KUALA LUMPUR: 1Malaysia Development Bhd (1MDB), which is wholly-owned by the Federal government, is seeking investors to jointly develop a large portion of the 70-acre (28.3ha) Tun Razak Exchange (TRX) project in Jalan Tun Razak, Kuala Lumpur.

Its wholly-owned unit, 1MDB Real Estate Sdn Bhd (1MDB RE), said in a statement yesterday that it had invited qualified investors to submit proposals for stage one of the TRX. This includes four office towers, up to five residential towers, up to two five-star hotels and a retail mall.

1MDB RE said it looks forward to both joint venture (JV) partnership opportunities and outright plot sales, with the former being its priority.

“For the majority of the TRX development, 1MDB RE plans to continue holding equity interest through joint ventures. The land sale will be considered on a case-by-case basis and will be subject to the master plan,” it said.

1MDB RE has appointed real estate advisers CBRE and CH Williams Talhar & Wong to scout for JV partners and plot sales respectively. In August, the Export-Import Bank of China (Exim Bank of China) and 1MDB inked an agreement to jointly develop TRX’s landmark tower.

To appease the concern of a glut in office space, 1MDB RE yesterday reiterated that TRX has a development period of up to 20 years, and will be built in “demand-driven phases”. The initial phase of construction is slated for completion in 2017.

The project, expected to be the next financial district, has an estimated total gross development value (GDV) of RM26 billion and is likely to draw 250 international financial services companies and offer 40,000 knowledge and skilled jobs.

To attract investors, the government had previously said it would provide certain benefits to companies based in the TRX. They include income tax exemption for 10 years, stamp duty exemption, industrial building allowance and accelerated capital allowance for TRX marquee-status companies.

Such incentives have drawn negative comments from rival developers, claiming that the government is giving unfair advantage to TRX.

According to bankers, the commencement of the TRX project is expected to raise fresh capital and generate additional cash flow to help 1MDB meet its debt obligations of some RM38 billion.

While the bulk of 1MDB’s debts is secured via a slew of power assets, acquired from tycoon T Ananda Krishnan and the Genting group, the bone of contention remains its first RM5 billion bond, which was issued in 2009 and guaranteed by the government.

Opposition lawmakers have been questioning the first bond involving some oil and gas ventures overseas, claiming there is not much update on the investments.

It was reported recently that 1MDB had considered selling RM1.5 billion sukuk to fund the relocation of an air force base in Sungai Besi in Kuala Lumpur. The company has secured the rights from the government to redevelop the Sungai Besi site into a multi-billion real estate project, under a condition that it will pay for a new military base in Negeri Sembilan.

This article first appeared in The Edge Financial Daily, on December 20, 2013.