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Saturday, October 23, 2010

Tough job for PNB

PERMODALAN Nasional Bhd (PNB) has studied market trends before deciding to embark on the Warisan Merdeka development, its president and group chief executive Tan Sri Hamad Kama Piah Che Othman says. The 100-storey tower will be a five-star green building which is still uncommon in Kuala Lumpur.

“We believe it will be able to meet the market’s growing need for such office space,” he explained when asked about the rationale for the tower project.

At a time when the world economy is still uncertain and amid rising prices, many Malaysians have questioned the necessity for the RM2.5bil to RM3bil tower project after Prime Minister Datuk Seri Najib Tun Razak announced the project in his budget speech last Friday.

Responding to questions on the project recently, Najib stressed the Government did not instruct PNB to construct Warisan Merdeka and that it was the investment agency’s board of directors that had wanted to embark on the project.

He said the area would be a business centre for both the bumiputra and non-bumiputra, and could be one of the country’s attractions that will generate profit.

Developers and property consultants have urged PNB to undertake extensive and in-depth feasibility and market studies to weigh the cost-benefit and potential impact of the tower on the property market.

The public also wants an environmental impact assessment study to be done on the project to look at the impact to the social system, the traffic situation and suitability of the site.

Most of the concerns are on whether the high-impact commercial development will cause an over supply of office space in the capital city, and the impact of the skyscraper to the worsening of the heavy traffic jams in the area.

There are also a number of schools in the vicinity and the expected heavier flow of the traffic have worried students, parents and the school authorities.

Hamad says PNB is looking to have the mass rapid transit (MRT) plying the Warisan Merdeka route.

“We are aware of the public’s concerns that the traffic jam in the area will worsen with the tower project, and will be working with the relevant authorities to look at ways to improve the infrastucture and traffic flow in the area,” he adds.

Hamad also allays fears that funds from unit trust investors or the Government will be used to finance the project.

He says PNB has enough funds to finance the whole development if need be but he does not rule out borrowings if interest rates are reasonable.

On the project’s positioning, Hamad stresses that the heritage elements of Merdeka Stadium will be one of the central themes and highlights of the project.

If that is the case, industry observers have asked whether PNB will look at introducing a full-fledged culture village around the historical site that can also double up as function destinations to ensure the the project will remain functional.

To avoid the project becoming a “white elephant” like many observers fear will happen, the culture village should be kept alive with interesting cultural performances and events on a daily basis.

Perhaps, the National Museum should be moved there as its historical ambience is the most appropriate to showcase important things and events of the country’s past.

On the rationale for the 100-storey tower instead of vying to be the world’s tallest, Hamad explains: ”We are not competing with anybody in the world in terms of the height of the building. Currently, there are already three buildings being planned at 1000m heights, surpassing Burj Khalifa’s 828m. There will be no end to this sort of competition. So making it the world’s tallest is a non-issue and we would not go into this.”

Hamad stresses that the building is not being designed to outshine any particular organisation, including the Petronas Twin Towers which have been and will continue to be Malaysia’s icon.

“We want the building to look architecturally good and acceptable whilst incorporating the green features. These are market expectations in the near future. With this, we can get a reasonable return on our investment on this building.”

Besides being the country’s most famous landmark, the 88-storey Petronas Twin Towers are the world’s tallest twin buildings today. Completed in 1998 at a cost of US$1.2bil, they were the tallest buildings in the world until they were “dethroned” by Taipei 101 which was completed in 2004.

The twin towers also have world renowned Argentine-American architect C├ęsar Pelli, to thank for its unique and timeless design. The towers were constructed largely of reinforced concrete, with a steel and glass facade which have given them the magical and glittering effect.

On the cost difference between the two projects, Hamad says: “We are comparing relative costs, in terms of the timing of these two developments. Material prices have gone up quite a fair bit. The real yardstick is the return on investment, using current market prices and costs for the building materials and other related costs.”

By The Star

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