LITTLE-KNOWN property investor-cum-manager Kwong Hing Group, which owns several commercial buildings in Kuala Lumpur, is looking at growing its property investment portfolio, particularly in the hospitality sector, to boost its recurring income.

The expansion is expected to be driven either via the acquisition of existing properties or building new ones.

Known for Wisma Hamzah Kwong Hing, a Grade A office building in Lebuh Ampang, Kwong Hing Group owns 300 acres of development land in Kuala Lumpur, Pahang, Selangor and Johor. Parcels to be developed over the next five years have a potential gross development value (GDV) of RM2.5 billion.   

Kwong Hing executive director Lim Kwong Choong tells The Edge that the group, which already owns and operates two hotels in Malaysia and one in China, plans to acquire more hotels.

“We are in talks with hotel owners to buy. We have many offers on our table,” Lim says, adding that the company prefers to purchase hospitality assets that have a minimum three-star rating.

Apart from asset acquisition, the group is planning to build a third building to rent out near Jalan Tun Razak. “We own a parcel in the area and we are looking at possibly acquiring an adjacent plot to build serviced suites,” Lim says.

About 400 small offices/home offices will be housed in the 20-storey building and will likely be offered on a sale and leaseback basis. “The estimated GDV is around RM500 million,” Lim says.

This project is expected to get off the ground in two years.

The 56-year-old group ventured into the hospitality industry in 2010, following the purchase of a 38-storey building known as Menara Pan Global from PanGlobal Bhd in 2010 for RM160 million. The building, located in Jalan Punchak, off Jalan P Ramlee, houses offices and the Pacific Regency Hotel Suites.

“We want to grow the Pacific brand name for our hotels. We are looking at organic growth. We now have a proven and established brand and management team,” Lim points out.

Pacific Express in Jalan Kasturi, near the Central Market in Kuala Lumpur, is the group’s second hotel venture. Its hotel in China is called Pacific Shenyang.

Lim, who describes the performance of Pacific Regency as “every investor’s envy”, says the hotel constantly enjoys an occupancy rate of over 80% and the average room rate (ARR) is RM300 per night.

The ARR for a one-bedroom unit in the hotel’s serviced apartment component is RM10,000 per month and 10% of the guests are long stay.

Pacific Regency, which is popular for its rooftop Luna Bar, is a five-star hotel. According to Lim, its gross operating profit (GOP) margin is 50%, a commendable figure in the Malaysian hospitality industry. GOP is gross revenue (from rooms, food and beverage, laundry or business centre) minus cost of operations (wages, electricity and amenities).

Pacific Express, meanwhile, which started operating in July this year, is recording a GOP margin of 70%. Lim says Kwong Hing bought the building, which was originally owned by the Yap Ah Loy family, from HSBC Bank about six years ago. It is now a three-star operation with 207 rooms.

The group spent RM50 million on converting the office building into a hotel and Lim says it is already making money.

Lim’s father Fap Khoon had come to Malaya from Dabu in Meizhou City, Guandong province, China, in 1958. He first traded in textile before venturing into property development. It is worth noting that the group also owns shopping centres in Jalan Tuanku Abdul Rahman and Jalan Petaling.

Fap Khoon is the chairman and managing director of Kwong Hing while Lim and his brother Kwong Hong, also an executive director, operate the family business.

Kwong Hing Group owns Menara KH in Jalan Sultan Ismail, which is popular for its Heli Lounge Bar; Bangunan HSBC in Medan Tuanku; Plaza Pengkalan in Jalan Ipoh and Wisma Fui Chui in Jalan Cheng Lok.

In 2008, the group refurbished Wisma Hamzah Kwong Hing for RM16 million. The 22-storey building had been built in 1984 at a cost of RM38 million. As a Grade A building with MSC status, Lim says the property is fully occupied with a long list of tenants hoping to get in. The building is distinct as it is encased in a reflective gold-coated glass skin.

About 15% of the group’s revenue comes from China where it has several investment properties scattered around Shenyang, Beijing and Shenzen.

In terms of contribution, up to 80% of the group’s revenue is derived from property investment and development, 10% from hospitality and 5% each from the trading of canvas shoes under the brand name Warrior and network marketing business BAE International Inc Sdn Bhd.

This article first appeared in The Edge Malaysia Weekly, on November 3 - 9, 2014.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.