MRCB wins deal to buy German Embassy land

MRCB group managing director Tan Sri Mohamad Salim Fateh Din and German ambassador Holger Michael shaking hands after the land deal signing ceremony in Kuala Lumpur.

MRCB group managing director Tan Sri Mohamad Salim Fateh Din and German ambassador Holger Michael shaking hands after the land deal signing ceremony in Kuala Lumpur.

PETALING JAYA: Malaysian Resources Corp Bhd (MRCB) has won the tender for 1.87 acres belonging to the German Embassy along Jalan Kia Peng in the heart of Kuala Lumpur.

The company, which had participated in the tender called by the vendor on Jan 26, said in a statement yesterday that it had paid RM259.16mil, or RM3,188 per sq ft, for the land.

The price was about 6% higher than the market value of the land, the company said, citing appraisals by CH Williams Talhar & Wong (WTW) and Raine & Horne International Zaki & Partners.

WTW managing director Foo Gee Jen said the fact that companies were willing to pay a premium to the market price suggests that demand for prime land “was still there.”

“Generally, there have not been many transactions within that (Jalan Kia Peng) area within the past six months or so. But the few transactions have fetched prices of more than RM3,000 per sq ft.”

He noted that Oxley Holdings (M) Sdn Bhd, a unit of Singapore-based developer Oxley Holdings Ltd, had purchased 1.3ha in Jalan Ampang in 2013. The company had paid RM3,300 per sq ft, with an absolute price of RM446.7mil.

A spokesman from Savills Rahim & Co, the real estate consultants who had handled the MRCB transaction, said there was “plenty of interest” for the German Embassy land.

“There were interested foreign parties as well, but transactions within the area have been around the RM3,000 mark. Last year, KSK Group Bhd paid RM3,299 per sq ft for a 1.6-ha parcel in Jalan Conlay,” he said.

An analyst said the acquisition by MRCB was a “good buy”, given the area’s prime location.

“It’s one of the most sought-after addresses, as it’s in the heart of Kuala Lumpur. Prices within the area have been escalating over the years and we don’t see that slowing down, despite a cool-down in the current property market,” he said.

The German Embassy land is located on Jalan Kia Peng on the periphery of the 100-acre KLCC development. It was bounded by Jalan Kia Peng and Jalan Binjai, rendering easy access from multiple directions, said MRCB.

It is also adjacent to the low-density luxury apartments/condominiums in the city, including the likes of Four Seasons Kuala Lumpur, the Foster + Partners’ designed Troika, Binjai On the Park, the Pavillion Banyan Tree and the world’s first Harrods Hotel, in the pipeline.

MRCB said it had entered into a sale and purchase agreement via its unit, Legasi Azam Sdn Bhd, with the Germany government to purchase the land.

“The German Embassy Land’s strategic location within the immediate vicinity of KLCC and its easy access and excellent transport infrastructure has made it a sought-after address in Kuala Lumpur.

“The land is located close to numerous Grade-A office towers, five-star hotels, the Suria KLCC shopping centre and other amenities,” the company said.

MRCB said the acquisition of the German Embassy Land was part of the group’s strategy to seek good opportunities to expand its operations, with a vision to create shareholder value by achieving strong and sustainable long-term growth.

“The board is confident of the prospects of the German Embassy Land after taking into consideration the scarcity of freehold land in the highly sought-after KLCC area.

“The proposed acquisition further attests to MRCB’s proven track record in implementing its landbanking strategy to achieve sustainable long-term earnings growth and visibility,” it said.

StarBiz reported in July 2013 that the asking price for the 1.87-acre freehold property of the former residence of the German ambassador, which resembles a clubhouse with a pitched roof, had an indicative price of RM2,500 per sq ft and was valued at about RM200mil.

At the time, the German government had yet to give a directive on the sale of the property. In August last year, a 7.98-acre parcel in Jalan Ampang, which was owned by the French Embassy, was said to be up for sale for an estimated RM700mil, according to reports.

The 3.02-acre British High Commission, also located in Jalan Ampang, meanwhile, was sold for RM294.97mil, or RM2,200 per sq ft, to SP Setia Bhd in late-2012.

The British High Commission has since relocated to Menara Binjai, which is next to the Intercontinental Hotel in Ampang.

MRCB said the proposed acquisition is expected to be completed by early-August and is not expected to have any material effect on the earnings and earnings per share of the group for the financial year ending Dec 31.