Within this discourse, one of the key concerns is the potential gentrification and displacement of minority residents due to poorly implemented redevelopment. To this end, I seek to explore the arguments within gentrification studies to position URA alongside its legal predecessors to then argue that the use of these legal tools reflect an ever expanding real estate redevelopment frontier, a process that continues to find new areas of accumulation.
Redevelopment theory beyond the Anglo-American experience
The proposed URA distinguishes between three different types of urban renewal: redevelopment, regeneration and revitalisation. Of these, redevelopment involves the most significant physical change to the strata, often involving demolition and rebuilding. It is precisely this scale of physical change that makes redevelopment the most contested aspect of urban renewal, because it does not only alter the built environment but also disrupts the lives and housing security of residents.
The most immediate concern for redevelopment is displacement, a process that is not necessarily direct, nor immediate. Drawing on the fallacy of measuring displacement in New York, Peter Marcuse (1985) argues that displacement should not only be understood through direct ‘last-resident’ displacement involving residents forced to move out (either due to eviction or not being able to afford rent hike) at a particular moment in time. In the context of the URA, displacement may occur indirectly through ‘exclusionary displacement’ where a unit is voluntarily vacated to make way for redevelopment which renders it out of reach for the next (similar) household. The proposed one-for-one housing replacement guarantees touted by previous redevelopments rests on upgrading where a unit originally valued below RM100,000 for example would be replaced with one valued at least four or five times the original value. However, as the asset value increases, so do maintenance fees, assessment rates, and the broader cost of staying for the same household as well as households of similar income profile. This narrowing of housing options for existing communities is how gentrification operates in practice.
To understand why this pattern recurs, it is useful to evoke Neil Smith’s (1996) rent gap theory which posits that gentrification happens when the ground rent is monetised to match its “highest and best use”. Capital often targets dilapidated housing complexes as these types of real estate have experienced a decline in value, thus upgrading provides the highest difference. His thesis is informed by the post-war US experience where ‘white flight’ into the suburbs led to disinvestments in the inner city. Post-colonial cities like Kuala Lumpur developed similar urban forms but through different land use dynamics. Yet, it may be useful to reflect on his thesis on Klang Valley’s urban sprawl and hollowed out urban centres. Does the return of capital to Malaysia’s dilapidated urban sites similarly monetises this gap and causes gentrification?
To ask this question, it is important to note that Smith’s thesis assumes the existence of a free market in land and housing. His thesis has since been expanded by others to account for land and property that was previously outside or at the edges of the real estate market. Central to this is Matthias Bernt (2022) who argues that rent gap can only be realised when the “commodification gap” closes, and closing this gap requires extra-market factors which differ by context, almost often involving state regulation and legal interventions. One of the commodification gaps he identified, using the case of Russia, is referred to as the ‘redevelopment gap,’ the difference between the rent capitalised under an existing building and the rent that could potentially be extracted after demolition and rebuilding. Closing this gap demands “the lifting or bypassing of preservationist or ownership regulations.”
Each time capital exhausts one frontier, it requires new legal and political instruments to open the next frontier.
Another expansion of Smith’s gentrification thesis is from geographer Tom Gillespie (2020) who argues that urban redevelopment in postcolonial cities should be understood not simply as gentrification but as the production of a “real estate frontier”. Each time capital exhausts one frontier, it requires new legal and political instruments to open the next frontier. Studying the case of Accra – the capital of Ghana – he posits that urban redevelopment there produces a real estate frontier through the transformation of state land into real estate. Guided by the strands of Bernt and Gillespie’s respective works, this article will explore how legal instruments have enabled the closing of redevelopment gaps to expand the real estate frontier in Malaysia.
Real estate frontier in Malaysia
Beginning in British colonial times, land was turned into private property through the introduction of the Torrens system, which prioritised land record to prove claims over land. This system overrides existing local land law which assigned ownership based on ‘working the land’. The former adat law – in principle – tied land ownership to productive use and allowed inheritance under the same principle. Torrens law transforms this into record-based ownership, enabling large tracts of land to be enclosed into private ownership without necessarily working the land. This structural change rendered all land homogenised, fragmented, and hierarchised, key processes for commodification, which allowed the plantation economy to thrive.
The Torrens system became the foundation for land laws in Malaysia, which was consolidated into the National Land Code (NLC) of 1965. Under the NLC, all land that is not alienated forms state land. However, the implementation of this law does not necessarily change how people conduct their everyday lives. Many took a while to alter their relationship (and worldview) to land, while some just chose to ignore the new framework. In the case of Malaysia’s rapid urbanisation, newcomers to Klang Valley continue to open land regardless of formal title, forming what officials see as squatter settlements and other irregular settlements (Bunnell and Nah, 2004). These dwellings have long been demonised as invasions and illegal occupations of state land.
The redevelopment of squatter land in Klang Valley happened in various cycles between the 1970s and 2000s, involving government-led clearing of settlements and resettlement of occupants in high-rise public housings or Program Perumahan Rakyat (PPR) (Prasad, 2017). In most cases, the cleared land was redeveloped for highways, private housing, and commercial uses. To enable this process, two legal tools were used. Firstly, the state relied principally on the Land Acquisition Act (LAA), which empowers compulsory acquisition of private land for public purposes, later expanded to any purposes “which in the opinion of the State Authority is beneficial to the economic development of Malaysia or any part thereof or to the public generally or any class of the public” (Land Acquisition Act 1960, c.3). In addition, Prasad (2017) notes the use of the Essential (Clearance of Squatters) Regulation (ECSR), an emergency regulation, for clearances of settlements in the early 2000s. His case of Kampung Berembang, Kuala Lumpur highlights the use of ECSR alongside other emergency provisions to weaken protests by targeting movement leaders.
What we have seen in the interim is the use of the LAA when commercial negotiations between developers and existing owners fall through, especially in the case of Kampung Sungai Baru. The problem is that the LAA is easily controversial and contested. Its use makes visible the fact that the state is acting on behalf of private interests, which undermines its own legitimacy.
There are still cases of squatter redevelopments, but this ‘frontier’ is largely exhausted. What we see in the last ten years is increasing interest in redeveloping ageing buildings. For the public sector, a prime example is the KL Urban Renewal programme, where Public Housing (PA) complexes across Kuala Lumpur are gradually redeveloped and residents who own their units were offered to move to the newly completed apartments close to the original site, such as the case of PA Sri Labuan. For privately owned complexes, the Kampung Sungai Baru flat and terrace house redevelopment illustrates the challenges of large-scale acquisition of fragmented private ownership. In both these cases, the properties are private properties that are tradeable in the property market. However, for large-scale acquisition, no existing legal tool was designed to ease this process smoothly. What we have seen in the interim is the use of the LAA when commercial negotiations between developers and existing owners fall through, especially in the case of Kampung Sungai Baru. The problem is that the LAA is easily controversial and contested. Its use makes visible the fact that the state is acting on behalf of private interests, which undermines its own legitimacy.
Gillespie identifies a similar tension in Accra, where the state’s compulsory acquisition of land for private developers provoked civil society challenges on the grounds that public powers were being deployed for private gain. In Malaysia, court challenges and public criticism of LAA use in urban redevelopment have repeatedly forced the state onto the defensive. In a sense, the URA may provide a legal solution to this problem. Rather than the state acquiring land under public interest provisions on behalf of developers, the URA institutionalises the relationship between state and appointed developer from the outset. It legalises this link by allowing the state to demarcate an area for urban redevelopment and bring in an “approved developer” to undertake the commercial development. The Kuala Lumpur Structure Plan 2040, gazetted in 2023, already identified 139 potential redevelopment sites in Kuala Lumpur alone. This design makes URA a significant tool in advancing the real estate frontier by resolving the legal and political friction that was slowing it down.
It is worth qualifying that these two examples – squatter settlements and strata development – are already commodified spaces, but with challenges to develop. For squatter settlements, despite owners having titles, previous cases have demonstrated that squatters are able to make legal claims based on their Temporary Occupation Licence (TOL) status and their identity as pioneers (pembuka tanah or peneroka bandar) (Bunnel and Nah, 2004). For ageing buildings, the existing ownership structures are fragmented and involve dissenting minorities which render it an ‘underperforming’ commodified space. Each site poses unique hurdles for acquisitions. By making land legible and investable, and rendering the occupiers illegal, these legal tools remove the obstacles that prevent capital from moving in.
What this mean for our urban future
By establishing redevelopment as a quasi-public process with the state as initiator, the developer as appointed agent, and the consent threshold lowered by law, the URA makes resistance structurally harder. When the redevelopment authority, the appointed developer, and the legal framework are all aligned in the same direction, where do residents appeal to?
This is not to say that all redevelopment is predatory, or that ageing buildings do not pose genuine challenges for residents and the city alike. Similarly, not all redevelopment causes gentrification if residents are not pushed out from economic and social changes. The question is whether the legal infrastructure being built reflects those complexities. The history surveyed here offers a cautionary pattern: legal tools introduced for ostensibly rational planning purposes have consistently been deployed to close the ‘redevelopment gap’. Each legal frontier surveyed here has concentrated the power to shape the city in the hands of state planners and appointed developers, and progressively reducing the avenues through which ordinary residents can include their voice.
The frontier concept also presupposes contestation: as Smith argues (1996: 231), “there are two sides to every frontier. Otherwise, it would not be a frontier”. Contestation over redevelopment has arguably been case by case, compared to other civil society demands. There have been attempts to stigmatise residents opposing redevelopment as either NIMBYs (if they are propertied class) or rejecting development (if they are poor). Such discourse may not be productive to the larger issues of real estate capital expansion against the everyday survival strategies of city dwellers. What is clear is that these cases, whether they make it to the national headlines or not, are each a brick that forms the wall against a normalisation of redevelopment models that dismiss residents’ rights. URA debates have been enriched by these protests as real case studies. The question for Malaysia now is whether the URA becomes a tool that rectifies that history, or whether it becomes the next chapter in a longer story of extending the real estate frontier. To answer that question depends on how civil society and affected communities engage with the lessons of previous redevelopment models.
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Bernt, M. (2022). The commodification gap: Gentrification and public policy in London, Berlin and St Petersburg. Wiley.
Bunnell, Tim, and Nah, Alice M. (2004). “Counter-Global Cases for Place: Contesting Displacement in Globalising Kuala Lumpur Metropolitan Area.” Urban Studies 41, no. 12: 2447–67. https://doi.org/10.1080/00420980412331297627.
Gillespie, T. (2020). The Real Estate Frontier. International Journal of Urban and Regional Research, 44(4), 599–616. https://doi.org/10.1111/1468-2427.12900
Land Acquisition Act 1960, c.3
Marcuse, P. (1985). Gentrification, Abandonment, and Displacement: Connections, Causes, and Policy Responses in New York City. Journal of Urban and Contemporary Law, 28, 195–240.
Prasad, V. (2017). Rule by exception: Development, displacement and dissent in greater Kuala Lumpur, Malaysia”, Master in City Planning thesis, Massachusetts Institute of Technology, June 2017.
Smith, N. (1996). The new urban frontier: Gentrification and the revanchist city. Routledge.