MESYUARAT PEMBENTANGAN KERTAS PENYELIDIKAN JABATAN BIL.

3/2009 21 23 DISEMBER 2009 DEWAN NUSANTARA, MENARA SRI SAUJANA INSPEN

KERTAS PENYELIDIKAN

A STUDY ON LAND RECLAMATION COSTS

ZURAIDAR HUSIN SITI NORAZIAH AHMAD MOHD IBNI IZZAN ADNAN

2009
--------------------------------------------------------------Jabatan Penilaian Perkhidmatan Harta (JPPH) Kementerian Kewangan Malaysia

Content
1.0 1.1 1.2 1.3 1.4 1.5 1.6 Introduction Background Problem Statement Objectives Research Questions Scope Significance of The Study

Page
1

2.0 2.1 2.2 2.3

Literature Land Reclamation Method of Land Reclamation Reclamation Process

3.0 3.1 3.2

Methodology Methodology Research Approach

4.0 4.1 4.2 4.3

The Projects Pulau Pinang Malacca Analysis

10

5.0

Result and Recommendation

16

Appendix A

Location Plan

Appendix B & B1 Detail calculation of cost

Part 1

INTRODUCTION
1.0 BACKGROUND

The blooming development in recent years in Malaysia has created the need of more land especially land nears to the developed areas. As most of the developed areas are located to the coastline, one of the options is to create more land is to reclaim coastal areas which also includes land below seawater level.

As we all know, coastal areas are mostly land that belong to the state government, hence the companies need to make an application to the state for land alienation. In line of this, JPPH is being requested to

carry out valuation for this purpose.

1.2

PROBLEM STATEMENT

Most of the time, JPPH encounters problem determining the market value of the coastal land because there is no sales comparables and thus resort to sales of similar land development located further from the sea, the costs of land reclamation then is being deducted to arrive at the market value of such land. The land reclamation costs used for this purpose were sometimes estimated lower and sometimes higher because these costs are not documented or tabulated like we did on building costs for us to refer as a guide. What are the costs of land reclamations?

1.3

OBJECTIVES

The objectives of the study are as follows:

i)

To highlight offshore land reclamation methods, and

ii)

To show the costs of sea land reclamation in Penang and Malacca and its ratio to land value.

1.4

RESEARCH QUESTIONS

i)

The method of sea land reclamation usually involved in the development of housing, commercial and industrial and its process.

ii) iii) iv) v)

What is the material used in reclamation? What are the costs? Is there a difference in costs according to location? What are the values of land after reclamation?

1.5

SCOPE

This study is limited to projects located in Pulau Pinang and Melaka from 2000 2008. It will include all types of development on coastal land, high rise and low rise (residential, commercial and industrial). The projects under study is those of offshore reclamation. Other types of land reclamation, eg. for example ex mining is excluded. Studies

focus on methods, process, materials and costs of filling the area to be reclaimed.

1.6

SIGNIFICANCE OF THE STUDY

It will serve as a practical guide for valuers in JPPH to do valuation of coastal land when the need arises.

1.6

RESEARCH LIMITATIONS

The limitation of this research is solely depending on the availability of data costs from JPPH George Town case files and the mild respond from the developers. They were reluctant to impart with the costs due to their companies regulations.

The companies which involve in reclamation project in Melaka also didnt give good coorporation to provide the accurate cost of their projects. Most data provided by UPEN (State Economic Plan Unit) and consultant companies directly involve with the project.

Part 2

LITERATURES

2.1

LAND RECLAMATION

What are land reclamations?

The term land reclamation is used to described two different activities. In the first sense, land reclamation involved modifying wet land or waterways to convert them to useable land, usually for the purpose of development. Land reclamation can also be a process n

which damaged land is restored to its natural state. In both cases, the term is used to refer to some sort of process which is designed to fundamentally alter the characteristics of a piece of land to achieve a desired end goal (www.wisegeek.com/what is land reclamation.htm, accessed 2/6/2009)

Sea land reclamation is creating new land from the sea. It means the area of new land which reclaimed are land filled by using other material gain from the sea or mainland. Land reclamation is either of two distinct practices, one involves creating new land from sea, riverbeds, wetlands, etc. the other refers to restoring an area to a more natural state (such as after pollution or salination have made it unusable). In Malaysia, land reclamation is widely practiced in the state of Penang, Malacca and Johor.

Reclamation activities are carried out in the country for the purposes of development, i.e industrial, housing, recreational and expansion area to the wharfs. There are various techniques in sea reclamation area which has been accepted according to the condition of the area, size and cots involved (Zaliha Yahya, 1987)

2.2

METHODS OF LAND RECLAMATION

There are two major types of reclamation and each has advantages and disadvantages (resources.metapress.com, accessed 8/4/2009). The methods are:-

1.

In the drained reclamation, fill is placed on the reclamation site. The advantage is that existing soft marine material can be left in place, reducing the amount of fill required. The disadvantages is the longer time require for settlement and a greater uncertainty in the duration and rate of consolidation. This could increase the cost in follow up structures to

accommodate a larger settlement. Artificial drainage is required to reduce drainage paths and accelerate settlement.

2.

In the dredged reclamation, landfill by is by replacement, in which soft marine material is removed and replaced by imported fill. This means a larger volume of fill but the advantage of faster consolidation. This method are using a combination of dredging mud from the sea bed, borrowing marine sand, excavation of islands and construction of seawalls.

2.3

RECLAMATION PROCESS

The process of reclamation depends on the method adopted (IJM Information Booklet 2008). The basic process are:-

Step 1 temporary bunds were built along the reclamation boundaries as shore protection structure.

Step 2 Upon tugging to site, the sand was unloaded by excavator and transported out by dump trucks via temporary jetty. Bulldozers then spread and compacted the reclaim land to the desired levels.

Step 3 A layer of sand of approximately 1.2 meter thick was laid as drainage path prior to PVD installation and surcharge on top. This sand layer helps to avoid water pollution.

Step 4 Perforated vertical drains (PVD) were installed at 1.3 meter apart in both direction throughout the whole reclamation area. It act as drainage path to drain out pore water to sand blanket layer and accelerate the consolidation process.

Step 5 Surcharge simulates from future loading was applied on top of sand layer to compress the soft layer below, resulting effective dissipation of pore water. Keeping post-construction settlement to minimum.

The process mentioned above, is almost the same except for the step number two, where dredged reclamation method marine sand was extracted from the sea bed of approved source and loaded onto barges. Whereas the other method, material used are totally from mainland e.g river sand, laterite or rock loaded onto reclamation site.

Part 3 METHODOLOGY

This chapter will explain the methodology and approach adopted to achieve the research objectives.

3.1

METHODOLOGY

The methodologies are:1. Collection data by interviewing to the related agencies or companies doing reclamation work. 2. Literatures data will be collect by reading the printed journals, books, seminar papers, internet access and others. 3. The result will be shown in the form of table and figure.

3.2

RESEARCH APPROACH The approaches of this study are combination of quantitative and qualitative approach through content analysis. Content analysis will

analyze the content of the previous literature done by other authors and the printed report produced by related agencies who are doing the reclamation work.

Qualitative approach will be done through semi structured interview with the potential respondent e.g. consultant, developers and related government department. The questionnaire included the method, process, materials and cost of the offshore reclamation. To achieve the research questions, the action taken are:-

First Question what is the method used to reclaim the coastal area for development purpose? Interview with the consultant, contractor or developer and doing some search on past paper regarding the method of offshore reclamation.

Second Question what is the process in land reclamation work? Interview with the consultant, contractor or developer and doing some search on past paper regarding the process of offshore reclamation.

Third Question what are the material used in reclamation work? Interview with the consultant, contractor or developer and analyse the built of quantity of offshore reclamation works.

Fourth Question what are the costs of land reclamation? Interview with the consultant, contractor or developer and analyse the built of quantity of offshore reclamation works.

Fifth Question Is there a difference in costs according to location? Comparing the costs incurred by developer in different location.

Part 4

THE PROJECTS

This

chapter

will

discuss

the

selected

offshore

reclamation

project

development to achieve main objective this study. The selected projects development are in Melaka dan Pulau Pinang.

4.1

Pulau Pinang The data used are both historical and current data of land reclamation projects in Penang.

i)

Data on project under construction identified for this study, namely, IJM projects -The Light - will be collected from the developer. Unstructured interviewed is carried out to obtain costs and steps in land reclamation.

ii)

Historical data will be sourced from case files in JPPH George Town. Bayan Bay Marina Resort by Bayan Bay Development Sdn Bhd, Bandar Tanjung Pinang by Eastern and Oriental (E&O) and Marina Projects by Purerich Realty Sdn Bhd

10

4.1.1 The Light- developer: IJM. Located: Jelutung Expressway Area: 32.0 acre Depth: 5 meter Project started: Jan 2009 Method used: Dredged method Status: Completed Costs: RM42,276,384.00 Major construction material No. 1. 2. 3. Material Sand Earth Perforated Vertical Drain (PVD) Sand Bag 200 mm concrete mattress 450mm thick rubble pitching wall Geotextile Rate (RM) 34.00 18.00 1.60 Volume/Quantity Used 765,197 m3 198,316 m3 1,516,000 m3

4. 5. 6.

62.00 175.00 160.00

106,694 m3 17,883 m2 2,849 m2

7.

8.50

7,530 m2

4.1.2 Project Bayan Bay Marina Resort Site: Bayan Bay Marina Resort Area: 15.02 acre (60,783.88 meter persegi) Depth: 3. 66 meter Project started: 2001 Method used: Dredged Status: Completed Costs: RM5,664,440.00

No. 1. 2.

Material Earth Rock Revetment

Rate (RM) 6.45 2,000.00

Volume/Quantity Used 129,712.79 m3 530 m run

11

4.1.3 Projek Bandar Tanjung Pinang, Tanjung Tokong. Site: Bandar Tanjung Pinang, Tanjung Tokong Area: 240.63 acre (973,796 meter persegi) Depth: 7 meter Project started: 2003 Method used: Status: Completed Costs: RM328,000,000.00 Reclamation cost comprising scope of work : a) Reclamation works b) Temporary rock bunds c) Coastal protection in the form of rock revetment and 60m set back from waterline d) Soil improvement i.e. surcharge vertical drains e) Soil investigation f) Independent Consultants supervision g) Infrastructure for fishermen i.e. breakwater

4.1.4 Marina Project, Bandar Tanjung Bungah

Site: Section A Located: Tanjung Bungah Area: 12 acres Depth: 4 meter Project started: 2007 Status: Completed Costs: RM26,527,742.00

Major construction material a) b) c) d) Site cleaning below water level Stone for filter material Geotextile-Vertical drain Red earth

12

4.2

Melaka In Melaka, extension development area by using reclamation offshore started in year 1993. The previous reclamation project done in Melaka are:-

Type Commercial

Area 31.9693 hectare

Location Taman Melaka Raya, now these scheme offering most valuable

properties in Melaka. Reclamation started in 1993 and completed in 1997. Mix 21.35 Taman Kota Laksamana. Reclamation started in 1993 and completed in 1997. Mix 9.3185 Pulau Berkembar Pulau Melaka.

development hectare

development hectar

Reclamation started on 1993 and abandoned. Total proposed to

develop is 50 acre, only 9.3185 hectare reclaimed and developed

The reclaimation to the above project didnt get the data cost.

In

2004,

state

government

approved

another

offshore

development project (need to reclaim) area along coastal Jalan Tengkera to Pekan Tanjung Kling. This project is continuous development using reclamation method annexe to the Kota Laksamana until Pekan Tanjung Keling. Total area approved and reclaimed is 89 acre and another 500 acre are in progress work.

13

That approval include other offshore area to be develop are along coastal Jalan Ujong Pasir to Pulau Melaka, Town of Melaka.

After submission before approval from the State Government, applicant or developer should pay to the State Government. The cost are:-

a) b) c) d)

Earnest money

RM100,000 per application

Contribution to the state : RM5,000 per acre Fisherman Fund Deposit to MBMB : : RM0.10 per square feet RM300,000 per application

Please refer to Appendix A: location of land reclamation projects.

4.3

ANALYSIS This research is an analysis studies carried out to determine the cost of sea land reclamation. The volume/area of each construction material used and market prices of these items are obtained. The market prices are determined either by per cu meter or per square meter. The total costs are also derived by multiplying the price per cu meter/per square meter and the total material consumed. The all total costs are divided by the volume of land to be reclaimed, hence the cost of land reclamation per cu meter is derived.

14

Analysis: Penang: No. Projects 1. 2. 3. 4. The Light- IJM Marina Project Bandar Tanjung Pinang Bayan Bay Marina Area (ekar) 32 12 240.63 15 Year 2009 2007 2005 2001 Reclamation Costs/pm3 RM62.83 RM120.17 RM38.00 RM21.85

Melaka Project
No. 1 2 3 4 5 6 7 8 9 10 11 Projects IGN Group Berhad ABS Maju Haruman Utama Ultra Green Sdn Bhd (A) Strategic Oscar Sdn. Bhd Pembinaan Kota Laksamana Sdn. Bhd. Ultra Green Sdn Bhd (B) Olympia Land KL Metro Ultra Green Sdn Bhd (C) Mahajaya Sdn Bhd Area Reclamation (acre) Costs/pm3 50 RM92.66 38.6 RM57.62 180 RM68.64 997 RM59.48 180 RM71.39 220 RM76.38 89 RM66.64 106.855 RM123.33 100 RM64.25 523.000 RM86.23 709 RM64.83

Refer to Appendix B for detailed calculation of costs.

15

Part 5 RESULTS AND RECOMMENDATIONS

We have to distinguish the fact that size of land reclamation under study is different hence the results corroborate the fact. The costs of land reclamation in this study are found to be RM35.00 pm3 to RM120.00 pm3 depending on land size. Further research is recommended to be done to look into the big differences in land reclamation costs.

In the earlier stage of the study, we hope to find and discuss the relationship of reclamation costs to land value but due to time constraints and heavy workload at branches offices, we are not able to do it now. This study will be continued later to include the comparison of land value between non reclaimed land and reclaimed land.

16

References: i. ii. Case files in JPPH George Town (www.wisegeek.com/what is land reclamation.htm, accessed 2/6/2009) HRC Consultancy Sdn. Bhd., Town Planner consultant of reclamation project in Melaka. iv. Juruukur Perunding Sdn. Bhd., Land Surveyor Consultant of reclamation project in Melaka. v. vi. UPEN Melaka, State Economic Plan Unit. Developer of The Light IJM.

iii.

17

Appendix B
1. No. IJM Material Current Market Price (RM) (a) 34.00 18.00 1.60 Volume/Quantity Used (b) 765,197 m3 198,316 m3 1,516,000 m3 Total costs (RM) (c)= (a)x(b) 26,016,698 3,569,688 2,425,600

1. 2. 3.

4. 5. 6.

7.

Sand Earth Perforated Vertical Drain (PVD) Sand Bag 200 mm concrete mattress 450mm thick rubble pitching wall Geotextile Jumlah

62.00 175.00 160.00

106,694 m3 17,883 m2 2,849 m2

6,615,028 3,129,525 455,840

8.50

7,530 m2

64,005 42,276,384

Analysis m3:

RM42,276,384 Land area x depth RM42,276,384 647,511 meter3 RM65.30 per meter3

PV utk 0.5 thn @ 8%

0.9623

______________________
RM 62.83 p meter 3

2.

Project Bayan Bay Marina Resort

Site: Bayan Bay Marina Resort Area: 15.02 acre (60,783.88 meter persegi) Depth: 3. 66 meter Project started: Method used: Status: Completed

Reclamation cost : a) Reclamation (Earth Filling) b) Shore Protection (Rock Reventment) RM4,604,440.00 RM1,060,000.00 RM5,664,440.00 0.85734 RM4,856,350.99

PV for 2 year @ 8%

Analysis :

RM4,856,350.99 Land size x depth 4,856,350.99 60,783.88 m2 x 3.657 meter RM4,856,350.99 222,286.65 meter cube RM21.85 per meter3

3. Projek Bandar Tanjung Pinang, Tanjung Tokong. Site: Bandar Tanjung Pinang, Tanjung Tokong Area: 240.63 acre (973,796 meter persegi) Depth: 7 meter Project started: 2005 Method used: Status: Completed Reclamation cost comprising scope of work : a) Reclamation works b) Temporary rock bunds c) Coastal protection in the form of rock revetment and 60m set back from waterline d) Soil improvement i.e. surcharge vertical drains e) Soil investigation f) Independent Consultants supervision g) Infrastructure for fishermen i.e. breakwater RM328,000,000.00 PV for 3 year @ 8% 0.79383 RM260,376,240.00

Analysis :

RM260,376,240.00 Land size x depth RM260,376,240.00 973,796 meter x 7 meter RM260,376,240.00 6,816,572 meter cube RM38.20 per cube

4. Marina Project, Bandar Tanjung Bungah Site: Section A Located: Tanjung Bungah Area: 47,314 sq. meter Depth: 4 meter Project started: 2007 Status: Completed Costs: PV utk 2 tahun @ 8% RM26,527,742.00 0.8573 ________________ RM22,742,233.00

Analysis :

RM22,742,233.00 Land size x depth RM22,742,233.00 47,314 sq. meter x 4 meter RM22,742,240.00 189,256 meter 3 RM120.17 per M3

APPENDIX B1

RECLAMATION PROJECT IN MELAKA No. 1 2 3 4 5 6 7 8 9 10 11 Componies IGN Group Berhad ABS Maju Haruman Utama Ultra Green Sdn Bhd (A) Strategic Oscar Sdn. Bhd Pembinaan Kota Laksamana Sdn. Bhd. Ultra Green Sdn Bhd (B) Olympia Land KL Metro Ultra Green Sdn Bhd (C) Mahajaya Sdn Bhd TOTAL RECLAMATION PROJECT IN PENANG IJM Bayan Bay Marina Resort Bandar Tanjung Pinang Marina Project, Tanjong Bungah TOTAL Acerage 50.000 38.600 180.000 997.000 180.000 220.000 89.000 106.855 100.000 523.000 709.000 3,193.455 M.S 202,343.13 156,208.90 728,435.28 4,034,722.08 728,435.28 890,309.79 360,170.78 432,427.51 404,686.27 2,116,509.18 2,869,225.63 12,923,473.83 Depth 4.00 5.00 5.00 5.00 5.00 5.00 5.00 3.00 5.00 4.00 5.00 4.64 Analyze Cost Reclaim Per Acre P.S.F P.S.M P.M3 (estimation) RM75,000,000 RM1,500,000 RM34.44 RM3.20 RM92.66 RM45,000,000 RM1,165,803 RM26.76 RM2.49 RM57.62 RM250,000,000 RM1,388,889 RM31.88 RM2.96 RM68.64 RM1,200,000,000 RM1,203,611 RM27.63 RM2.57 RM59.48 RM260,000,000 RM1,444,444 RM33.16 RM3.08 RM71.39 RM340,000,000 RM1,545,455 RM35.48 RM3.30 RM76.38 RM120,000,000 RM1,348,315 RM30.95 RM2.88 RM66.64 RM122,000,000 RM1,141,734 RM26.21 RM2.44 RM94.04 RM130,000,000 RM1,300,000 RM29.84 RM2.77 RM64.25 RM730,000,000 RM1,395,793 RM32.04 RM2.98 RM86.23 RM930,000,000 RM1,311,707 RM30.11 RM2.80 RM64.83 RM4,202,000,000 RM1,315,816 RM30.21 RM2.81 RM70.13

1 2 3 4

32.00 15.02 240.63 12.00 299.65

129,499.61 60,783.88 973,796.56 48,562.35 1,212,642.40

5 3.66 7 4 4.915

RM42,276,384 RM5,664,440 RM328,000,000 RM26,527,742 RM402,468,566

RM1,321,137 RM377,126 RM1,363,089 RM2,210,645 RM1,343,129

RM30.33 RM8.66 RM31.29 RM50.75 RM30.83

RM2.82 RM65.29 RM0.80 RM25.46 RM2.91 RM48.12 RM4.71 RM136.57 RM2.86 RM67.53