Friday 29 Mar 2024
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THE French and German embassies seem to have struck sweet deals on their properties in the central business district of Jalan Ampang, Kuala Lumpur.

It is learnt that the two parcels of land have fetched higher-than-expected prices, which real estate agents see as a sign of keen interest in prime land despite the current soft property market.  

Sources tell The Edge that the vendors will seal their deals with the buyers “very soon”. Collectively, these transactions are estimated at close to RM1 billion.

A source says the French embassy’s deal will be done at above RM2,000 psf, or almost RM700 million.

The French embassy last year announced plans to sell an eight-acre parcel in Jalan Ampang. Sitting on this freehold land, located behind The Intermark and Double Tree by Hilton in Jalan Tun Razak, are the embassy, the ambassador’s residence and two bungalows.

It was reported that the French embassy was expecting to sell this property at RM1,800 psf, taking its cue from the sale of the British High Commission’s land in Jalan Ampang in December 2012. S P Setia Bhd had paid RM294.96 million for the 3.07-acre tract, which works out to RM2,200 psf.

Three months ago, the German embassy put up two parcels of land for sale, namely the official residence of its ambassador located in Jalan Kia Peng, which is a stone’s throw from the Petronas Twin Towers, and the property in Jalan Langgak Golf in the Jalan U-Thant area, which used to be the Goethe-Institut.

The Jalan Kia Peng lot is a freehold parcel measuring 81,288 sq ft. It had a reserve price of RM2,300 psf. It is learnt that an offer as high as RM2,800 psf had been made for the tract. If so, this property could fetch as much as RM228 million.

In 2013, at least two parcels of land in the Jalan Kia Peng area were sold. City View Ventures Sdn Bhd bought a 63,089-sq ft leasehold tract from Tropi-

cana Kia Peng Sdn Bhd for RM2,099 psf. Then, Kuala Lumpur Cosmopo-

litan Sdn Bhd purchased a 39,828-sq ft of freehold parcel in Changkat Kia Peng from Hatayu Corp Sdn Bhd for RM2,799.88 psf.

As for the German embassy’s 16,695-sq ft freehold parcel in Jalan Langgak Golf, the guide price was RM1,500 psf. In comparison, the Federal Lands Commissioner of Malaysia in 2013 sold a 13.7-acre site opposite The Royal Selangor Golf Club for RM334.79 million, or RM561 psf, to Lembaga Tabung Angkatan Tentera.

The real estate agencies handling the French and German embassies’ deals did not comment when contacted for confirmation.

With news that the deals may have closed at higher-than-expected prices, industry players say it is testimony to Kuala Lumpur’s attractiveness to local and foreign investors.

“The market is still active. The wait-and-see stance is only in some aspects. Developers need to make money and, hence, are landbanking. For example, Mah Sing Group Bhd has been accumulating land,” Zerin Properties CEO Preveindran Singhe tells The Edge.

“This is a good time to acquire land, especially when the market is perceived to be slow. There is liquidity in the market and property developers have the cash.” 

Valuation and real estate firm LaurelCap Sdn Bhd’s director Stanley Toh says foreign investors still have their eye on Malaysia, especially now, as they want to take advantage of the weaker ringgit. Citing Singapore and China-based investors and funds, Toh says,“There is a lot of bargain hunting by these foreigners.”

He says land in the KLCC area is of value and investors are willing to pay good money for prime plots. However, he says, these investors tend to use the prices of the transactions by KSK Group Bhd and Singapore-listed Oxley Holdings Ltd for two parcels of land in the central business district as a benchmark when deciding if a purchase is a good deal.

“[So,] If the per sq ft price is below RM3,300, it is considered good value,” he adds.

property-trasaction_30_1058In December 2013, KSK Group paid RM568 million for a 172,149-sq ft tract in Jalan Conlay, near the Bukit Bintang area. The deal worked out to RM3,299 psf. A month earlier, Oxley paid RM446.7 million for a 135,356-sq ft parcel in Jalan Ampang, which translates into RM3,300 psf. This transaction was completed only two months ago.

Meanwhile, it is likely that the new owners of the parcel in Jalan Kia Peng will build high-end or luxury residences there, similar to many other developments in the vicinity and the Jalan Stonor area.

For the tract in Jalan Langgak Golf, projects approved by the Kuala Lumpur City Hall in the area tend to be low-rise luxury serviced apartments. For example, YTL Corp’s unit, Budaya Bersatu Sdn Bhd, is developing an 11-storey building with just 18 serviced apartments.

D&P-Ejenawa Sdn Bhd, a subsidiary of Wing Tai Malaysia Bhd, which in 2011 purchased a parcel from the Canadian government, is also planning to build low-rise serviced apartments.

This article first appeared in The Edge Malaysia Weekly, on March 16 - 22, 2015.

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