Launched in 2011 by Mammoth Empire Holding Sdn Bhd (MEH), the RM5 billion Empire City Damansara (ECD1) may finally be completed in a joint venture (JV) with Exsim Group.
From the "Party of the Century" where Paris Hilton attended, to lend glitz to the mall and upcoming development, to reports of MEH having insufficient funds and of construction delays for ECD1, the rough waters may soon be calm, as Datuk Danny Cheah tells The Edge that the next two months will see MEH clear RM300 million of its debts from loans taken from AmBank and Maybank.
"Soon we will not have that kind of pressure [to settle the outstanding loans] and the group can start afresh," he says to the publication.
Sale of multiple assets to Exsim, including a 65-acre tract meant for Empire City Damansara 2 in PEtaling Jaya and 4.5 acres of undeveloped land that was a part of ECD1 have seen reports peg the value at RM800 million, though neither Cheah nor Exsim have confirmed the price tag.
About reports that Aset Kayamas Group had paid RM236 million (RM270.90 per sq ft) for 20 acres of the 65 available, Cheah says the deal had been terminated by mutual agreement by both parties.
"There were certain condition precedent, which could not be met, so both parties (MEH and Aset Kayamas) decided to terminate the sales and purchase agreement last year and the money has been refunded [to them]. Exsim is now the [sole] owner of the 65 acres of land," says Cheah.
Michelle Siew, the head of corporate communications at Exsim says its entry into the project is as a strategic partner to MEH for the ECD1 project, and not as a white knight.
"We are JV partners and we see this so-called problem as an opportunity. We like the concept of ECD and its strategic location," says Michelle Siew, head of corporate communications at Exsim.
The JV company plans to complete the outstanding five developments (with some changes to be made to a few of the hotel blocks under construction, which Cheah says will be apartments instead of hotels) for ECD1, with its gross development value (GDV) of close to RM800 million. Two of the projects are called QUB and QUAD+, which comprise multipurpose suites, the MacGuffin Hotel, the Autograph luxury hotel and Tower G.
Completion is expected within the next two years, with each component taken up by a special-purpose vehicle set up by Exsim and MEH.
The HCK Tower, still under construction is slated to be completed by first quarter 2020.
Exsim will have full control over the developments on the 4.5 and 65 acres while MEH has been tasked with ensuring the connecting infrastructure is completed.
Exsim's plans for the 4.5 acres is two developments called Mossaz Tower and Paxtonz Tower, which have a combined GDV of over RM690 million. Mossaz Tower will be a 39-storey tower with 1,117 suites from 314 to 494 sq ft, while Paxtonz Tower will consist of 775 suites with cuilt-ups of 332 to 526 sq ft within a 23-storey block.
"We see a growing demand for compact suites due to their versatility. The Mossaz and Paxtonz towers are designed to cater for young entrepreneurs," says Siew.
Expected completion is in 48 months, with a soft launch scheduled this month.
Exsim plans to turn the 65-acre tracts into a mixed-use development with a GDV of RM9 billion. The first phase is affordable houses (rumah mampu milik) scheduled to be launched in September.
Exsim will not be involved in the Empire City Mall, having no experience in such projects, while MEH will be using its entitlements from the JV to fund the completion of the mall.
Now at 80% completion, the mall is expected to be completed in the next two years, but only fully open for business in 2022.
"Previously, we had a different [way] of thinking. The direction in the last three years had been to provide a lot of incentives to retailers, including international brands, to come in, thus we spent millions of ringgit in capex to lure them [as tenants] for the mall.
"However, we had a rethink of this direction in the past year and we realised that we were actually wrong. If the retailers come in with us spending the millions but there are no customers, they would need to close shop and leave," says Cheah.
"So now, we have [realigned] the focus to get the population in first by completing all the high-rise development surrounding the mall, then the retailers will be knocking on our doors [and not the other way around] and we would have more favourable terms in terms of rental [agreements].
"In the next six to nine months, we expect to complete the infrastructure portion, which is the bridges connecting to the mall. [Previously,] we were affected by the delays in the construction of the Damansara-Shah Alam Elevated Expressway (DASH) as there is some interfacing between our project and theirs. As we understand that the national interest should come first, we have decided to let them complete their part first before proceeding with ours," he adds.
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