PROMINENT businessman Tan Sri Desmond Lim Siew Choon is preparing to demolish and redevelop the 49-year-old Plaza Batai retail shoplots in Damansara Heights, Kuala Lumpur, which he recently acquired from Selangor Properties Bhd for an estimated RM100 million.
The Edge has learnt that Lim, who bought the upmarket Plaza Batai in affluent Damansara Heights, not far from where his Pavilion Damansara Heights project is taking shape, wants to build serviced apartments on the site.
Documents sighted by The Edge shows that a company called Motif Budi Sdn Bhd submitted a planning application on Dec 23, 2020, to Dewan Bandaraya Kuala Lumpur (DBKL) for approval. According to the plan, Motif Budi is seeking to amalgamate three parcels of freehold land (Lot PT 47052, Lot 53834 and Lot 53835), measuring 96,900 sq ft, to build two 19-storey blocks — Tower A and Tower B — with 152 units of serviced apartments each. The development will also include one floor of facilities for the residents, four floors of parking space and two floors of retail space.
A search on the Companies Commission of Malaysia website shows that Motif Budi is registered as an investment holding company with a business address at Level 20, Pavilion Tower, Jalan Raja Chulan, Kuala Lumpur.
The shareholders are listed as Koh Goh Yuan, Rosmanira Junoh and Noor Zatul Hidayah Ahmad. Koh owns all but two shares in the company, which are held by Rosmanira and Noor Zatul. Incidentally, Koh is a shareholder of Global Oriental Bhd, a company linked to Lim.
Rosmanira’s name had previously emerged as a shareholder of Aman Ikhtisas Sdn Bhd, which owns a 10% stake in Sering Manis Sdn Bhd, a company majority-owned by Global Oriental, and which is undertaking The Pavilion Genting Highland project.
The Plaza Batai development, located at the junction of Jalan Batai and Jalan Beringin, comprises 16 two-storey terraced shoplots offering a total net lettable area (NLA) of 47,160 sq ft.
In December, The Edge reported that Lim was likely to continue to operate the business, as it is for recurring income but that the site may be redeveloped in the future. At the time, industry observers said Lim had paid for the land rather than the building.
It is learnt that the new owners had very recently introduced themselves to the tenants and have informed that they plan to meet to novate the tenancy agreement.
It is noteworthy that, in 2013, the Bukit Damansara Residents’ Association (RA) had objected to Selangor Properties’ plan to develop two blocks of 25-storey serviced apartments with four levels of basement on the site.
The RA said the development was not compatible with its surroundings and that a 4.9 plot ratio was high, as the area has a plot ratio of just two. The RA also argued that the increase in density would ruin the peaceful neighbourhood and the shops at Plaza Batai.
It was reported that Selangor Properties was later directed to scale down the development to 12 storeys with a plot ratio of three.
What is the potential gross development value of the project?
Industry observers say that, based on the existing plot ratio of two and pricing the serviced apartments at RM1,500 psf, a back-of-the-envelope calculation would give a gross development value of RM230 million for the project.
If Lim manages, however, to get at a plot ratio of three and assuming that, in two to three years, the price of the serviced apartments will increase to RM1,800 psf, then the GDV could be as much as RM420 million.
Asked for comment on the upcoming development, Savills Malaysia deputy managing director Nabeel Hussain says, “Based on unofficial reports of the acquisition price [of RM100 million], a medium-rise development is most likely, as it would probably face fewer objections than a high-rise.
“Current top-end prices in Damansara Heights are in the RM1,500 psf range [after discounts], but given the planning requirements and scale of the Pavilion Damansara Heights project [where the residential units have sold extremely well], I don’t see any development on this site coming online in less than two to three years.
“Fortunately, the fact that the site currently generates income means the holding costs will be offset to a significant degree, and so the new owners can perhaps afford to wait a bit longer than usual.”
A valuer who declined to be named says the development may have height restrictions, owing to its proximity to Istana Negara. Developments within 800m from Istana Negara have to adhere to height restrictions, and the Plaza Batai plot appears to be just about that distance from the palace. For comparison, the Damansara City project and the Pavilion Damansara Heights Project nearby have a plot ratio of 5.9 and 10 respectively.
Siva Shankar, CEO of real estate agency at Rahim & Co, says: “Damansara Heights is a blue-chip address. You cannot go wrong. Of course, there may be an oversupply now, but this won’t be forever. Covid-19 or not, our economy will bounce back and the property market will recover by 2022/23. The move by the developer (Motif Budi) to get permission and launch in maybe 2023 is a right one.
“If the product is in the right location, priced right and has the right design, it should sell well. This is not Bukit Beruntung, this is Damansara Heights.”
Meanwhile, it is also worth noting that an elevated Jalan Damansara-Semantan highway is being built to reduce traffic congestion, particularly on Jalan Beringin and Jalan Johar, in the area.
The RM211.52 million project is being undertaken under a public-private partnership with WCT Holdings Bhd, a Lim-linked company, with the construction cost being shared by DBKL, Impian Expresi Sdn Bhd (the developer of Pavilion Damansara Heights) and UKAS (public-private partnership unit).