05 Feb 2015

Three new towers in KLCC Golden Triangle area

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KLCC-NEW-Development-ZonesWhere its all happenning. {Jalan Yap Kwan Seng, Binjai and Persiaran KLCC}

Selangor: There are plans for three new high-rise buildings near the Petronas Twin Towers in the Kuala Lumpur City Centre (KLCC) and tender documents for sub-works are due in a few months.

They are said to complement the twin towers, and are unlikely to be taller than the iconic buildings.

While the new towers will bring in additional office, retail and hotel space into the Golden Triangle area, sources said that the ultimate shareholder, Petroliam Nasional Bhd (Petronas), is certain it would not suffer from any market risk.

Two of the three towers are being jointly developed by KLCC (Holdings) Sdn Bhd, which is the unlisted parent of the KLCC Stapled Group and also 100pc-owned by Petronas, together with Qatari Diar Real Estate Investment Co, the investment arm of the Qatari Investment Authority, in a 50:50 venture.

One of the towers will have an anchor in the form of a hotel group.

Early last year, it was reported that luxury hotelier Fairmont Hotels & Resorts would debut in Malaysia in 2017, with 750 rooms and some 30,000 sq ft of meeting and banquet space, as well as recreational facilities.

The report also stated that the hotel would be in a 62-storey building that would feature a covered walkway to the Kuala Lumpur Convention Centre.

Qatari Diar is part of a group that owns at least 40pc in Fairmont Raffles Hotels International.

The other tower will be an office block whose rental space will be partly underwritten by the Qatari firm, sources said. Note that the Qatari firm has been actively investing in real estate.

It recently received the approval from the Egyptian Ministry of Defence to start its north and south Sinai project in Egypt. The US$2.16bil (RM8bil) project will include hotels, shopping malls and residential homes.

Late last year, it signed an agreement with the Omani Tourism Ministry to develop an eco-themed project in Oman.

The third tower will be the new corporate headquarters of a local oil and gas (O&G) group, which according to sources, has long been working on this deal.

It is not clear if the O&G tower will be built on KLCC Property Holdings Bhd’s remnant land in the KLCC area or on land owned by KLCC Holdings.

KLCC Prop, in which Petronas holds a 75.46pc stake, owns the remaining 5,726 sq m of commercial land (Lot D1) adjacent to Mandarin Oriental Kuala Lumpur.

The company has said in the past that it was talking to potential tenants for a mixed-development project.

“Lot D1 is still seeking an anchor tenant, although management does not foresee a taker in the near term,” said AllianceDBS Research analyst Marvin Khor in a recent report.

KLCC Stapled Group is stated to have 4.1 million sq ft of investment properties, via either the stapled group or through KLCC Holdings, for potential injections in the long run, Khor added.

Meanwhile, plans for a new tower near Menara Dayabumi in Kuala Lumpur, which were first announced in 2013, will see a new 80-storey block being built where the current City Point shopping centre is, which will be demolished, sources said.

This development will also include a luxury hotel as well as new office space.

According to sources, the new office space will be largely taken up by the needs of Petronas for its back-end services.

“Dayabumi is largely tenanted by Petronas companies such as its shared services team. These groups are growing and so they will need new space,” said a source.

The redevelopment of the Dayabumi complex is expected to start this year, with completion targeted for 2019.

A recent report by RHB Research noted that following a company briefing, KLCC Stapled Group disclosed that the ongoing development of Lot 185 by its parent is well underway.

The development, which is situated between KLCC and the As-syakirin mosque, will consist of 500,000 sq ft of retail space, an office block and a hotel block.

“This could potentially be injected into KLCC Stapled Group upon completion, although it is unlikely to materialise soon,” said RHB.

Khor added that the stapled group has the right of first refusal to KLCC Holdings’ planned developments around the KLCC area.

“An asset injection could enable KLCC Stapled Group to generate interest from a yield perspective.

“Its high level of cash and low gearing is supportive of any move for potential external acquisitions,” he said.

In November 2013, KLCC Prop first announced that it would undertake a restructuring exercise to form a “stapled real estate investment trust (REIT)”.

Shareholders of KLCC Stapled Group will ultimately hold shares in both KLCC Prop and KLCC REIT.

Units of the REIT will be distributed to shareholders and “stapled” to the KLCC Prop shares.

KLCC REIT, the largest REIT in the country, made its debut on Bursa Malaysia on May 9, 2013. The REIT’s portfolio includes the Petronas Twin Towers, Menara ExxonMobil and Menara 3 Petronas.

KLCC Prop has Suria KLCC, Mandarin Oriental, Dayabumi and Lot D1.

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