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Monday, February 11, 2008

Kha Seng to ride on niche retail sector

KHA SENG Corp Sdn Bhd is keen to tap into the growing niche retail developments, including lifestyle shopping malls, concept stores and wholesale complexes, especially in the garment and fashion trade in the Klang Valley.

The company has several retail projects in the planning stages, which will commence in a few months.

Managing director Bernard Bong said Kha Seng would concentrate its resources on the Klang Valley's niche retail, wholesale and commercial projects in the next two years.

The Jalan Kasturi pedestrian area beside Kuala Lumpur Central Market will be upgraded into a covered street mall.

“The retail market in Kuala Lumpur has grown tremendously in a very short time and we believe there is a need for a breather before the market can absorb more sizeable format malls.

“However, there is still an inadequate supply of commercial spaces that cater to specific needs and the community in a particular locality.

“Our retail projects will target this niche market and we aim to do that with our latest project, Kenanga Wholesale City,” Bong told StarBiz.

Kha Seng, a garment manufacturer and wholesaler, diversified into real estate investment 15 years ago and eager to “ride the waves” of the growing commercial property market.

Within three years of taking over the management of Kuala Lumpur Central Market, it has successfully turned around the building into a vibrant culture, arts and craft centre.

In 2004, the company paid RM38mil for the building's remaining 60 years lease in an open tender by Pengurusan Danaharta Nasional Bhd.

Central Market has 60,000 sq ft of net lettable space housing 250 shop lots, including 30 to 50 kiosks, that sell a variety of art, handicrafts, batik, souvenirs and gifts.

To encourage the right tenants to establish business in Central Market, the company has maintained rental rates at between RM15 and RM40 per sq ft. “The rates will be up for review when the time is right,” Bong said.

His decision to expand in the retail real estate sector is largely due to Central Market's immense success.

Expressing his satisfaction in the company's investment, he said Kha Seng was on its way to recoup its capital and turn in profits within the next 18 months.

“There is probably no other centres nationwide that is similar to Central Market, given its one of a kind combination of location, culture, history and shopping.

“However, as a retail-focused company, we will consider investing in other potential projects if the right opportunity comes along,” Bong said.

On plans to expand the Central Market, he said Kha Seng had submitted plans for development of the riverside into a historical walk and alfresco dining outlets, while the Jalan Kasturi pedestrian area would be converted into a covered mall with decorated kiosks and for street performances.

“Once the finer details are ironed out, we will start work on the next phase of upgrading,” Bong added.

On future projects, he said Kha Seng had paid RM78mil to purchase the UE3 shopping centre in Cheras from the project’s receiver. The building was formerly own by the MBf group.

Bong said the company would spend RM100mil to refurbish and reposition the shopping complex into a lifestyle mall with specialty stores for the middle-income market.

The refurbished complex, with net lettable space of 600,000 sq ft, will be opened in the first half of 2009.

A 360-room business class hotel will also be constructed on the adjoining land.

Meanwhile, the Kenanga Wholesale City along Jalan Kenanga, off Loke Yew, will be an integrated commercial complex for fashion apparel wholesale and retail trade.

Kenanga Wholesale City Sdn Bhd bought a 3.1-acre plot from Tenaga Nasional Bhd in the middle of 2007 and the RM1bil project is schedule for completion early 2010.

Bong, also managing director of Kenanga Wholesale City, is looking at building similar concept projects for other wholesale businesses in the surrounding area or in other parts of Kuala Lumpur.

On Kha Seng's earlier plans for the redevelopment of the Klang bus station, he said it had been replaced with another retail project on a nearby land. “We are in negotiation with the landowner,” he said.

By The Star (by Angie Ng)

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