Industry experts believe the 55.79 acres are located within the outlined area
BANK Negara Malaysia’s disclosure that it has purchased 55.79 acres of land in Kuala Lumpur for an estimated RM2 billion from the government has puzzled the market on various counts.
Industry observers were quick to say that, firstly, it was rare for a government agency to buy land from the federal government and, secondly, the transaction was done at market price.
Though Bank Negara says it plans to use the land for the development of a financial education hub, in the past, government land was transferred to public universities at minimum cost as education is deemed a public good.
At RM2 billion, the price of the 2,430,212.4 sq ft parcel works out to RM823 psf.
“It (the transaction) is mind-boggling. It doesn’t make sense for [Bank Negara] to get involved in a land purchase. It could have leased the land for a nominal sum,” says a land valuer contacted by The Edge. He is surprised that such a huge amount was spent on land alone to develop an educational hub. “Land is available for RM200 psf in Putrajaya and for RM200 psf with infrastructure in Cyberjaya.”
According to his findings, the said parcel — an extension of the green lung from the Lake Gardens — is currently zoned as “public open space”. This means that to be used for educational purposes, the land would have to be re-gazetted to institutional use.
Based on the description given by Bank Negara — in terms of size and “contiguous to the Bank’s Sasana Kijang complex” — industry expert have identified it as the green lung located along Jalan Sultan Salahuddin and Jalan Tun Ismail. The Forestry Department’s headquarters is also located close to the green lung (see map).
Questions are being raised as to whether Bank Negara should be acting like a real estate developer, buying such a large piece of land for such a huge sum and then taking its time to put it to use (landbanking). Has any other central bank done something similar?
Bank Negara says the land will be used to relocate the Global Islamic Finance University (INCEIF) and the International Shari’ah Research Academy for Islamic Finance. It adds that the land will also be used for the future development of education and training facilities that will focus on enhancing the technical capabilities of the talents in the financial services industry.
The RM2 billion tract is also near the new Asia School of Business (a collaboration with the Massachusetts Institute of Technology) complex and the financial industry’s Financial Industry Training Centre, which is under construction.
Another valuer contacted by The Edge says RM823 psf appears to be a fair market price based on another land deal done by the government nearby but acknowledges that it is at the high end of the spectrum.
A year ago, the Ministry of Finance sold a 19.4-acre parcel fronting Jalan Duta near Istana Negara in Kuala Lumpur to Jakel Land Sdn Bhd for RM646 million. Jakel Land, which is equally owned by Symphony Life Bhd, Permodalan Nasional Bhd and Jbiz Development Sdn Bhd, paid RM774.90 psf for the parcel.
However, a valuer-cum-real estate agent disagrees, saying the value should be closer to RM500 psf, given the sheer size of the land. At 55.79 acres, it is close to three times the size of the 19.4-acre Bukit Bintang City Centre development — where Pudu Jail was formerly located — but smaller than the 70-acre Tun Razak Exchange site.
Yet another valuer agrees, saying that because Bank Negara’s Sasana Kijang and Universiti Terbuka Malaysia are both zoned as institutional, it is surprising that the said land was given such a high valuation.
He explains that the land is not intended for commercial profit and is stunned that the central bank would pay such a high price.
To estimate the price of a piece of land, there are certain aspects that have to be considered, such as the terrain and the size. At least two real estate agents have described the land as “undulating and slightly hilly”.
Industry experts find Bank Negara’s announcement to be vague as it does not identify the exact lot and location of the land it is purchasing or the independent private sector valuer it engaged.
Bank Negara says the price it is paying is subject to a final survey of the area involved, which means it could be lower or higher.
The question is, why couldn’t the central bank wait for everything to be settled before agreeing to the whopping RM2 billion price tag? Why was there such a hurry?