City&Country: Cover Story-- Bangsar land draw

Bus station, office towers, hotels and even a shopping mall… These are just a few of the guesses being bandied about on the ultimate use of the prized vacant plot where the Unilever headquarters and factory once sat in Jalan Bangsar, Kuala Lumpur.

Until its relocation in 2003, after 56 years on that spot, the Unilever (Malaysia) Holdings Sdn Bhd’s headquarters and factory was a Bangsar landmark. The buildings would have seen the days when Bangsar property prices were a mere fraction of what they are now and the traffic light compared with the congestion of today.

Wati, who runs an eatery in Jalan Riong just opposite the factory site, tells City & Country she has heard that a commercial development will be built there.

“It is said they will build hotel and office towers here,” she says, gesturing to the land. “The development will be something like the neighbouring Bangsar Village [in the nearby Telawi area],” she adds with a certain authority.

There are other theories. Shahril, a resident of the medium-cost apartments near the vacant site, has heard that a bus station, similar to the KL Sentral transportation hub, will come up on the land. Shahril goes on to say if this is true he will protest against the development, which he fears will further clog traffic flow in the area, due to the nearby Bangsar LRT station and the growing number of retail spaces.

Wati and Shahril are not the only ones keeping an eye on the development of the 19-acre piece of freehold land. Many others, astute developers especially, definitely have it on their radar.

Unilever (Malaysia) Holdings’ corporate office relocated to its current premises in Menara Telekom in 2003. Just before the move, its manufacturing operations moved to the Bukit Raja industrial estate in Klang and to Rawang.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A visit by City & Country found the Bangsar tract overgrown by weeds and thick bushes, a health concern of residents there. A few old 1- to 2-storey unoccupied buildings still stand on the site. The multiple gates are chained and padlocked, with signboards warning against trespassing. A signboard at the entrance indicates that the land belongs to the Railway Asset Corp (RAC).

According to a source familiar with RAC, the asset management company is in advanced negotiations with “two to three government-linked companies (GLCs)” which are keen to buy the commercial land. It is, however, not immediately known how much longer the talks will take or the price tag of the real estate.

Chan Wai Seen, executive director of JS Valuers Research & Consultancy Sdn Bhd, tells City & Country that the land could fetch RM360 psf and above, given its frontage to the busy Jalan Bangsar.

The value estimate is based on the transaction of a land-cum-buildings deal along the adjacent Jalan Riong, which does not have frontage to main road, last December at RM360 psf.
The land has, unsurprisingly, attracted numerous developers including Mah Sing Group Bhd and Land & General Bhd (L&G) which are believed to be submitting proposals to RAC to jointly develop the land, the source adds.

This plot has been zoned for “mixed commercial and industry” under the draft KL City Plan 2020.
It is believed RAC is only able to sell the land to government-linked agencies which can then dispose of it to a private developer or, alternatively, develop the land jointly with a private developer, the source tells City & Country.

According to postings on online forums, an integrated project dubbed Bangsar City will come up on the site. But checks, however, reveal that Bangsar City could be just a concept of future development on the site, and that RAC has not submitted any development plan to the local authority.

Balai Berita
The “Unilever land” is not the sole dream of developers. Across the road, bordered by Jalan Riong and Jalan Liku, are a cluster of buildings owned and occupied by The New Straits Times Press (Malaysia) Bhd (NSTP).

NSTP’s news operation centre and headquarters, Balai Berita, sits on two adjacent tracts totalling about 3.64 acres. These were acquired in 1972 and 1988. NSTP’s printing plant operated here before it was relocated to Bukit Jelutong in Shah Alam, Selangor.

The original office building on 84,173 sq ft was built 36 years ago. An annexe, believed to be 17 years old now, sits on the  other plot of 74,270 sq ft.

These tracts are worth RM56.83 million, or about RM358 psf according to its FY2008, ended Dec 31, accounts.

Another factor, JS Valuers’ Chan says, that would impact the value in the land in that area is the plot ratio. Zoned for “mixed commercial and industry”, the area (“Unilever land”, Balai Berita and its surroundings) has a permitted plot ratio of 2.

It is noteworthy that a piece of commercial land on the nearby Jalan Maarof has fetched RM1,000 psf after the landowner obtained the development order (DO) for a 7-storey building.

A redevelopment of NSTP’s two adjoining tracts seems to be on the cards. It has been reported recently that the NSTP management has told its senior staff it is open to any recommendation or proposal on how to generate higher revenue from the properties it owns, of course including that in Bangsar as well.

According to the report, the publishing house is also looking to sell non-revenue generating assets, including land in Bukit Jelutong, as well as re-evaluating the commercial viability of other properties it owns, to raise funds for future expansion.

Three months ago, NSTP’s major shareholder Media Prima Bhd (MPB) proposed a share swap exercise to take the company private. The initial one-for-one share exchange comes with one free MPB new warrant for every five NSPT shares accepted. In November, MPB sweetened the deal by revising upwards the share swap ratio to six-for-five while retaining the warrant offer. NSTP also declared a special tax-exempt dividend of 40 sen per share the same time.

As at Jan 4, MPB has successfully garnered a 89.64% stake, paving the way for the publishing house to be delisted.

China Press
The “Unilever” and NSTP land in Bangsar are not the only candidates for redevelopment in the area. Next to the NSTP headquarters, across the road from the old Unilever factory, is yet another candidate in the form of the China Press Bhd headquarters.

Industry talk has it that China Press operations will be moved into the Nanyang Press Holdings Bhd headquarters in Petaling Jaya for business consolidation. The three main Chinese media organisations in Malaysia, including Sin Chew Media Corp, China Press and Nanyang Press Holdings, are owned by timber magnate Tan Sri Tiong Hiew King.

He, in turn, controls the four main Chinese national newspapers in the country — Sin Chew Jit Poh, Guang Ming Daily, China Press and Nanyang Siang Pau.

The freehold China Press headquarters site is owned by Media Chinese International Limited since 1976 (Media Chinese International is listed on Bursa Malaysia and Hong Kong Stock Exchange). The 34-year-old building is sitting on land with a net book value of US$3.1 million (RM10.4 million), according to the company’s FY2009 annual report end-March 31.

According to the annual report, Media Chinese International also owns an adjoining plot on which are buildings that are 21 years old. This particular tract was bought in 1988, and has a net book value of US$487,000 (RM1.6 million).

These two pieces of land measures about 1.17 acres in total.

Under the draft KL City Plan 2020, the Jalan Riong/Jalan Liku area has been zoned for “mixed commercial and industry”. This means the area can be utilised for storage, distributive trade and service industries with up to 30% use for commercial. It has a permitted plot ratio of 2.

If landowners in the area were to propose commercial developments of a higher plot ratio, they need to convert the land to commercial land status.

Bounded by Jalan Bangsar, Jalan Maarof, Jalan Tanduk and Jalan Liku, the area is a stone’s throw away from commercial developments like Mid Valley Megamall, Menara Mutiara Bangsar, KL Sentral, Dataran Maybank and UOA Bangsar.

Nearby, construction of the KL Eco City is underway. This redevelopment of Kampung Haji Abdullah Hukum is being carried out jointly by S P Setia Bhd and Kuala Lumpur City Hall (DBKL). The first launch has been slated for July.

Despite robust development activities in the vicinity the Jalan Riong/Jalan Liku area has, surprisingly, stayed relatively quiet. VPC Alliance (KL) Sdn Bhd managing director James Wong says due to its past industrial use, the market appears reluctant to view the area as a prime office or industrial district.

The proximity of Tenaga Nasional Bhd’s (TNB) transmission stations and activities (along Jalan Bangsar), located to the south of the Jalan Riong/Jalan Liku area, may also be a deterrent to the place evolving into a prime commercial or residential district, he adds.

The reality is that redevelopment of the area is inevitable, given its proximity to the city and the accessibility of two LRT stations and land in good locations getting scarce.

Stephen Tew, managing partner of Hectares & Stratas Sdn Bhd, says since the area is a prime location, land owners wishing to go into commercial development will not face major problems as DBKL has always wanted to shift industrial activities out of the city.

“If they were to redevelop the area, chances are they will go for mixed development of office and retail — something like Mid Valley Megamall — but it will be of lower density due to the road system. Hence, the retail mall will be aimed at the niche market. Strata offices are also suitable due to the LRT stations,” he says.

VPC’s Wong concurs, saying that an urban park consisting of 10- to 15-storey office blocks, with lifestyle activities such as bistros and restaurants, is the ideal development for that area. For the NSTP headquarters’ land in particular, he is not surprised that the management may invite GLCs like Malaysian Resources Corp Bhd (MRCB) to jointly develop the land.

The value of strata office lots in Bangsar has appreciated, encouraged by the price increase of office lots in KL Sentral.

JS Valuers’ Chan tells City & Country: “Currently, selling prices of office space in Plaza Sentral, KL Sentral range from RM850 to RM1,000 psf. The asking prices of office units in UOA Bangsar are in the region of RM850 psf, which is about 30% higher than the initial developer’s selling prices of RM650 psf.”

He says the ground floor of the old shophouses on Jalan Bangsar, including those beside China Press headquarters, are being rented for RM4 to RM5 psf per month. He says this is reasonable given their frontage to Jalan Bangsar.

Office space in UOA Bangsar, meanwhile, is also going for RM4 to RM5 psf per month, he says.
Elvin Fernandez, managing director of Khong & Jaafar Sdn Bhd, says the land in the Jalan Riong/Jalan Liku area could fetch RM500 to RM600 psf if approved for commercial usage. “Such a value will be fundamentally supportable by the land being developed with office buildings which could fetch rental of RM5 to RM6 psf a month upon completion,” he tells City & Country.

One thing is for certain, the landscape of Jalan Riong/Jalan Liku is poised to change.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 790, Jan 25-31, 2010.