SYDNEY: There will be no further sale of land within the Tun Razak Exchange (TRX) compound in the next two to three years until the infrastructure for the 70-acre mixed-use development in the heart of Kuala Lumpur is ready.
According to TRX City Sdn Bhd chief executive officer Datuk Azmar Talib, there are two reasons to hold off the sale of the remaining land in the development.
The first is to allow fast and easy access to facilitate infrastructure construction within the development, and the second is to unlock the value of the real estate at a higher premium later.
“We want to keep the remaining available land in TRX to facilitate infrastructure development,” Azmar said.
TRX City is the master developer of the project that is now under the ambit of the Ministry of Finance Inc (MoF), which has taken over from 1Malaysia Development Bhd (1MDB) following a restructuring.
“We don’t want to unlock everything upfront, especially when we have not yet completed building the infrastructure for the project. We believe when the infrastructure is ready, we will be able to fetch a much higher premium for the land,” he said.
To date, 60% of the 70-acre TRX land has either been sold or marked for development. The project has 28 acres, or 40%, left for future sale and development.
Speaking to reporters during a recent media familiarisation trip to Lendlease’s urban regeneration projects in Australia, Azmar said TRX City has allocated about RM3bil for infrastructure works on the development to enhance its connectivity, sustainability and security.
The move is to make TRX the “best financial centre” in Kuala Lumpur.
Australia property group Lendlease is TRX City’s partner in the development of the 17-acre Lifestyle Quarter within the TRX.
Comprising a retail mall, six residential towers, a luxury hotel and park, the TRX Lifestyle Quarter will be developed in stages through a joint venture, with Lendlease owning 60%, and TRX City, 40%, of the partnership.
Lendlease will also be the development and construction manager for the TRX Lifestyle Quarter project that comes with an estimated gross development value of RM8bil. The development of the project is expected to be financed through a combination of equity and debt.
Lendlease first signed a conditional agreement for the development of the TRX Lifestyle Quarter project in a joint venture with TRX City in June 2014.
TRX City was known as 1MDB Real Estate Sdn Bhd then, and it was a wholly-owned unit of the controversial sovereign investment fund.
Two weeks ago, Lendlease firmed up plans to undertake the development of the TRX Lifestyle Quarter.
It is learnt that the Australian developer has put off its plans pending the transfer of the TRX development to the MoF. This is because the negative news surrounding the 1MDB have had an impact on the perception of the TRX development.
“The transfer of TRX City and Bandar Malaysia from 1MDB to MoF came into effect recently. Under the new structure, MoF owns TRX which in turn holds a 40% stake in Bandar Malaysia,” said a source.
According to an industry source, the completion of the transfer, which disentangled TRX City from 1MDB, is one of the conditions required for the group’s joint-venture agreement with Lendlease.
Lendlease’s joint-venture agreement with TRX City turned unconditional in the middle of last month, making way for the construction of the TRX Lifestyle Quarter to pick up pace. Excavation for the basements of the development, encompassing The Exchange TRX retail mall, TRX Residences tower and a luxury hotel, has already completed.
Piling works are set to commence for The Exchange TRX in the coming weeks.
While critics contend that the deal took too long to finalise, Lendlease CEO for Asia Tony Lombardo felt that the duration taken was not unusual.
“Our deal on the Barangaroo urban regeneration project in Sydney took about 36 months to finalise before construction works began; the deal for the TRX Lifestyle Quarter project took about the same time, so that’s nothing out of the ordinary from our point of view,” Lombardo said.
The TRX Lifestyle Quarter is one of 12 large-scale urban regeneration projects that Lendlease is currently undertaking in major cities around the world.
Lombardo pointed out that most of Lendlease’s projects are done in partnership with governments.
“We believe the best large projects in the world always happen in partnerships, and they are always in alignment with the Government’s vision for the city,” he explained.
Lendlease is expected to launch The Exchange TRX in the second half of this year.
This will be followed by the launch of two of the six TRX Residences towers in the first half of 2018.
The Exchange TRX, which is scheduled for completion in 2020, has secured 25% of net lettable area with tenants, including the Japanese departmental store Seibu.
The TRX Residences, which will be completed in phases from 2021, will feature 40 to 57-storey towers offering a total of 2,400 apartment units.
Lendlease is the biggest joint venture partner to develop the TRX.
Meanwhile, other developers such as the Mulia Group of Indonesia has already started work.
It is developing the 92-storey office block, named Signature Tower, in TRX.
As of end-March 2017, a total of 45 floors (from basement) of the Signature Tower has been built.
Azmar pointed out that Kuala Lumpur has not had any significant development since the development of the Kuala Lumpur City Centre (KLCC).
Just as the development of KLCC had elevated Kuala Lumpur’s profile when it was completed about 20 years ago, Azmar expected the development of TRX to provide a fresh impetus for the nation’s capital.
The entire 70-acre TRX comes with an average plot ratio of 6.8 times, although pockets of land in the development have received approval for as high as 15 times gross floor area.
While the average plot ratio of TRX is relatively low compared with other developments in the vicinity, Azmar stressed the project was more about quality than quantity.
TRX City has awarded RM1bil worth of infrastructure jobs, including road improvements and tunnelling projects, to various contractors. The remaining RM2bil worth of infrastructure jobs would be awarded in phases to meet the project’s targeted completion in 2020.
Companies that own parcels of land in TRX included Affin Bank Bhd, which bought a 1.25-acre plot in 2015 for RM255mil, or RM4,699 per sq ft, with a plot ratio of 15.2 times; and Lembaga Tabung Haji, which acquired a 1.6-acre plot in the same year for RM188.5mil, or RM2,780 per sq ft, with a plot ratio of 10.47 times.
WCT Bhd has a deal with TRX City to settle part of the RM754.8mil worth of construction works in TRX with 1.7 acres of residential land valued at RM233mil.