Written by Au Foong Yee
Monday, 30 November 2009 00:00
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The prized freehold tract in Kuala Lumpur City Centre (KLCC) which Dijaya Corp Bhd is acquiring for about RM123 million or RM2,200 psf had been on the market for about a year. It was said to have been tagged at between RM2,700 and RM3,000 psf at the height of the property market.
Those familiar with the land say the Korean-linked vendor Mercury Property Management Sdn Bhd became serious about cashing out around six months ago. It thus brought the price down to about RM2,500 psf, in tandem with prevailing market conditions.
“They could have got RM3,000 psf or even more for the land, but not now,” says Zerin Properties’ founder and chief executive Previndran Singhe, who is convinced that KLCC property prices will continue to rise.
At RM123 million, Mercury Property Management is still making a gross gain of about RM20 million — it had paid Chua Yong Man and Others (as trustees for the Estate of Chua Cheng Bok) a little under RM103 million for the land in July 2008.
The vacant parcel on the Jalan Ampang thoroughfare was the site of the Bok House. It is sandwiched between Bangunan Angkasa Raya and Wisma BSN and is within a short walking distance of the iconic Petronas Twin Towers and the very popular Suria KLCC shopping centre. Other neighbours include the likes of Menara TA, Menara Public Bank, Wisma Selangor Dredging, high-end hotels and condominiums.
In deciding on a price for the land, Mercury Property Management would have considered the value at which the 30-year-old Angkasa Raya building changed hands in May last year. The corner freehold 69,171 sq ft plot was acquired by another property developer, Sunrise Bhd, in May 2008 for RM179 million or RM2,588 psf. The transaction set a new benchmark for Kuala Lumpur property prices.
While the Bok House land is vacant, Bangunan Angkasa Raya is believed to be still occupied.
Sunrise said last month that the planning for its project was still in the preliminary stage. It has completed a market study on a suitable development for the site and is in the process of selecting the architect for the job from among five renowned international architectural firms.
According to Previndran, Dijaya is paying a fair price for the Bok House land but the tract is at a disadvantage compared to Sunrise’s corner plot, which is not only closer to Suria KLCC but also commands an unobstructed view of the Twin Towers.
He says there is a perceived premium of about 15% to 20% for a view of the Twin Towers. Studies his company conducted reveal that for both local and international property buyers, proximity and accessibility to the Twin Towers and Suria KLCC are important, with views of the Towers being a bonus.
Previndran also points out that Kuala Lumpur City Hall tends to consider a corner building a landmark and thus approves a higher plot ratio for it. Even at the standard KLCC plot ratio, the Sunrise project will block views of the Twin Towers from Dijaya’s building.
Dijaya’s managing director Datuk Tong Kien Oon says he is aware of this. The company, he adds, will be focusing on the proximity and accessibility of the land to Suria KLCC. Dijaya is planning to build a boutique hotel with serviced apartments on the land.
“We are already talking to architects; we hope to firm up details and get the project off the ground as soon as possible — hopefully, by the end of next year,” he says, adding that the land deal will only be completed in February. “We certainly don’t want to sit around and wait,” he notes.
Meanwhile, Dijaya has made a cash call, which is expected to rake in anything between RM80 million and RM120 million. The corporate exercise is also expected to be completed in 1Q2010.
While Sunrise is synonymous with luxurious condos in the exclusive Mont’Kiara address, Dijaya is well known in the Petaling Jaya area for its Tropical Golf & Country Resort, Tropicana Indah Resort, Tropicana City Business Park and Tropicana City Mall projects.
Like for Sunrise, entry into the KLCC property arena will give the Dijaya brand a strong boost. Many developers — those in the top tier and those that want to be in the top tier — are eyeing KLCC, says Previndran. “Having a landmark and successful KLCC development is a who’s who claim!” he adds.
On the timing of developing in the KLCC area, Previndran expects the market to pick up in 3Q2010 before going into a mini-boom in 2011. “Land prices will remain stable and inch up after the coming Chinese New Year. These will not be speculative rises but sustainable movements.”
In another development, the KLCC condo market can expect a future supply of about 3,500 units from about 14 projects that have been launched or are now under construction. At least four of these are expected to be ready in 1Q2010 and another two in 2Q2010.
Savills Rahim & Co International Real Estate Consultants (agency department) managing director Robert Ang is less bullish about the KLCC property market. He says while there has been a return of interest in development land, KLCC condo sales have not been doing well. The office segment in the KLCC area has also been performing poorly, he notes.
However, he agrees that the Bok House land is a good buy because there are few such tracts left on the market today.
This article appeared in Corporate page of The Edge Malaysia, Issue 783, Nov 30 – Dec 6, 2009.
