Monday February 4, 2008
Commercial values and rental in KL touch
UNDER the Kuala Lumpur
Structure Plan 2020, the city has five goals to achieve in order to assume its
place as a major global city. First on the list is to enhance the role of the
city as an international commercial and financial centre.
Other goals in the plan are to
create an efficient and equitable city structure, enhance the city's living
environment, create a distinctive identity and image for the city, and have
efficient and effective governance.
Judging from the amount of
property development activity going on in downtown Kuala Lumpur, especially in the construction
of luxury condominiums and serviced apartments in the vicinity of the Kuala
Lumpur City Centre (KLCC), at least one aspect of the plan is being
However, commercial property
development in the downtown area has lagged behind the feverish pace of
residential property development until the past year or so. This has led to a
rise in the values and rentals of commercial properties, both in the office and
Except for the KL Sentral, the
Mid Valley City and Bukit Damansara commercial precinct, KL City Hall has in
general discouraged the development of commercial properties, especially office
towers, since the 1997 Asian financial crisis due to the number of uncompleted
or untenanted properties then. City Hall had subsequently said it would only
approve commercial property development on certain stringent conditions.
In the decade since the
Petronas Twin Towers together with its 6-storey Suria shopping mall located in
the very heart of KLCC opened its doors, there have not been many purpose-built
commercial buildings in the area except for the 29-storey Menara ExxonMobil,
the 49-storey Menara Maxis and the five-star Mandarin Hotel Kuala Lumpur owned
by KLCC Property Holdings Bhd. Another new office building is the 36-storey
Menara Public Bank, located along the corner of Jalan Ampang and Jalan Yap Kwan
Seng, completed in 1994.
This has led to a situation in
which there is a lack of Grade A office space in the area, noted several
property consultants. This is now being remedied, as can be seen from
announcements made in the past two years on the development of commercial
properties, usually an office tower or two with a residential element in the
form of serviced suites or apartments on a retail podium.
According to Henry Butcher
Malaysia Sdn Bhd chief operating officer Tang Chee Meng, the past year was
marked by strong interest from institutional buyers for Grade A office
buildings, resulting in capital values of these buildings hitting benchmark
prices after hovering in the RM500 to RM600 per sq ft (psf) band over the past
He said office rentals had
moved up in tandem with values, with Grade A office rentals located in the
vicinity of KLCC ranging between RM5 and RM8 psf while occupancy rates in KL
have moved up to around 83%.
Among those developing
commercial properties in the neighbourhood of KLCC, KLCC Property comes easily
to mind. It is developing another 59-storey office tower cum shopping podium.
YNH Property Bhd, on the other hand, is developing Lot 163 Suites, a mixed
development project that includes a 14-storey office tower with a gross
development value (GDV) of RM322mil along Jalan Perak.
Another development that would
take place along the same stretch of road is the 34-storey office building by
TH Technologies Sdn Bhd, part of Lembaga Tabung Haji.
The RM150mil building is built
on the build-operate-transfer model in which the Islamic pilgrims' fund would
hand over the building to the Federal Territory Islamic Religious Council after
25 years. In that period, rental revenue would go to the fund, which in turn
would apportion part of it to the council.
Glomac Bhd is another company
that saw the need for more Grade A office space in the area. The company is the
senior partner in a joint venture with the diversified Al Batha Group of the United Arab Emirates for the development of the
40-storey Glomac Tower located on the corner of Jalan
Pinang and Jalan P. Ramlee.
The yet-to-be-built office
tower, which has a net lettable area of 243,830 sq ft, was purchased late last
year by Kuwait Finance House (M) Bhd for RM577mil or about RM1,120 psf.
Further down the road and
located in a corner of Jalan Tun Razak and Jalan Ampang is Goldis Tower,
which would be developed by Goldis Bhd, a company in which IGB Corp Bhd has a
27.28% equity stake. The development is actually two 30-storey towers
comprising corporate suites and a boutique hotel with a GDV between RM500mil
TTDI Development Sdn Bhd is
the most recent of developer to enter the property development scene in the
area with the announcement of the development plans of the 9.1-acre Platinum Park, an integrated development
comprising both commercial and residential elements.
Located along Jalan Stonor
near KL's oldest condominium, Desa Kuda Lari, the project will have three
office towers of 33-, 38 and 50-storeys, one 30-storey condominium block and
two 42-storey condominium blocks and a 30-storey serviced apartment tower with
a total GDV of RM3.5bil. The 50-storey office tower was sold to the Federal
Land Development Authority for RM640.7mil recently.
Office buildings are by no
means the only type of commercial property development in the KLCC vicinity.
The Star Online, 2008)