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 Page

1.0 Introduction 1

1.1 Background

1.2 Problem Statement

1.3 Objectives

1.4 Research Questions

1.5 Scope

1.6 Significance of The Study

2.0 Literature 4

2.1 Land Reclamation

2.2 Method of Land Reclamation

2.3 Reclamation Process

3.0 Methodology 8

3.1 Methodology

3.2 Research Approach

4.0 The Projects 10

4.1 Pulau Pinang

4.2 Malacca

4.3 Analysis

5.0 Result and Recommendation 16

Appendix A – Location Plan

Appendix B & B1 – Detail calculation of cost

1

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?

2

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) What is the material used in reclamation?

iii) What are the costs?

iv) Is there a difference in costs according to location?

v) 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

3

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

didn’t 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.

4

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.

5

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.

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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.

7

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.

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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:-

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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.

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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

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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. Material Rate (RM) Volume/Quantity Used

1. Sand 34.00 765,197 m3

2. Earth 18.00 198,316 m3

3. Perforated Vertical Drain

(PVD)

1.60 1,516,000 m3

4. Sand Bag 62.00 106,694 m3

5. 200 mm concrete mattress

175.00 17,883 m2

6. 450mm thick rubble pitching

wall

160.00 2,849 m2

7. Geotextile 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. Material Rate (RM) Volume/Quantity

Used

1. Earth 6.45 129,712.79 m3

2. Rock Revetment 2,000.00 530 m run

12

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 Consultant’s 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) Site cleaning below water level b) Stone for filter material

c) Geotextile-Vertical drain d) Red earth

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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 Area Location

Commercial 31.9693

hectare

Taman Melaka Raya, now these

scheme offering most valuable

properties in Melaka. Reclamation

started in 1993 and completed in

1997.

Mix

development

21.35

hectare

Taman Kota Laksamana.

Reclamation started in 1993 and

completed in 1997.

Mix

development

9.3185

hectar

Pulau Berkembar Pulau Melaka.

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 didn’t 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.

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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) Earnest money : RM100,000 per application

b) Contribution to the state : RM5,000 per acre

c) Fisherman Fund : RM0.10 per square feet

d) Deposit to MBMB : 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.

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Analysis:

Penang:

No. Projects Area (ekar)

Year Reclamation Costs/pm3

1. The Light- IJM 32 2009 RM62.83

2. Marina Project 12 2007 RM120.17

3. Bandar Tanjung Pinang

240.63 2005 RM38.00

4. Bayan Bay Marina

15 2001 RM21.85

Melaka Project

No. Projects Area

(acre) Reclamation Costs/pm3

1 IGN Group Berhad 50 RM92.66 2 ABS Maju 38.6 RM57.62 3 Haruman Utama 180 RM68.64 4 Ultra Green Sdn Bhd (A) 997 RM59.48 5 Strategic Oscar Sdn. Bhd 180 RM71.39 6 Pembinaan Kota Laksamana Sdn. Bhd. 220 RM76.38 7 Ultra Green Sdn Bhd (B) 89 RM66.64 8 Olympia Land 106.855 RM123.33 9 KL Metro 100 RM64.25 10 Ultra Green Sdn Bhd (C) 523.000 RM86.23 11 Mahajaya Sdn Bhd 709 RM64.83

Refer to Appendix B for detailed calculation of costs.

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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.

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References:

i. Case files in JPPH George Town

ii. (www.wisegeek.com/what is land reclamation.htm, accessed 2/6/2009)

iii. 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. UPEN Melaka, State Economic Plan Unit.

vi. Developer of ‘The Light’ – IJM.

Appendix B

1. IJM

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

No. Material Current Market Price (RM)

(a)

Volume/Quantity Used

(b)

Total costs (RM)

(c)= (a)x(b)

1. Sand 34.00 765,197 m3 26,016,698

2. Earth 18.00 198,316 m3 3,569,688

3. Perforated Vertical Drain (PVD)

1.60 1,516,000 m3 2,425,600

4. Sand Bag 62.00 106,694 m3 6,615,028

5. 200 mm concrete mattress

175.00 17,883 m2 3,129,525

6. 450mm thick

rubble pitching wall

160.00 2,849 m2 455,840

7. Geotextile 8.50 7,530 m2 64,005

Jumlah 42,276,384

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) RM4,604,440.00

b) Shore Protection (Rock Reventment) RM1,060,000.00 RM5,664,440.00

PV for 2 year @ 8% 0.85734

RM4,856,350.99

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 Consultant’s 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: RM26,527,742.00

PV utk 2 tahun @ 8% 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

Per Acre P.S.F P.S.M P.M3

1 IGN Group Berhad 50.000 202,343.13 4.00 RM75,000,000 RM1,500,000 RM34.44 RM3.20 RM92.66

2 ABS Maju 38.600 156,208.90 5.00 RM45,000,000 RM1,165,803 RM26.76 RM2.49 RM57.62

3 Haruman Utama 180.000 728,435.28 5.00 RM250,000,000 RM1,388,889 RM31.88 RM2.96 RM68.64

4 Ultra Green Sdn Bhd (A) 997.000 4,034,722.08 5.00 RM1,200,000,000 RM1,203,611 RM27.63 RM2.57 RM59.48

5 Strategic Oscar Sdn. Bhd 180.000 728,435.28 5.00 RM260,000,000 RM1,444,444 RM33.16 RM3.08 RM71.39

6 Pembinaan Kota Laksamana Sdn. Bhd. 220.000 890,309.79 5.00 RM340,000,000 RM1,545,455 RM35.48 RM3.30 RM76.38

7 Ultra Green Sdn Bhd (B) 89.000 360,170.78 5.00 RM120,000,000 RM1,348,315 RM30.95 RM2.88 RM66.64

8 Olympia Land 106.855 432,427.51 3.00 RM122,000,000 RM1,141,734 RM26.21 RM2.44 RM94.04

9 KL Metro 100.000 404,686.27 5.00 RM130,000,000 RM1,300,000 RM29.84 RM2.77 RM64.25

10 Ultra Green Sdn Bhd (C) 523.000 2,116,509.18 4.00 RM730,000,000 RM1,395,793 RM32.04 RM2.98 RM86.23

11 Mahajaya Sdn Bhd 709.000 2,869,225.63 5.00 RM930,000,000 RM1,311,707 RM30.11 RM2.80 RM64.83

3,193.455 12,923,473.83 4.64 RM4,202,000,000 RM1,315,816 RM30.21 RM2.81 RM70.13

RECLAMATION PROJECT IN PENANG

1 IJM 32.00 129,499.61 5 RM42,276,384 RM1,321,137 RM30.33 RM2.82 RM65.29

2 Bayan Bay Marina Resort 15.02 60,783.88 3.66 RM5,664,440 RM377,126 RM8.66 RM0.80 RM25.46

3 Bandar Tanjung Pinang 240.63 973,796.56 7 RM328,000,000 RM1,363,089 RM31.29 RM2.91 RM48.12

4 Marina Project, Tanjong Bungah 12.00 48,562.35 4 RM26,527,742 RM2,210,645 RM50.75 RM4.71 RM136.57

299.65 1,212,642.40 4.915 RM402,468,566 RM1,343,129 RM30.83 RM2.86 RM67.53

ComponiesNo.

TOTAL

TOTAL

AnalyzeAcerage M.S Depth

Cost Reclaim

(estimation)