City&Country: En bloc buying interest in Solaris Towers

Sunrise Bhd, which surprised the market with its partnership with Sime Darby Property to develop a prime commercial project in Shah Alam’s Bukit Jelutong, looks set to pull off another winner.

The developer plans to make its debut in the Kuala Lumpur city centre by the next quarter with the launch of Solaris Towers. And eager buyers have already started knocking on the door to buy the towers en bloc.

Sunrise executive chairman Tong Kooi Ong says they are now considering the offers. He declined to elaborate on the identity of the parties, pricing, or the terms discussed.

Solaris Towers is a two-block strata office development coming up on a 1.8acre leasehold land near bustling Jalan Sultan Ismail. It will have a gross development value of about RM450 million. The total net saleable area is 570,000 sq ft, comprising 250 office units (550,000 sq ft) and five retail lots. The pricing and size of the units are not immediately available. Neither is the artist’s impression of the project.

In a briefing for analysts and the media in Kuala Lumpur on Jan 28, Tong said that he was “terribly confident” of the success of Solaris Towers.

Based on the current prime office rental rates in the area, the developer expects rentals of the strata office space to range from RM5 to RM7 psf.

It is noteworthy that the keen interest in Solaris Towers has come at a time when concerns continue over an oversupply of purpose-built office space in the Kuala Lumpur city centre.

In fact, since the onslaught of the global credit turmoil in 2008, several en bloc commercial building sales in the Klang Valley have been cancelled. However, interest in the property market picked up in the second half of 2009, and in those six months, there were 28 major transactions worth more than RM3.5 billion, according to CB Richard Ellis (CBRE) (Malaysia), which is bullish about 2010.

Landserve Sdn Bhd managing director Chen King Hoaw is less optimistic. He expects the office market, pressured by more incoming supply of purpose-built space, to remain subdued this year.

According to The Edge/Knight Frank Klang Valley Office Monitor 4Q2009, some 1.87 million sq ft of new office space is expected to come onstream this year. The average rental rate in the Golden Triangle is RM5.86 psf (down 0.1% from 3Q 2009), while in the Central Business District it is RM3.93 psf (down by 1%). Meanwhile, average rentals in Damansara Heights, on the fringes of the city centre, stayed unchanged at RM4.30 psf.

Purpose-built versus strata
Solaris Towers is poised to appeal especially to businesses wishing to own a prime address in Kuala Lumpur in a market that lacks stratified supply. On top of this, assuming work on the project kicks off this year, it will be another three years or so before its completion.

The latest launch of stratified office space, points out DTZ Nawawi Tie Leung Sdn Bhd executive director of investments Brian Koh, was Menara UOA Bangsar. Despite being located outside the Golden Triangle, on Jalan Bangsar, the project did very well. It was completed in the third quarter last year, Koh tells City & Country.

Koh also recalls it has been several years since the Golden Triangle saw a strata-titled office launch, which was in the form of Menara UOA KLCC. This project also did very well. 

“Normally, buyers of these strata offices are medium-sized businesses and most probably they will use the space themselves,” he adds.

Solaris Towers, there is no doubt, is a project to watch. As with Sunrise’s plans for its prized plot just across the road from the iconic Petronas Twin Towers.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 792, Feb 8 - 14, 2010

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