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New benchmark for office space, Pusat Bandar Damansara at RM1,200 range

Monday, 21 April 2014

The nine office blocks in Pusat Bandar Damansara have been scheduled to be demolished in the third quarter of 2014. Lim owns two pieces of land there.

The nine office blocks in Pusat Bandar Damansara have been scheduled to be demolished in the third quarter of 2014. Lim owns two pieces of land there.

PETALING JAYA: Datuk Desmond Lim Siew Choon, who is planning to demolish and rebuild a mixed integrated development in Pusat Bandar Damansara (PBD), seems to have set a benchmark for office space in that area at between RM1,000 and RM1,200 per sq ft, sources said. The first phase of the office block is expected to be completed in three to four years.

The 9.58-acre parcel, one of several in that area, is the current site of nine office blocks of six and seven storeys high.

A source said the price range seemed “reasonable” in spite of the oversupply of office space.

Another consultant Siders Sittampalam, managing director of PPC International Sdn Bhd, said a more reasonable range would be RM1,000-RM1,100 per sq ft.

The scenario of Lim setting a benchmark for PBD office space has come about as a result of Impian Ekspresi Sdn Bhd offering to buy out owners of 25 parcels of properties there. Impian Ekspresi, a vehicle Lim indirectly controls, is the owner and developer of PBD.

Lim, best known for shopping mall Pavilion Kuala Lumpur, is also the executive chairman of Malton Bhd and chairman of Pavilion Reit.

It is believed that a few of the owners are resisting the move while the majority are agreeable, sources said.

Lim has fought a long legal battle with Johor Corp (JCorp) over the prized PBD development.

When it was finally resolved in September 2013, tenants in PBD were given monthly tenancy contracts. The buying-out of the 20 odd owners is seen as the last hurdle to empty the area for demolition works to begin in the third quarter of this year.

The nine blocks will be reduced to rubble on a staggered basis over a period of about one year. Most of the tenants have terminated their contracts. “Tenants have ‘terminated’ the contracts themselves and some of the owners have been paid,” a source said.

Sources said the owners have been offered “less than RM1,000 per sq ft” for their properties.

“They will be able to buy the new units at about the same price they sold their existing parcels as a sort of concession. Any additional space will be sold at between RM1,000 and RM1,200 per sq ft, or the prevalent market rate,” a source said.

Siders said a reasonable rate would be between RM650 and RM700 per sq ft as the buildings are old. It is uncertain if the owners, about 20 of them, were offered the same price for their parcels.

The new mixed integrated development, comprising serviced apartments, offices and a hotel, is expected to be built over a period of five to six years. There is a likelihood some of the offices may be completed earlier, sources said.

Lim paid cash RM500mil and conducted an asset exchange for this 9.58-acre site.

The asset exchange comprised some office space to be built in the new redeveloped PBD and an existing 20-storey commercial office building at V Square@PJ City Centre in Petaling Jaya.

There have been comments by certain parties that Lim got the 9.58 acres at a good price as he did not have to fork out much cash because of the asset exchange whereas he paid a premium for an adjacent parcel of 6.34 acres in the same area last March.

This second parcel is closer to the Bangsar-Jalan Damansara intersection.

Lim bought it via Jendela Mayang Sdn Bhd, a company linked to him. He paid RM450mil for that parcel, or RM1,628 per sq ft. Selangor Properties Bhd (SelProp) was the vendor.

Sources said it was not possible to compare the prices paid for the two pieces of land although they are located in the same area and adjacent to each other because Lim would have to pick up the tab for demolishing the nine structures. The second piece is currently used as a public car park.

Lim is expected to build shopping mall Pavilion 2 on the former car park land and connect it to the Pusat Bandar Damansara MRT station which is currently being built over the Bangsar-Jalan Damansara intersection.

C H Williams, Talhar & Wong managing director Foo Gee Jen said Lim’s interest in PBD was not just about land, although that was an important factor.

“It is about refurbishment, increasing plot ratio and the MRT right at your door step.

“That is what (Desmond) Lim is paying for when he paid a premium for the second piece of land.

“It is about connecting Pavilion KL to Pavilion 2 via 10 minutes by rail and in time to come, his third mall in Bukit Jalil, which will also be connected by rail,” said Foo. “The MRT is the premium which cannot be translated into a per sq ft basis,” Foo said.

He said the beauty of that 9.58 acres is that it is S-shaped. He can demolish all or part of it and do a hybrid but he will have to improve the basement parking, according to Foo.

SelProp built PBD in the 1980s with a plot ratio of four. Lim is expected to increase that to 7.5 or 8.

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