2019 is it good year for investment?

9 largest property deals of the year of 2018

2018 will be remembered as a year driven by concerns about the global economic slowdown, monetary policy, inflation and the 14th General Election. Brexit’s impact on the United Kingdom and Europe also worried investors, as did a slowdown in China’s economy.

A foreign fund manager described the first six months of last year as a particularly dreadful period for the Malaysian market.

Nevertheless, several interesting deals took place in the Klang Valley.

One of the biggest surprises was UEM Sunrise Bhd’s acquisition of 29.5ha in Kepong from City Hall in the second quarter. The land next to Kepong Metropolitan Park was acquired for RM416 million, or at RM131 per sq ft (psf). UEM Sunrise entered into an agreement with Mega Legacy Equity Sdn Bhd to develop the land.

“It is interesting that UEM Sunrise is coming back to Kuala Lumpur. The developer has been experiencing a slowdown in property sales in the southern region. They need to come back to Kuala Lumpur to the right market segment. I expect they will be building in a segment that can make money,” said the fund manager.

WISMA MONT KIARA

Singapore-based ARA Asset Management Ltd sold Wisma Mont Kiara, a 16-storey office building with a net lettable area (NLA) of 181,992 sq ft, to Saudi Arabia’s Alrajhi family for RM122 million (RM670 psf).

The Grade A office building in Jalan Kiara is part of the 1 Mont Kiara integrated project, which also consists of 1 Mont Kiara Mall and the 30-storey Menara 1 Mont Kiara office suites.

SSTWO MALL

The SStwo Mall (NLA of 460,000 sq ft) in Petaling Jaya was sold for RM180 million in July last year to Puchong-based DK Group of Companies.

It was reported that Asia Malls Sdn Bhd had been looking for a buyer for SStwo Mall for three years. The mall opened in 2010 and closed in March 2015 due to poor performance.

Best for the mall be to knocked down and rebuilt.

“As a mall, it is too hidden away. It will be tough for a mall to succeed even if the new owner upgrades it as there are too many malls in Petaling Jaya.

“I think a condominium would be better, plus, you don’t see too many in that area,” 

WISMA UOA PANTAI

UOA Real Estate Investment Trust (UOA REIT) sold Wisma UOA Pantai, Off Jalan Pantai Baru, Kuala Lumpur to CIMB Bank Bhd for RM120 million in the second quarter of last year.

The five-storey office building, with two mezzanine floors and two levels of basement carpark, has a NLA of 157,083 sq ft.

UOA REIT said Wisma UOA Pantai was operating at a low occupancy rate of 19 per cent as of April last year.

The sale took the market by surprise because CIMB has been going on an asset light strategy.

It is understood CIMB may use the building as its new data centre.

HILTON GARDEN INN HOTELS

Singapore’s Royal Group sold two hotels - Hilton Garden Inn North (formerly, Cititel Express) and Hilton Garden Inn South (formerly Hotel Empress) in Jalan Tunku Abdul Rahman, Kuala Lumpur for RM240 million or RM451,128 per room, in the third quarter of last year.

The properties were sold to Thailand-listed Strategic Hospitality Extendable Freehild and Leasehold Real Estate Investment Trust (SHREIT).

“This deal is interesting. Royal Group bought the properties about three years ago and refurbished them. This goes to show that the market is still very attractive to foreign investors,” 

James Lim, executive director of Strategic Property Investors Co Ltd (SPI), an independent professional REIT management firm and manager of SHREIT, said in a statement the properties have great potentials.

Kuala Lumpur is ranked 10th among the world’s most visited cities. Due to its popularity among Chinese, Indian and Middle Eastern tourists, it has recorded constant growth in the number of tourists, with annualised rates for the past 10 years at 4.8 per cent for international tourists and 12.3 per cent for local tourists, Lim said.

PRINCE COURT MEDICAL CENTRE

In March last year, Khazanah Nasional Bhd announced it was buying Prince Court Medical Centre from Petroliam Nasional Bhd to expand in the healthcare services sector.

The 270-bed medical centre is located on a 2.4ha site in Jalan Kia Peng.

Industry experts said although this was a related party transaction, it showed Khazanah’s seriousness in wanting to build up capacity in healthcare services.

“The acquisition of the medical centre is a strong signal that Khazanah wants to take a significant step in the medical segment. We understand Khazanah is looking for more hospitals to add to its portfolio. New acquisitions could be here or overseas,” said an industry expert.

Khazanah invested in Pantai Holdings Bhd back in 2006 and transformed it into what is now known as IHH Healthcare Bhd, the largest emerging market-listed hospital operator with more than 10,000 beds in 10 countries.

JTI FACTORY

JT International Bhd’s (JTI) manufacturing facility in Persiaran Raja Muda, Shah Alam on a 2ha site was sold in the second quarter of last year for RM40 million to RM50 million.

The factory was sold to a Japanese firm, believed to be another tobacco company.

“JTI has been focusing on the premium market which has softened and decided to let go of the factory to focus on other businesses. I understand that the new owner is looking at the affordable segment or possibly another segment to meet current market expectations,” said a source close to the Japanese tobacco company.

“I think JTI got a very good deal for the factory. The management is happy as it can focus on other things,” the source said.

LAND SALE KSL Holdings Bhd’s

KSL Holdings Bhd’s wholly-owned subsidiaries, Gantang Jaya Sdn Bhd and Bintang Bintang Development Sdn Bhd, acquired nine parcels of freehold land totalling 74.72ha from Pulai Springs Resort Bhd for RM176.94 million.

The land, located within the Pulai Springs Resort in Johor Baru, was sold on March 20 last year.

The Johor-based developer plans to use it for landed property development and enhance its presence in Johor. Local knowledge is important.

“KSL is a Johor-based firm. The main thing from this deal is local knowledge. As much as people are saying the market is soft in the Iskandar region, there is demand there, especially for landed properties. I believe KSL will focus on landed properties comprising super-link houses, semidetached houses and bungalows,”

AXIS REIT’S PURCHASE OF THREE INDUSTRIAL FACILITIES

Axis Real Estate Investment Trust (Axis REIT) acquired several industrial facilities in the last six to nine months of last year.

In the second quarter, Axis REIT bought two adjoining parcels of land with four warehouse blocks, a double-storey detached office building, a double-storey canteen building and two guardhouses in Section 28, Shah Alam for RM87 million.

It also bought two freehold industrial properties, comprising a single-storey detached factory, a mezzanine office and ancillary buildings in i-Park, Indahpura, in Iskandar Malaysia, Johor for RM38.7 million.

Before the year ended, Axis REIT bought an industrial facility comprising a three-storey office with a 1.5-storey warehouse factory annexe and other ancillary buildings in Senawang Industrial Park for RM18.5 million.

“These are very interesting deals and show that the market for industrial properties and warehouses remains strong. We can expect more activities this year in the industry segment,” 

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Johan

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