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Wednesday, May 28, 2008

Sunrise to set KLCC land price record

PRIME SITE: Wisma Angkasa Raya is a stone’s throw from the Petronas Twin Towers.

SUNRISE Bhd has proposed to buy a piece of prime land in the heart of Kuala Lumpur, a deal that will set a new record for land prices in the Kuala Lumpur City Centre (KLCC) area.

The freehold 69,171 sq ft land houses the 29-year old Wisma Angkasa Raya, and is a stone's throw from the Petronas Twin Towers.

Sunrise plans to buy the land for about RM179 million, or RM2,588 per sq ft (psf), higher than what YTL Corp Bhd paid for 0.4ha in Jalan Stonor earlier this year.

"The price is undoubtedly a new record for Kuala Lumpur," Aseambankers analyst Ong Chee Ting wrote in a report yesterday, adding that it is a fair price.

The deal reflects the bullishness of Malaysian developers as the capital grapples with a shortage of office space.

The land "has potential to be redeveloped into an upmarket commercial development", Sunrise said in a statement to Bursa Malaysia on Monday.

The main risk to the project is that Kuala Lumpur may have too much office space by 2010.

Nevertheless, that risk is offset by the fact that the site is a good location, Ong noted in his report.

Under the deal, Sunrise is buying all of Tanah Tuah Development Sdn Bhd for RM27 million cash from Reliance Pillar Sdn Bhd and Lembaran Segimaju Sdn Bhd.

Tanah Tuah has an interest in the land as it signed a deal on January 14 this year to buy the property for RM152 million.

However, that deal is not completed yet. Sunrise did not identify the original landowner.

In addition, Sunrise will settle a RM30.4 million loan given to Tanah Tuah by Reliance Pillar and Lembaran Segimaju.

Ong calculates that if Sunrise's new property can be sold at RM1,300 psf, there is still a hefty 30 per cent margin to be made.

"This translates into potential gross development value and development profit of RM900 million and RM208 million respectively," he said.

Reliance Pillar and Lembaran Segimaju bought into Tanah Tuah this month for about RM40 million.

By New Straits Times (by Presenna Nambiar)

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