Two businessmen snap up properties worth RM180 mil in prime KL locations

This article first appeared in The Edge Malaysia Weekly, on December 7, 2020 - December 13, 2020.
Two businessmen snap up properties worth RM180 mil in prime KL locations
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TWO commercial property deals worth nearly RM180 million have been transacted in the adjoining locations of Damansara Heights and Bukit ­Kiara in Kuala Lumpur, proving that there will always be a demand in prime locations despite a slow market.

Sources say Tan Sri Desmond Lim Siew Choon of Pavilion fame has bought Plaza Batai in Damansara Heights, while Datuk Vinod Shekar of Petra Group has purchased a sizeable office space at Senada at the TPC Golf & Country Club.

The Edge has learnt that Lim paid RM100 million to Selangor Properties Bhd (SPB) for Plaza Batai. When contacted for confirmation, SPB’s chief operating officer Chong Koon San declined to comment.

In September, The Edge reported that SPB’s commercial assets and land parcels in Damansara Heights — the Menara Milenium office building and the boutique commercial building Plaza Batai — had drawn the interest of potential investors who were keen to acquire premium assets at a more favourable price owing to the economic downturn. Chong merely said at the time that there was no deal on the table.

Located along Jalan Batai, Plaza Batai is a 48-year-old building that comprises 16 units of two-storey terraced shoplots. The units on the ground floor have a net lettable area (NLA) of 21,760 sq ft while the units on the first floor offer 25,400 sq ft in NLA. Tenants there are mostly upmarket restaurants.

According to a source, Lim will continue to operate the business as it is, for recurring income. However, there may be redevelopment plans in the future. Industry observers believe Lim paid for the land rather than the building. Plaza Batai sits on a 96,900 sq ft freehold site. This means, at RM100 million, Lim paid about RM1,030 psf for the land.

“The pricing of RM800 to RM1,000 psf would be a fair price for the area. At RM1,000 psf, it would not be a steal, mainly because of the low plot ratio, but it can be considered a trophy asset,” valuer Stanley Toh of LaurelCap Sdn Bhd tells The Edge. However, he is unsure whether the land has much redevelopment potential as its plot ratio is two.

It is noteworthy that this is not the first time Lim is buying an asset from SPB. In 2015, SPB sold a freehold parcel of 6.35 acres in Pusat Bandar Damansara to Lim’s Jendela Mayang Sdn Bhd for RM450 million or RM1,629 psf. Lim is building a multibillion-ringgit mixed-use development called Pavilion Damansara Heights on this site and the adjoining 9.5-acre parcel, which once housed ministries and government departments.

As for the deal inked by Vinod, chairman and group CEO of the Petra Group, sources tell The Edge that the businessman has purchased the top 10 floors of office space totalling 100,000 sq ft at Senada, which is being developed by Sime Darby Property Bhd in a 60:40 venture with Brunsfield Metropolitan Sdn Bhd. It is understood that Vinod paid about RM85 million or RM850 psf for the office space.

The office tower forms part of Senada Residences, which comprises one 22-storey block of office tower and two blocks of serviced apartments (22 and 21 storeys) built atop a four-level retail podium. The mixed-use development sits on a 4.3-acre site. The NLA for the office tower is 195,024 sq ft.

One source tells The Edge that Vinod’s Petra Group plans to move into the new building when it is ready in September 2021 from its current office in Menara BRDB in Bangsar.

When contacted, a Sime Darby Property spokesperson said, “We have received strong interest from the market and conversations are still ongoing.”

The Edge did not get a response from Vinod.

It is learnt that Zerin Properties had brokered the deal. When contacted, its CEO Previndran Singhe declined to comment.

However, a call to the sales gallery reveals that the offices are from the fifth to the 22nd floors and there is space available for sale on the lower floors, which are selling at RM1,150 psf. This means Petra has managed to purchase the asset at a hefty discount of 26%.

Adzman Shah Mohd Ariffin, CEO and chief real estate consultant at ExaStrata Solutions Sdn Bhd, says while there is an oversupply of office space in Kuala Lumpur, there is still take-up on the outskirts. He adds that the acquisition was not surprising.

“People are also decentralising from Kuala Lumpur to take up modern spaces that are away from the cities and close to facilities or amenities, or have easy access to the highway. It is no longer about work from home (WFH) but work from anywhere (WFA), and people are opting for space with social distancing. New buildings are catering to this need for social distancing and allocating more space for this purpose,” says Adzman.

He adds that for Petra, it may have opted for a better facility and visibility as the location is good to showcase the group’s name atop the building. Typically, purchasers that buy or own the largest portion of an office space have naming rights.

On the acquisition price, Adzman believes it to be reasonable at RM850 psf. “Judging from the transactions in Mont’Kiara, Damansara and Bangsar South, the price seems to be within the range for new buildings,” he notes.

 

 

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