JOHORE’S AIRPORT CITY IN THE MAKING
by Lim Lay Ying
Property Times, New Straits Times
05th June 2004

Ever since SATS (Senai Airport Terminal Services Sdn Bhd) was given the go-ahead to take over Johore’s Senai Airport in November 2002, speculation was rife as to whether the team behind the project would be as successful as it had been with the PTP (Port of Tanjung Pelepas) project.

The company’s vision of transforming Senai Airport into a major air cargo hub which was conceived sometime in the mid-1990s, moved a step closer to reality with this final hurdle cleared with MAHB (Malaysia Airports Holding Bhd). For southern Johore, this marks an opportunity for a placing on the world map of integrated logistics hubs.

So far, KLIA (Kuala Lumpur International Airport) in Sepang, Selangor, was the first in the country to have made the move. The airport is designed to provide the aviation foundation for the Multimedia Super Corridor – a high-tech, government, commercial, education, and residential zone that stretches 15 kilometres wide and 50 kilometres long.

In the world today, the new Hong Kong International Airport on the 1,255 hectares (approximately 3,138 acres) man-made Lantau Island is ranked as the busiest cargo airport – a position it has held since 1996. Its 2.49million tonnes of cargo handled in 2002 helped to keep off Japan’s Tokyo which had handled 1.94million tonnes then.

Besides Hong Kong and Tokyo, another three of Asia’s airports also garnered placings amongst the world’s top ten successful cargo airports. Seoul’s Incheon in South Korea claimed the fourth position with a volume of 1.67million tonnes, while Singapore’s Changi with 1.63million tonnes and Taipei in Taiwan which did 1.36million tones were at number four and six positions respectively.

Acknowledging that it will ultimately come face to face with other world class cargo airports such as Anchorage, Frankfurt, Amsterdam Schiphol, and London’s Neathrow as well besides the formidable Asian ones, SATS’ immediate focus however is on capturing some of Singapore’s Changi Airport’s business.

Aiming for World-Class Standards

Following the payment of RM60million for Senai Airport last November, SATS fast-tracked the construction of the airport’s cargo facilities. By July this year, the complex which houses a 34,000 square feet airfreight facility capable of handling 100,000 tonnes, will be fully operational with the whole range of airfreight services offered. Complementing this facility will be another 150,000 square feet warehouse space with an annual capacity of 300,000 tonnes, a refrigerated cargo centre, a perishable cargo centre, a dangerous goods centre, and mail handling services.

The ultimate objective is to develop Senai into a world-class integrated logistics hub served by a network of sea, air, road, and rail transportation. The airport will anchor an expansive urban agglomeration of commercial, industrial, and residential zones, earmarked to be developed on the four-thousand acre land parcel surrounding it currently. Plans include a free zone growth area for logistics and distribution activities (which Singapore is currently offering), industry clusters of multi-national companies, and an aviation-related industrial zone to support airfreight activities.

A new Custom, Immigration, and Quarantine (CIQ) facility for cargo movement to and from Singapore will be built to replace the existing structure at Tanjung Puteri. This will be supported by an integrated multi-modal network and dedicated highways linking Senai with PTP, Johore Port, and Singapore. What will eventually emerge will be an aerotropolis where high-tech manufacturing, distribution, and logistics industries cluster.

Property Values to Escalate

These developments will equip Senai Airport with the ability to further drive new forms of urban development and in doing so, possibly even enhancing adjacent transportation-accessible property values at rates faster than those at other metropolitan locations. This phenomenon has already been demonstrated at other world-class air cargo hubs such as Amsterdam’s Schiphol, Chicago’s O’Hare, Hong Kong’s Lantau Island, South Korea’s Incheon, and Singapore’s Changi.

Rents of office space in buildings located in the immediate area around Schiphol Airport command a 45 per cent premium over rates in the Amsterdam city centre, and over 60 per cent higher than offices in other Amsterdam suburban areas. Currently, Schiphol is home to 10 to 12 per cent of the region’s office space supply.

Radiating from Schiphol along high-speed highways are strings and clusters of business parks, logistics park, high-tech industrial parks, distribution centres, information and telecommunication complexes, and merchandise clothing marts. Observers are expecting land prices in the Schiphol area to sky rocket in the next five to ten years.

Driving Urban Development

Chicago’s O’Hare International Airport which held the title of the “world’s busiest airport” for nearly 40 years, triggered concentrations of economic activity over almost 5 kilometres (3 miles) of geographical zone around it. At the peak in 1990, there were 1,821 hectares (4,500 acres) of manufacturing, almost 2.8million square metres (30million square feet) of offices and retail, and 10,000 hotel rooms.

Hong Kong’s new international airport at Lantau Island is creating business and commercial clusters directly linked to the airport. Approximately 92 hectares (230 acres) of commercial land is being developed adjacent to the main passenger terminal. Named Hong Kong Sky City, the development comprises office and retail, a business park, and a large hotel, leisure, and entertainment complex. There will also be a US$500million (RM1.9billion) international exhibition centre for trade shows.

South Korea’s Incheon which opened in 2001, is flanked by a large technology park for global high-tech industries, a university research centre, and a new town which provides a residential base for those working in the airport. Known as Songdo Media Valley – Korea’s version of Silican Valley, the project spans about 356 hectares (890 acres) of land adjacent to the airport.

Senai Airport’s primary competitor however, will be Singapore’s Changi International Airport with its wide, uncongested aerolane linked to downtown Singapore. It will soon be complemented by an aerotrain going directly from the city centre to the air terminals. An air logistics park adjacent to the airport has been designed to further improve Singapore’s rapid fulfillment functions and allow third-party logistics providers (3PLs) to offer distant customers highly customized products at minimum response time. Virtually, every major 3PL in the world is active in and around Changi.

Opportunities nevertheless, abound for Senai and one cannot ignore the widening and deepening impact it will have on urban growth and form in the coming decades. The critical issue will be whether the growth will be smart and sustainable and whether it will offer the maximum potential benefits to people and businesses.