TEXTILE retailer and wholesaler Jakel Trading Sdn Bhd will launch its first property development project, Jakel Square, in Kuala Lumpur next month with the opening of the country’s largest textile mall.
Previously known as CapSquare Retail Centre, the building in Jalan Munshi Abdullah has undergone an extreme makeover and will also be home to new hypermarket entrant, LuLu Group International, from the Middle East.
In a recent interview, Jakel Trading group managing director and CEO Datuk Mohamed Faroz Mohamed Jakel tells The Edge details about the group’s move from clothing and furnishing to property development and investment.
Last year, Hajra Properties Sdn Bhd, a company wholly owned by the Jakel family, acquired CapSquare Retail Centre for an estimated RM199 million from Bandar Raya Developments Bhd (BRDB). “We paid over RM300 million as we also acquired some lots from individual owners,” Mohamed Faroz says. “It was a good buy.”
Hajra paid about RM300 million for a freehold parcel measuring five acres in the area, which came with a completed retail portion and north and south towers. Together with the hotel portion (north tower), which is expected to be operational at end-2015, the group’s total investment in Jakel Square is an estimated RM500 million. Return on investment on the property is expected to take between 10 and 12 years.
The asset enhancement exercise will see Jakel Square having a total gross floor area of 1.35 million sq ft and a net lettable area (NLA) of close to one million sq ft. Of this, the textile mall, known as Jakel Mall, will be located in the south tower in a 10-storey building and will take up an NLA of 330,000 sq ft while LuLu Hypermall will take up 300,000 sq ft. The remaining space will be rented out to smaller retail and food outlets.
Jakel Development Sdn Bhd, which is undertaking the development of all the Jakel Square components, was set up by Mohamed Faroz together with his siblings, Mohamed Nizam, Mohamed Izani and Abdul Shiraz.
The company is currently in the process of making Jakel Square a shariah-compliant real estate asset. The upcoming 320-room, four-star hotel, for example, will provide two separate swimming pools — one for men and the other for women — in accordance with shariah. The owners are now in talks with several companies to manage the hotel. When the hotel opens, it will provide an additional retail space of 100,000 sq ft in NLA.
Jakel Trading (via Hajra) surprised the market last year when it bought the shopping centre from BRDB. BRDB’s major shareholder, Ambang Sehati Sdn Bhd, took the company private in 2012, but in 2011 had indicated that it planned to purchase CapSquare from the then listed BRDB.
Jakel Trading’s venture into property related businesses is neither sudden nor accidental. Since its establishment in 1985 in Segamat, Johor, the group has always preferred to own the premises where it conducts its business instead of leasing the space, says Mohamed Faroz.
“My father always said, ‘If you have the money, buy property’,” he says, recalling the advice of his late father, Mohamed Jakel Ahmad. In fact, before venturing into the carpet business, Mohamed Jakel used to buy and sell land in Muar, Johor. “Real estate is part of the retail business. When you are successful, the value of the property will be enhanced.”
Jakel Trading, which will turn 30 on March 30 next year, started with just two employees. Mohamed Faroz used to help out after school from the time he was 13. Today, its staff strength is 5,000.
In the financial year ended Dec 31, 2013, Jakel Trading posted revenue of RM648 million and is expected to cross RM700 million this year. It operates 20 Jakel outlets nationwide.
What’s next for the group? When Jakel Mall opens in Jakel Square, the company will be closing its Masjid India branch. Mohamed Faroz already has plans for the 15 shoplots that it will vacate. He plans to transform the entire area into a market, similar to Gold Souk in Dubai. It has already signed on jeweller Malabar Group.
Joyalukkas is another foreign jeweller with a presence in Masjid India. The jeweller is renting the building that previously housed Mun Loong. This building is also owned by the Jakel family.
This article first appeared in The Edge Malaysia Weekly, on December 29, 2014 - January 04, 2015.
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