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City & Country: TTDI: A new office address?

Those who ply the stretch of Jalan Damansara separating Taman Tun Dr Ismail (TTDI) from Damansara Kim in Petaling Jaya would have spotted a hoarded construction site within the popular TTDI. The site fronts the busy Jalan Damansara.

According to details posted onsite, the ongoing works are for a 31-storey office building by Bellworth Developments Sdn Bhd, which has its office in TDDI itself. No other information is immediately available. A spokesman tells City & Country the company is not ready to reveal details of the project, believed to be the developer’s maiden attempt.

At the other end of TTDI, Ken Holdings Bhd, another TTDI-based developer, is planning a 12-storey office building with green features on two adjoining parcels totalling 1.2 acres on Jalan Burhanuddin Helmi. Currently being used as an open car park, the public-listed developer plans to start work on the site by year-end or early 2010. It will boast facilities equivalent to that of a five-star hotel, including four levels of basement parking.

In the foreground - Ongoing construction of a 31-storey office building by Bellworth Developments Sdn Bhd in Taman Tun Dr IsmailAs more and more multinational corporations trade prestigious Kuala Lumpur city addresses for suburban offices, astute developers are capitalising on this trend. Modern office buildings are coming up in several areas in Petaling Jaya. Whether it is to avoid paying premium rents or traffic congestion, major corporations are now more receptive to the idea of relocating to suburban areas.

A number of developers, convinced that this is the way forward, have invested hard cash to be in a position to benefit when the trickle becomes a deluge. Away from TTDI, some of the new offerings in the neighbouring PJ area include Quill 9 in Section 19, VSQ @ PJ City Centre (Jalan Utara), PJ8 (Jalan Barat), PJ Exchange (Jalan Timur), Paradigm (Kelana Jaya), PJ Trade Centre (Damansara Perdana), Surian Tower (Mutiara Damansara) and First Avenue (Bandar Utama).

While the Damansara Perdana-Mutiara Damansara-Bandar Utama conurbation in Petaling Jaya is recognised as a fast-emerging growth area for office space today, competition can soon be expected from the nearby low-density, freehold TTDI where at least two new commercial developments are due to be completed in the coming years.

A short distance away, across Jalan Damansara and next to the Desa Kiara condominiums, is the upcoming Glomac Damansara. The mixed commercial development by Glomac Bhd sits on a freehold site of under seven acres, with a gross development value of RM800 million. The project will feature shopoffices, office suites and serviced apartments to be developed over four phases.

By 2012, Glomac Damansara will see 15 and 25-storey office towers, 9 and 10-storey blocks of office suites, two 28-storey serviced apartment blocks, 12 units of en bloc shopoffices (5 and 8-storeys) and hybrid retail units, with a total gross floor area of 1.5 million sq ft. According to the developer, the first phase, comprising shopoffices, tagged from RM3.8 million, has been about 65% sold since its launch in mid-March. The developer is also in talks with several parties to sell the office towers en bloc.

Meanwhile, the master developer of TTDI, Naza TTDI Sdn Bhd, also has some small parcels in the vicinity, where it plans commercial and mixed developments. The developer has a freehold 0.87-acre commercial tract near Glomac Damansara, acquired at the end of last year for over RM400 psf. The tract sits near the junction of Jalan Damansara and Damansara-Puchong Expressway. Works on a planned office tower could start next year, S M Faliq S M Nasimuddin, Naza TTDI group managing director, tells City & Country. The developer also has a freehold 0.65-acre tract within TTDI, which has been identified for future mixed developement.

TTDI, often viewed as the preferred residential address, may just be known for its commercial offerings as well.The rents for ground floor lots of the 3-storey shopoffices at TTDI are going for between RM3 and RM4 psf

Property consultants say TTDI can become a successful decentralised office site based on its strategic location and good accessibility to the KL city centre and Petaling Jaya. TTDI is one of the most established middle to upmarket residential areas in the Klang Valley, says Tiffany Goh, director of YY Property Solutions (Valuation) Sdn Bhd. It is accessible via the Damansara-Puchong Expressway, SPRINT Highway, Penchala Link and the New Klang Valley Expressway, she notes.

“TTDI has a vibrant commercial area and our analysis reveals that demand for office space there is high. There are still opportunities for office space to continue to grow,” says Goh. According to TTDI-based YY Property Solutions, the total purpose-built office space in TTDI is close to 500,000 sq ft, with an average occupancy level of about 90%.

The existing purpose-built offices in TTDI are Plaza VADS (formerly Plaza IBM), Bangunan AHP (formerly Jaya Jusco), Wisma WIM and Bangunan Bakti Siti Hasmah, which are all over a decade old. Their occupants are mainly large manufacturing/trading companies, professionals, banks and those in the service industries. Plaza VADS and Bangunan AHP form part of the real estate portfolio of Amanah Harta Tanah PNB, a real estate investment trust listed on Bursa Malaysia. The buildings have net lettable area of 201,554 and 95,312 sq ft respectively. These two buildings were built by Naza TTDI in 1988 and were sold to the PNB property trust.

Besides office buildings, there are two clusters of mostly 3-storey shopoffices in TTDI. The main hub is at the Tun Mohd Fuad area, with another cluster located on Jalan Burhanuddin Helmi. The latest transaction data provided by Regroup Associates Sdn Bhd reveal that a unit located on Jalan Wan Kadir changed hands for RM2.73 million last November while a similar unit on Jalan Tun Mohd Fuad 3 was sold for RM2.4 million. In January this year, a typical unit on Jalan Burhanuddin Helmi was transacted at RM2.5 million.

Naza TTDI’s Faliq says demand for new and modern office space is high in TTDI, and this has prompted Naza to develop Plaza TTDI comprising 37 units of 3-storey modern offices with lifts. Launched in 2005, Plaza TTDI is situated on Jalan Wan Kadir 3. Demand, he adds, comes from small and medium-sized business operators, professional firms, non-governmental organisations and other service operators.

The oldest purpose-built office building in TTDI is Plaza VADS built in 1988“Shopoffices appeal to smaller businesses with lower capital, while dedicated office buildings command higher rents and attract more prestigious organisations, which are concerned with their corporate image,” says Faliq.

Rental rates in Plaza TTDI range from RM5 to RM6 psf for the ground floor, RM4 to RM4.50 psf for the first floor and RM3 to RM3.50 psf for the second floor. The launch price for a 3-storey block was RM2.2 million, but is now selling at about RM3.7 million or an average of RM822 psf, says Faliq.

Sam Tan, Ken Holdings executive director, believes that a new office block in TTDI could become another landmark there. “Plaza VADS, perhaps one of the more prominent office buildings, has been around for some time. The former occupant, IBM, moved out in 2006 to a newer corporate office in nearby Bandar Utama,” says Tan. Currently VADS, an information and communications technology service provider, is the anchor tenant at Plaza VADS.

Development of the 286ha TTDI started back in 1974 by UDA Sea Park Development Sdn Bhd, a joint venture between the Urban Development Authority, the government’s arm for urban planning and redevelopment, and SEA Housing Corp Sdn Bhd, a private development company helmed by the late Tan Sri Lee Yan Lian.

UDA Sea Park Development is also the master developer of TTDI. In 1984, the company was renamed TTDI-SEA Park Development Sdn Bhd and then became TTDI Development Sdn Bhd in 1990. The major shareholders of TTDI Development included UDA, Peremba Bhd and Permodalan Nasional Bhd (PNB).

In 2001, Pengurusan Danaharta Nasional Bhd, a national asset management company, acquired TTDI Development from PNB to assist in the management of its property portfolio. In 2004, Ekspedisi Nikmat Sdn Bhd, helmed then by the late Tan Sri S M Nasimuddin S M Amin, acquired TTDI Development from Danaharta. TTDI Development, now the main property arm of the Naza group of companies, changed its name to Naza TTDI Sdn Bhd last year.

Stiff neighbourly competition
Paul Khong, Regroup Associates’ executive director, sees stiff competition between TTDI and the Damansara Perdana-Mutiara Damansara-Bandar Utama conurbation but he believes TTDI is more attractive, given its location. At TTDI, potential tenants can find decentralised offices close by the Damansara vicinity without having to encounter serious traffic congestion. Another bonus is that TTDI still sports the coveted KL address, says Khong.

However, supply is limited in TTDI, a mature development. “TTDI was planned as a low-density residential neighbourhood and with its fully mature status, there are only few remaining commercial plots for development,” says Khong. While he believes TTDI would do well as a decentralised office location, its growth could be impeded by the lack of available land. “At best, it will be like the Damansara Uptown area,” he adds.

Damansara Uptown, located nearby in Damansara Utama, has been the main centre of commercial activity for the neighbourhood over the past two decades. The popular hub features mostly 4-storey shops and several office buildings, with almost full occupancy. Developer See Hoy Chan Sdn Bhd is in the midst of rejuvenating Damansara Uptown to make it more upmarket. Coming up on a 12-acre site will be several high-rise blocks comprising serviced apartments, an office tower and a boutique retail centre. Work on the RM900 million project is expected to start next year.

As for the Bellworth development coming up in TTDI, Regroup Associates’ Khong calls it “superior” in terms of location, visibility and accessibility. “The project has its attractions and just like those in Damansara Uptown, amenities and services are easily available,” he says.

He also notes that Glomac Damansara, while an extension of the TTDI commercial centre, is separated by a barrier in the form of Jalan Damansara. “This project will be more of a self-contained development on the Damansara side and will obviously bring business synergy to the entire area,” says Khong.

YY Property Solutions’ Goh feels that the commercial concentration in TTDI will not be shifted with the emergence of Glomac Damansara. However, she believes the project will be able to enhance the overall commercial and retailing activities in TTDI, with the provision of more fine dining and varied food and beverage outlets as well as an increase in the working population.

On the parcels of land currently being utilised as car parks in TTDI, Khong believes these will eventually make way for commercial use. “Since there are no other major commercial buildings being built here, these parcels have the potential to be converted for commercial purposes,” he adds. There are several open car parks such as the one adjacent to Bangunan AHP and Pasar Besar TTDI.

Dearth of quality buildings
According to Goh, TTDI currently lacks quality office buildings. However, the upcoming Bellworth development and the Ken Holdings project have the potential to attract a large number of companies, which are looking to upgrade to better buildings, she says. “TTDI certainly has sufficient amenities as it is surrounded by highly established shopping centres and hotels nearby,” adds Goh.

As far as rents are concerned, says Khong, location will be an important factor in determining the rates. Current rental rates for Plaza VADS is believed to be between RM3 and RM3.50 psf including service charges, while the newer generation of office buildings in Bandar Utama and Mutiara Damansara command slightly higher premiums of RM4.50 psf, he adds. 

For the shops, data provided by Regroup Associates shows that the latest asking prices for basic units (22ft by 68ft) range from RM2 million to RM2.8 million. On the rental rates, lots on the ground floor are going for between RM3 and RM4 psf. The upper floors are leased for between RM1 and RM2 psf.

Goh reckons that the upcoming developments in TTDI will have competitive rates as they will be competing with not only existing buildings but also future developments within a 5 to 10-minute drive, including those in Bandar Utama, Damansara Utama, Mutiara Damansara, Damansara Perdana and Bangsar.

With two office projects about to roll out and several more on the drawing board, TTDI is set to attract more corporations, looking for quality office space, away from KL city.



This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 764, July 20-26, 2009

 

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