Thursday 28 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on December 2, 2019 - December 8, 2019

THE Chinese embassy is in the process of buying two pieces of land measuring a combined 2.33 acres in Jalan Ampang, Kuala Lumpur, and has lodged a caveat to register its interest in the site, documents show. Sources say it is buying the land from Hong Kong-based Nan Fung Group for an estimated RM200 million.

The Edge understands that the embassy is buying the land because it needs more office space. It did not respond to questions from The Edge.

A land title search at the Federal Territories Department of Lands and Mines office shows that the Embassy of The People’s Republic of China in Malaysia lodged a caveat in January on the parcels — Lots 146 and 147 — to protect its interest and prevent any further dealing in the land.

The lots are located next to the Chinese embassy and are currently registered to Yip Fung Sdn Bhd, a wholly-owned subsidiary of Nan Fung Textiles Ltd, which has been trying to dispose of the land as well as several other parcels since 2016. Nan Fung also owns 4.01 acres in Jalan Ampang next to the Thai embassy.

Sources say the Chinese embassy plans to buy the two lots, which measure 101,436 sq ft in total, for about RM2,000 psf or RM202 million.

Is this a fair price? The land is freehold and has a commercial title and permitted plot ratio of six.

In December 2012, the British High Commission sold its office building in nearby Jalan Ampang, about 650m from the Chinese embassy, for RM294.96 million to S P Setia Bhd. The 134,075 sq ft parcel cost RM2,200 psf.

While announcing its second-quarter results for its financial year ending Dec 31, 2019, in August, S P Setia said it had sold the land — which had a development order — for RM449.2 million or RM3,350 psf to Agile Property Development Sdn Bhd. Agile Property, which is part of China-based Agile Group Holdings Ltd, is developing a luxury condominium on the site called Agile Embassy Garden. The developer has a 30% bumiputera partner — Duta Hicon Sdn Bhd — whose shareholder is Ferdaus Mahmood.

In 2015, Putrajaya Ventures Sdn Bhd, a unit of Petroliam Nasional Bhd, bought the French embassy land in Jalan Ampang for RM894 million or RM2,600 psf. This parcel is also 650m from the Chinese embassy.

A valuer contacted by The Edge says data from the government’s Valuation and Property Services Department shows that S P Setia’s sale was recorded on Nov 11, 2018, while the Chinese embassy lodged a caveat on Lots 146 and 147 on Jan 3.

“In the light of the sale to Agile Property, the purchase price of the two lots appears to be a steal,” says VPC Alliance (M) Sdn Bhd managing director James Wong. He puts the price at RM2,500 psf to RM2,700 psf or RM253 million to RM273 million in total.

“Typically, when someone wants an adjacent piece of land, they pay a higher price for it. This is called marriage value,” he explains.

Wong says the S P Setia parcel probably fetched a higher price because it already has a development order and is closer to the major intersection of Jalan Ampang and Jalan Tun Razak. Moreover, only one of the two lots that the Chinese embassy is buying has a large frontage with Jalan Ampang.

Another property valuer says, “The price is fair as the frontage is narrow and the land is further away from the KL city centre compared with the other two parcels (former British High Commission and French embassy land).” The Jalan Ampang frontage is a mere 141 sq ft.

Meanwhile, Nan Fung seems to have made a handsome profit. The company is said to have bought the land in the mid to late-1980s when the price in the area was about RM50 psf. Nan Fung was set up in 1954 as a textile manufacturer and incorporated in 1989 as Nan Fung Group with businesses in property development, construction, hospitality management and financial investment.

The China embassy’s move to acquire land seems to be going against the trend for diplomatic offices to relocate from large landed properties to office blocks. The British High Commission was relocated to Menara Binjai after it sold its land, and the French embassy was moved to Integra Tower.

According to a source, it is possible that the Chinese embassy purchased the land to centralise its offices that are scattered around Kuala Lumpur. For example, the Chinese Visa Application Service Centre is located in Hampshire Place Office in Jalan Mayang Sari. The embassy also has an office at Plaza OSK while its Office of Military, Naval and Air Attache is in Jalan U Thant.

The source adds that once the embassy buys the land, it may want to develop it to accommodate the other offices.

 

 

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