Lee Rubber puts Jalan Raja Chulan land up for sale


  • The parcel (shaded red) is next to Suasana Suites Bukit Ceylon, the high-rise on the left
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This article first appeared in The Edge Malaysia Weekly, on October 10 - 16, 2016.

 

LEE Rubber Co (Pte) Ltd, a Singapore-based rubber company that has a long established presence in Malaysia, has put out a request for bids for a 1.81-acre parcel in Jalan Raja Chulan, Kuala Lumpur, which it owns. It is the third piece of land in the prime area to be put up for sale in the past seven months.

The parcel, which faces both Jalan Raja Chulan and Jalan Ceylon, comprises four contiguous plots measuring a total of 78,798 sq ft and could fetch as much as RM250 million, according to industry estimates.

Three of the four plots, owned and developed by Lee Rubber’s wholly-owned subsidiary Petaling Budi Sdn Bhd, are freehold and form the larger portion of the land or 74,540 sq ft.

The fourth plot, measuring 4,258 sq ft, is held under a leasehold title that will expire in 2060. Currently, there is a dilapidated building with a garage and badminton court there.

Real estate agents Knight Frank Malaysia and CBRE-WTW have been appointed joint exclusive agents for the sale via tender.

When contacted, Sarkunan Subramaniam, managing director of Knight Frank, tells The Edge that the invitation for bids opened last Wednesday. The deadline for submission is Nov 8.

Sarkunan says he is unable to provide any expected price for the parcel since the owners have not placed a reserve price. However, industry estimates put the price range at RM2,700 to RM3,200 per sq ft, based on the two recent transactions and a recently obtained development order (DO).

In March, liquidators Deloitte Corporate Solutions Sdn Bhd placed a 7.4-acre or 322,672 sq ft parcel in Jalan Raja Chulan — located next to the Bukit Nanas Forest Reserve and water reservoir — up for sale via tender. The freehold piece of land has a plot ratio of seven.

It was reported that the parcel, suitable for a mixed-use commercial development, was able to fetch between RM2,000 and RM3,000 psf, which translated into a total price tag of RM645 million to RM968 million. The tender closed on May 23. An industry player points out that this parcel surrounds another parcel that has a different owner.

In May, Telekom Malaysia Bhd (TM) and UEM Sunrise Bhd teamed up to jointly develop TM’s two parcels in Jalan Raja Chulan that are opposite Menara Olympia and the Telekom Museum. Under the deal, UEM will pay a guaranteed land cost of RM150 million, which translates into RM2,037 psf for the 1.69 acres.

With regard to the TM-UEM deal, Sarkunan says after taking into account AmInvestment Bank Research’s estimated gross development value (GDV) of RM1.1 billion, the total consideration would amount to RM2,787 psf.

However, the total consideration cannot be realised by TM immediately but over a span of at least three years, he adds.

Back to Lee Rubber’s parcel, it has obtained a DO for two blocks of serviced apartments, with a total of 525 units. The approved plot ratio is 10, which, based on a back-of-the-envelope calculation, places the GDV at RM1.1 billion if the buyer choses to build luxury units. The development is in the vicinity of Pavilion Ceylon Hill.

“I believe this location is going through an urban renewal as the area surrounding Kuala Lumpur Tower undergoes redevelopment. This will be the next sought-after locale as it is not right smack in the hustle and bustle of the Golden Triangle but is in a secluded and prestigious area in front of the Bukit Nanas Forest Reserve, offering lush greenery for the serviced apartments,” says Sarkunan.

CBRE-WTW director Lim Chai Yin tells The Edge that “this land is located right in the middle of town where prime parcels of this size are hard to come by”. She says at this size, it will also increase the number of parties that will be able to consider the site, as prices tend to be higher in the city centre.

It is unclear when Petaling Budi purchased the parcel or why it is divesting it. A search on the Companies Commission of Malaysia’s website reveals that the company was set up in September 2006. Its directors are Lee Seng [email protected] Siong Chuan and Ng Wai Hung.

Should this deal go through, it would be the second recent sale by Lee Rubber. In November last year, City & Country wrote that the company placed its 85-year-old Lee Rubber Building, at the corner of Jalan Tun H S Lee, up for sale. This pre-war building has since been sold.

At four storeys high, the building was famous for being the tallest building in Kuala Lumpur during the British era. Later, another floor was added. The property has a land area of 10,637 sq ft, total built-up of 46,607 sq ft and net lettable area of 38,126 sq ft.

Lee Rubber was founded by late rubber tycoon and philanthropist Tan Sri Lee Kong Chian, who was once dubbed the rubber and pineapple king. Lee and a friend set up a rubber smokehouse in Muar, Johor, in 1927 called Lee Smoke House. In 1928, the company was renamed Lee Rubber. Lee was also behind the creation of Oversea-Chinese Banking Corp in 1932 and established the Lee Foundation in 1952.