Lembaga Tabung Angkatan Tentera (LTAT) will no longer have a role in the redevelopment of the old airport at Sungai Besi. Instead, it will be the lead developer in the redevelopment of the 245-acre Batu Cantonment army base in Jalan Ipoh in Kuala Lumpur, sources say.
“Its partner will be the state-owned 1Malaysia Development Bhd (1MDB) while LTAT’s development work would be carried out by the Boustead group,” according to sources.
It is understood the participation of LTAT at Batu Cantonment follows its loss of a 30% stake in the development of the old airport. Its share will be taken over by an as yet unknown party.
Under the redevelopment of the Sungai Besi tract, 1MDB and LTAT were each supposed to have a 30% stake in the project with the remaining 40% held by the Qatar Investment Authority (QIA).
The Sungai Besi airport, which served as the country’s first international airport from 1952 to 1965, was being eyed by many parties as it is probably the last major piece of land located close to the city centre. It has the potential for a multi-billion-ringgit redevelopment.
“There is some unhappiness that LTAT was removed from the Sungai Besi project,” the source says. At press time, the LTAT could not be reached for comment.
1MDB will lead the development of most government land, particularly in the Klang Valley, with a view to ensuring returns to the government are maximised. The company, set up with RM5 billion raised from the capital markets, will be the master planner and have the overall responsibility for the strategic development of almost all government land.
It will partner foreign sovereign wealth funds such as the QIA in drawing up the master plan and putting up the initial infrastructure for the property development.
According to another source, Kuala Lumpur City Hall is in the process of drafting the redevelopment plan for the Batu Cantonment site, which may see a mixed real estate project comprising residential and commercial elements with a plot ratio of four. Plot ratio compares the total floor area of buildings against the size of the land designated for the development.
The source says City Hall is not expected to participate in the project. But it will be responsible for issuing the development order and offer advice on landscaping and construction of amenities. According to the source, should residential become the primary element of the makeover, the site will accommodate residential and commercial real estate on a 70:30 basis, and vice versa if the developers decide to make commercial property the main theme.
“The redevelopment could be undertaken on a public-private partnership basis,” the source says. It is, however, uncertain for now which developers will undertake the project and what the shareholding structure will be like.
According to another industry source, the 245-acre plot could be worth about RM266.75 million, or RM25 psf.
“This is just the land cost without infrastructure. Its gross development value will depend on what is to be built on the vast track of land but it could go into billions,” the source says, adding that the value of the Batu Cantonment site is comparable to land prices for townships within Kuala Lumpur’s Sentul enclave undertaken by the YTL group.
Valuations for the Batu Cantonment land take into consideration the potential development which will take place on the site, says the source, adding that the Batu Cantonment area should not be directly compared with prime sites within the Kuala Lumpur City Centre.
According to proposals under City Hall’s Kuala Lumpur Structure Plan 2020, the Batu Cantonment enclave can be turned into a comprehensive development area (CDA) where an automobile business park could be built. This will involve car showrooms and vehicle servicing entities besides vehicle parts and accessory suppliers.
The balance of the CDA may include medium-density and medium-cost residential and commercial developments associated with the new district centre, according to the structure plan.
It was reported in 2002 that the Perak government had secured the consent of the Defence Ministry for the relocation of the Batu Cantonment army base in Jalan Ipoh, Kuala Lumpur, to Batu Gajah in Perak.
1MDB was established as part of Prime Minister Datuk Seri Najib Razak’s efforts to boost foreign direct investmenty. To set it up, 1MDB borrowed RM5 billion on the debt market via bonds guaranteed by the government. With its seed capital, 1MDB is looking to invest in the energy, real estate, tourism and agriculture sectors via joint ventures with foreign sovereign wealth funds.
It already has a joint venture with PetroSaudi International in the energy sector. Its venture into the redevelopment of the 162ha Sungai Besi airport will be its first in real estate.
This article appeared in Corporate page of The Edge Malaysia, Issue 812, June 28-July 4, 2010