Transit-Oriented Development (TOD): Is Paying a Premium Near a Train Station Worth It?

Transit-Oriented Development (TOD): Is Paying a Premium Near a Train Station Worth It?

I was recently at the wedding dinner of a good friend’s daughter. These days, wedding dinners are definitely no longer of my friends but of my friend’s next generation. At the dinner, I happened to be seated at a table full of distinguished people who somehow loves property investment too. Naturally, the conversation eventually touched on property. Haha!

The Dato’ seated on my left shared how he had taken up the role of chairperson of his own development’s management committee. He had also “forced” some of his neighbours to join him.

Why? Because he told them that if they wanted to ensure their development was properly maintained, they needed to be involved and do something about it.

Makes perfect sense to me. We cannot simply complain about poor maintenance while expecting someone else to solve every problem. If we want our property value and living environment to be protected, sometimes we need to contribute our time and effort too.

Meanwhile, the Dato’ on my right, who was once a senior management member of a prominent Malaysian property developer, asked for my thoughts on Transit-Oriented Development (TOD).

Here is what I shared. Do note that these are my personal views.

#1 – When does paying a premium for a TOD make sense?

There are many supporters of TOD projects, and some buyers are willing to pay a premium for homes located near train stations.

I have no problem with that. As long as the reason for paying that premium is valid, it can be a good purchase.

Here are four situations where I think buying a TOD makes sense:

First: You or your family members use the LRT, MRT, Monorail or BRT daily to commute to work. The convenience of having a station within walking distance can save considerable time and money. This convenience is multiplied by so many people.

Second: You can rent out the unit at a premium to tenants who need that same convenience. In this case, the rental demand must be real, not just something stated in the sales brochure.

Third: You manage to buy the unit without paying a premium, or perhaps even below comparable market prices. That would make the purchase more attractive from an investment perspective.

Fourth: The development offers more than just a train station nearby. Perhaps there is a proper shopping mall, supermarket or essential retail facilities integrated into the development. This adds another layer of convenience.

These are all valid reasons to consider a TOD.

However, I believe TOD developments in Malaysia still have plenty of room for improvement. Why? Because we are still lacking two important elements: the PUSH and PULL factors.

#2 – The PUSH factor: Make people want to leave their cars behind

What would encourage Malaysians to stop driving and use public transport instead?

Convenience is the obvious answer.

If driving to work takes 30 minutes but taking the train requires 20 minutes of driving to reach the station, followed by another train journey, why would someone change?

A proper TOD should make public transport the more attractive option.

This requires reliable train services, convenient interchange stations, good last-mile connectivity, safe pedestrian walkways and comfortable access regardless of the weather.

Remember, telling people that a station is only 500 metres away does not automatically mean it is convenient to walk there. Some examples of how to ensure it’s convenient and safe?

Is the route shaded? Is it visible so that it’s safer or is it unsafely invisible? Are there proper crossings? Le’s not try to run across a main road yeah. Can elderly residents and parents with young children use it comfortably?

These details matter.

If public transport is not convenient, people will continue driving. The premium paid for a TOD may then become much harder to justify.

#3 – The PULL factor: Give people more reasons to live, work and spend time there

Now, what would make people want to stay around a TOD? This is where placemaking and integrated development become important.

A successful TOD should offer more than residential towers beside a train station.

Imagine having a proper supermarket, restaurants, clinics, convenience stores, offices, recreational spaces and perhaps even schools within walking distance.

Residents can buy groceries, have meals, exercise and attend to everyday needs without constantly getting into their cars.

This creates a more vibrant environment.

There are also economic benefits. Businesses gain access to a larger pool of potential customers. Employees can commute more conveniently. Residents spend less on fuel, tolls, parking and car maintenance.

When people can live, work, shop and relax within a connected environment, the location becomes more attractive.

And when a location becomes genuinely attractive, it has a better chance of sustaining property demand over the long term.

#4 – TOD is about more than property prices

There are other benefits worth considering.

More people using public transport can help reduce traffic congestion, fuel consumption and vehicle emissions. Walkable environments encourage physical activity, while well-designed public spaces create opportunities for social interaction. I know, sometimes the weather is warmer than usual but then again, there are some of us who does not sweat as much as me. (Yes, I sweat a lot, so walking in warm weather is not comfortable for me)

There is also a land-use benefit. Instead of spreading homes, offices and commercial activities across increasingly distant locations, TOD encourages higher-density development around public transport infrastructure.

However, these benefits do not happen automatically. They depend on good planning, proper execution and long-term maintenance.

A development can call itself a TOD, but if residents still need to drive everywhere, perhaps something important is missing.

So, should you buy a TOD?

My answer is still the same. It depends on your reasons. If the question is for me, my personal answer is that a TOD is not applicable to me. I prefer a drive to the destination versus a walk from home to the station, then a walk from the station to the place I like to be. After my appointment, walk back to the station and then walk back from the station back to my home. Haha. Note, this is just me. Does not represent everyone.

A TOD should not just be about having a train station nearby. It should be about making public transport useful, everyday life convenient and the surrounding environment attractive. If this is really what you need, then it’s time to get a TOD unit.

The real value of a TOD is not how close your home is to the station. It is how much better your life becomes because the station is there.

Happy property hunting!