PETALING JAYA: Another club may end up giving way to development, days after property developer LAND AND GENERAL BHD announced plans to redevelop its club facilities on 36 acres in Bandar Sri Damansara, Petaling Jaya, and six months after MAH SING GROUP BHD revised terms to buy the Sultan Salahuddin Abdul Aziz Shah Golf Course in Shah Alam.
This coming Sunday, members of the Raintree Club of Kuala Lumpur, among the oldest, will decide on a resolution proposing to dissolve the club, sell the 6.2 acres it is located on and distribute the proceeds to members, sources said. Due to the urgency of the matter, members were notified late last week.
Such changes in land use suggest that despite the weak property market environment, running a club is even more challenging. Two years ago, it was 36-hole Kelab Rahman Putra in Sg Buloh with Perfect Eagle Development Sdn Bhd’s interest in the club’s 280 acres.
The resolution by Raintree Club calls for a five-member committee to be elected and appointed to prepare for the sale of the club’s freehold land, which is held by Raintree Developments Bhd, a 100% subsidiary of the club, sources said.
Besides winding up the club, the proposal also calls for the committee to commission an independent valuer to value the club’s land and prepare a comprehensive plan of action within a six-month period.
The club is sitting on 6.2 acres of freehold land in Ampang Hilir. That is a prime city location, sources said. Membership is capped at 2,000 and is deemed as owners of the club, “liable for its assets and liabilities,” according to its constitution.
“The sale of the land will be a windfall for many,” the source said. Assuming a land value of between RM500 and RM2,000 per sq ft, pre-tax land value per member is between RM67,500 and RM270,000, the source added.
According to its constitution, the club can be dissolved with a vote by 1,200 members.
The rationale for the proposed dissolution of Raintree Club was the rising maintenance costs for a building that is more than 30 years old, ageing members and low patronage. In view of the rising land value, some members are seeking to unlock the value of the land.
“The club’s premises are more than 30 years old. Naturally, demands for replacement, repairs and maintenance will increase. This will be, and is already, a drain on the club’s finances. This is evident in the various proposals to increase subscription fees and impose a new development fund contribution,” a document calling for the proposed resolution said.
“Maintenance and upgrading the club has been a constant challenge for members,” a source said.
According to its 2015 annual report, up to 74% of its club members, or 1,480 members, are over 50 years old.
Many of them do not use the facilities, although they continue to pay their monthly expenses of about RM150, which may be increased to RM200.
“In light of the above, the proposed resolution to dissolve the club, therefore, has merits,” the source told StarBiz.
The Raintree Club is about 5km from the Government’s planned financial centre Tun Razak Exchange in Jalan Tun Razak and Boustead’s mixed integrated project MyTown and Sunway Group’s mixed integrated development known as Velocity in Cheras. It is about 15km from Bandar Malaysia in Sungai Besi.
“It is natural for the land value to rise over time and in tandem with the various developments being planned in that vicinity,” the source said.
The club was set up in 1983 at a time when club membership was the trend among the well-to-do. According to the source, over and above its objective as a place for sports and recreational activities, it also prided itself as an “investment option for members” with membership capped at 2,000. Membership is a one-time payment of RM12,000 for individuals and RM15,000 for corporates.
CBRE-CH Williams Talhar & Wong (CBRE-WTW) managing director Foo Gee Jen said he heard rumblings of change as far back as a decade ago, but this was to redevelop the club.
The winding-up of the club, the land sale and proceeds distributed to members “is something new,” Foo said.
As for the wide range of value of between RM500 and RM2,000 per sq ft, Foo said this was because “there is no definite certainty with regard to what can be done on the land. If it remains as club use, it will be at the lower range, but if there is planning permission for a residential development or limited commercial use, then RM2,000 is something achievable,” Foo said.
Besides engaging a valuer, Foo said members would also need legal, financial and tax advisory services to look at the tax element of a sale.
CBRE-WTW is managing the sale of Kuala Lumpur’s oldest condominium Desa Kudalari, Lorong Kuda off Jalan Tun Razak, near the Petronas Twin Towers. Negotiations are still ongoing. The exercise is supposed to conclude by the end of this month.
“We are still seeking the mandate from owners and in view of the complexity of the negotiations, it will take longer and there is the eventuality of an extension of the deadline,” he said.