DutaLand’s Golden Triangle hotel project may finally take off

This article first appeared in The Edge Malaysia Weekly, on June 17, 2019 - June 23, 2019.

The construction of the hotel had reached the 29th floor when it came to a halt. Photo by Kenny Yap/The Edge

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A fresh application submitted to Dewan Bandaraya Kuala Lumpur in April has revived hopes that a long-stalled project by DutaLand Bhd at the junction of Jalan Ampang and Jalan Sultan Ismail may finally be taking off after several failed attempts to resurrect it.

Initially named The Grand Duta Hyatt Hotel, it had been left partially completed over the past two decades despite its premier location in the city centre opposite the Renaissance Hotel Kuala Lumpur and diagonally across The Ritz-Carlton Residences Kuala Lumpur.

But its revival had been anticipated since 2017 when DutaLand disposed of its Sabah plantations to Boustead Plantations Bhd for RM750 million, providing it with much needed cash for the project.

DutaLand did not respond to questions sent by The Edge.

“They are interested in reviving the project and we are encouraging them to do so,” Federal Territories Minister Khalid Abdul Samad tells The Edge when asked about the status of the project, which was supposed to include hotel residences, serviced apartments, offices and retail space.

Khalid emphasises that as a matter of policy, DBKL would want all abandoned projects to be revived if possible.

The DutaLand project could be the third significant abandoned project in the city that is seeing some form of progress.

In May, The Edge, quoting Khalid, reported that work on the long-abandoned Plaza Rakyat in Jalan Pudu, which was halted when the Asian financial crisis of 1997/98 struck, is expected to begin soon. In the same month, The Edge reported that the Quill Group of Companies had commenced construction of Quill City Residences, which was deferred in 2007.

Duta Grand Hotels Sdn Bhd, a 78.39% subsidiary of Dutaland, is the owner and developer of Duta Grand. The remaining 21.61% of Dutaland is owned by Duta Credit Sdn Bhd.

DutaLand is controlled by Tan Sri Yap Yong Seong, better known as Duta Yap. He controls 55.24% of DutaLand and owns 90% of Duta Credit, with the remaining 10% held by Puan Sri Leong Li Nar.

The directors of Duta Grand Hotels include Yap, Yap Wee Keat, Yap Wee Chun and Yap Wee Sean. Based on the latest available financials submitted to the Companies Commission of Malaysia, Duta Grand Hotels’ total liabilities as at June 30, 2018 (FY2018), amounted to RM112.04 million, of which RM2.48 million are current. The company also has retained losses of RM89.17 million.

“The planning work of the project (Duta Grand) to enhance the value of the development is in progress. Approval from the relevant authorities has been received, and as a result of this, an additonal 10 storeys have been added to the building. Management is also looking at various ways to recommence the project, with minimised risk, such as joint venture or disposal of certain components of the project,” DutaLand’s 2018 annual report states.

Documents sighted by The Edge show that Duta Grand Hotels made a fresh application to Dewan Bandaraya Kuala Lumpur in April to get the project going. Prior to that, Duta Grand Hotels had applied for approvals in 2016, but the project saw no progress. Based on the latest submission to DBKL, the building will be 64 storeys high, with a 325-room luxury hotel taking up 13 floors, 29 floors of serviced apartments and 15 floors of office space. The revised structure is taller than the original plan for a 52-storey building.

It is unclear how much DutaLand needs to put in to complete the building. An abandoned project expert says if the developer does not change the design, it may only need to check on the structural integrity. “If there is a change in design, they may need to demolish [the existing structure],” he says, adding it may have to look into piling as well. Construction of the existing building is believed to have halted at the 29th floor.

A valuer contacted by The Edge estimated the value of the land in the area at around RM2,800 psf, which works out to RM343.84 million for the 122,000 sq ft freehold parcel. DutaLand’s annual report puts the net book value of the land, purchased in 1996, at RM335.11 million.

The development of what was supposed to be The Grand Duta Hyatt — which many refer to as Duta Grand Hyatt — was halted in July 1998 in the wake of the 1997/98 Asian financial crisis.

The history of the project goes back more than two decades to 1994, when hotel operator The Hyatt Group awarded a contract to build the Grand Hyatt Duta to Kuala Lumpur Landmark Sdn Bhd. Kuala Lumpur Landmark was a subsidiary of Olympia Industries Bhd.

Mycom — the holding company of Olympia that was later renamed DutaLand — subsequently teamed up with Kuala Lumpur Landmark to develop the 52-storey building that was to house its headquarters and the hotel.

In the wake of the 1997/98 economic meltdown, Mycom and Olympia found themselves with debts of some RM1 billion and had to be restructured.

It is noteworthy that DutaLand plans to use RM430 million of the RM750 million raised from the sale of its plantation assets to fund its existing businesses. The group’s total borrowings as at March 31, 2019, amounted to RM789,000 (compared to RM3 billion as at June 2018) while realised and unrealised retained earnings totalled RM822.94 million. In the first nine months ended March 31, 2019, DutaLand posted a net profit of RM5.49 million on the back of RM16.68 million in revenue.
 

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