Newsbreak: Chinese developer buys prime tract in Jalan Raja Chulan

This article first appeared in The Edge Malaysia Weekly, on September 18, 2017 - September 24, 2017.

This 7.4-acre tract in Jalan Raja Chulan is said to have been sold for RM500 million

-A +A

SHENZHEN-based property developer China Vanke Co Ltd is believed to have won the tender for a 7.4-acre tract in Jalan Raja Chulan, just outside Kuala Lumpur’s Golden Triangle. This puts an end to attempts to divest the asset that was part of a long-running legal dispute.

It is learnt that China Vanke, which is listed both on the Shenzhen Stock Exchange and Hong Kong’s stock exchange, is paying RM500 million or RM1,600 psf for the land.

The tract was put up for sale in March last year by Deloitte Corporate Solutions Sdn Bhd, which was appointed the liquidator to City Centre Sdn Bhd — the owner of the land — following an order by the Kuala Lumpur High Court on Oct 26, 2015.

When contacted, a Deloitte officer handling the tender declined to comment, citing confidentiality.

It is understood that China Vanke, through a locally incorporated company — Malola Garden City Sdn Bhd — plans to build six towers with over 4,000 serviced apartments on the site, which is located near Menara Kuala Lumpur.

Filings with the Companies Commission of Malaysia show that Malola was incorporated on March 13 this year. Its nature of business is described as stock, share and bond broking. It is wholly owned by a foreign company called Jumbo City Ltd. However, the address of the foreign outfit is not stated. It is unclear if Malola has any Malaysian shareholder.

The directors of the company are Malaysian Tan Vin Shyan and three foreign nationals — Zhou Chaobin, Lang Cong and Haiwu Wang.

Tan is the executive director of BCB Bhd while Wang, whose address is Shenzhen City, is the vice- president and CEO of China Vanke’s Chengdu Region Headquarters.

As for the development plans for the tract, industry estimates put the gross development value (GDV) of the project at between RM1.5 billion and RM2.5 billion. This may vary, depending on several factors, including the target market, timing of the launch and plot ratio. An earlier approved plot ratio was seven. However, in recent years, many property development projects in KL have been granted plot ratios of above 10.

Documents sighted by The Edge show that Malola in July sought planning permission from Dewan Bandaraya Kuala Lumpur to develop the land. It received DBKL’s conditional approval last month.

It is worth noting that the tract is made up of 16 lots and is oddly shaped — it surrounds a parcel belonging to another owner.

The Edge understands that negotiations may have taken place between Malola and the said landowner, but a deal has yet to be concluded.

The price China Vanke is paying for the tract appears to be lower than recent deals executed for nearby parcels — at between RM2,000 and RM2,400 psf. A 1.65-acre parcel in Jalan Ceylon was sold for RM2,405 psf to Tan Sri Desmond Lim Siew Choon while the Telekom Malaysia Bhd-UEM Sunrise Bhd deal to jointly develop a site in Jalan Raja Chulan translates into RM2,037 psf.

Previously, there were two failed bids to sell the tract. In the first attempt, a deal was never reached. During the second tender in 2006, a sales and purchase agreement was signed to dispose of the land for RM164 million, but the court rejected the deal.

The tract became an integral part of a suit when the original owner, Cheah Theam Swee, was declared a bankrupt, and it was the only visible asset linked to him. The land is owned by City Centre, which ultimately belonged to Cheah and his brother, Cheah Theam Kheng. City Centre’s parent company has also gone into liquidation.

Theam Swee’s route to bankruptcy can be traced back to the 1980s when a New Zealand-based investment company called Equiticorp provided a loan to a consortium led by Theam Swee to purchase Jedi Corp.

Jedi Corp, which was renamed London Pacific, was a listed shell company owned by Equiticorp in New Zealand. In 1989, Equiticorp collapsed and proceedings to recover debts owed and settle with its debenture holders began. Theam Swee defaulted on his loans and his creditors went after him.

Meanwhile, even as attempts were made to recover monies owed, Theam Swee tried to sell the land on his own. A 2016 report by the statutory manager of Equiticorp’s debenture holders said Theam Swee and Theam Kheng attempted to sell the land to a Chinese concern.

A refundable deposit was paid by the purchaser to a solicitor’s trust account. “The scheme never eventuated, but the deposit was not refunded,” the report said. The bankrupt estate of Theam Swee owns 82% of City Centre while Theam Kheng holds the remaining 18%. The Edge understands that Theam Swee died last year.

It is alleged that Theam Kheng and two lawyers have dishonestly taken receipt of RM10 million. The 86-year-old Theam Kheng was charged late last year with abetting in a criminal breach of trust case. Proceedings against him began on June 7.