TWO-AND-A-HALF YEARS after news that a prime parcel within Bukit Bintang, Kuala Lumpur, had been acquired via tender for the Harrods Hotel project, the land has yet to be transferred and remains in the name of the Federal Lands Commissioner.
This has raised questions as to when the development will be completed and how the developer, Jerantas Sdn Bhd, will finance the project, which a property expert estimates would have a gross development value of RM5.5 billion. Jerantas is the vehicle through which Tan Sri Syed Mokhtar Albukhary, Tan Sri Desmond Lim Siew Choon and Qatar Holding LLC will jointly develop the luxury project.
Despite that, the site has been cleared and the perimeter boarded up, with the signage of the upcoming Harrods Hotel development.
When contacted by The Edge, individuals representing Syed Mokhtar and Lim did not respond on why there has been a delay in the land transfer.
A source familiar with the matter says there is nothing out of the ordinary even though the land transfer has yet to be completed.
However, a search with the Federal Territories Director of Lands and Mines Office reveals that a registrar’s caveat has been entered on the parcel where Restoran Seri Melayu used to be located.
“The land transfer is only an administrative [process],” the source says, dismissing the caveat as a reason for the delay.
On Jan 23, 2009, the Minister of Natural Resources and Environment had lodged a registrar’s caveat on several plots of land in Kuala Lumpur, including Lot 342, which is the site of the Harrods project. A search on the caveat shows that it was lodged to prevent any “improper transfer of the land”.
Jerantas had submitted its proposal to Dewan Bandaraya Kuala Lumpur (DBKL) on April 22, 2014, and obtained a development order on June 5. Since the land is not in Jerantas’ name, a lawyer says he is curious as to how the company managed to submit the proposal to DBKL. Nevertheless, he adds that this may be possible if the company has a power of attorney from the landowner to act on the land.
Assuming Jerantas had been granted the power of attorney, it is still not known how the project will be financed. Another lawyer tells The Edge that with the caveat in force, no financial institution is likely to finance the development as it will not be able to create a charge to secure the loan. A search with the Companies Commission of Malaysia shows that as at Dec 31, 2013, there was no charge reflected in Jerantas’ accounts. Note that Jerantas has not placed a private caveat on the parcel.
Lot 342 is a parcel of freehold land measuring 150,609 sq ft. There is also a second adjacent parcel for the Harrods development, which is Lot 297. The site, which previously housed Chulan Square, measures 53,970 sq ft and has a 99-year lease that expires on Sept 22, 2081. The land has been in the name of Datuk Bandar Kuala Lumpur since 1982.
A title search indicates that Lot 297 can only be used for office or commercial building, and the land cannot be transferred or leased except with the Federal Territories Land Executive Committee’s permission.
Integral Accord Sdn Bhd, a company that was incorporated in 1993, has a 15-year lease on the plot, which expires on Feb 29, 2016. Its shareholders are Zuhri Adli Zaaba, Datin Norma Samsudin and Zaaba Che Mat. Zaaba and Norma hold 80% and 20% of the company’s stake respectively.
The Edge has learnt that the Harrods development has been given the project name “Harrods Square”. Based on Jerantas’ application to DBKL, the mixed-use development will comprise four blocks: a 27-storey hotel with 102 rooms and 60 serviced apartments; a 61-storey building with 508 serviced apartments and four floors of commercial and retail space; a 52-storey building with 516 serviced apartments and commercial and retail space; and a 31-storey office building with a food court and a daycare centre. This development will be connected to Pavilion KL from underground as well as an overhead pedestrian bridge.
Earlier reports had indicated that the Harrods project is due for completion in 2018.
News of the project first surfaced in late 2011. In July 2012, Qatar Holding LLC signed a memorandum of understanding with Jerantas to participate in the development. Jerantas is 66:34 held by Gagasan Simfoni Sdn Bhd and PS Trading Sdn Bhd. It was reported that Gagasan Simfoni, equally owned by Datuk Manan Md Said and Raja Sa’adi Raja Amrin, represents Lim and Qatar Holding, while PS Trading is an indirect subsidiary of Syed Mokhtar’s Tradewinds Corp Bhd.
During the signing ceremony, Lim’s representative had stated that a parcel measuring 2.21ha, sandwiched between Jalan Raja Chulan and Jalan Conlay, had been acquired for an estimated RM429.68 million or RM1,800 per sq ft. Based on recent land transactions in the city centre, the land could today be worth at least RM670 million.
Questions have been raised as to whether the landowner will participate in the project and if the payment for the parcel would be in the form of deferred payment.
Meanwhile, Restoran Seri Melayu has been dismantled and is expected to be relocated to another site, while the demolition of Chulan Square was completed about two months ago.
This article first appeared in The Edge Malaysia Weekly, on January 5 - 11, 2015.