THE purchase of the Bangunan KWSP at Changkat Raja Chulan in Kuala Lumpur by TIME Dotcom Bhd may be an indicator of the current times.
Time is paying RM62mil for the building which the Employees Provident Fund (EPF) had bought for RM46.04mil in 1994.
The acquisition will enable Time to expand its operational facilities.
It also implies that the building price has hardly appreciated in 28 years.
PPC International’s Datuk Sidsapesan Sittampalam (Siders) tells StarBizWeek that the price transacted for the building is an indicator of the changing times with the emergence of the Covid-19 pandemic.
“One would need to look at the yields of the building as to whether they are high or low but there is no official data provided on this front.
“However, the limited parking space is a weakness of the building. I believe that the EPF had reasons to sell it.
“The building has been placed on the market for some time and it is done on a willing buyer-willing seller basis,” Siders says.
He points out that the price paid by Time is a reflection of the huge office supply space in the city.
“In the Kuala Lumpur area, there is total office space of some nine million sq m. A supply of about 1.4 million sq m is anticipated in the next few years. There is a substantial amount of incoming office space.
“Many people have adapted to the work from home (WFH) arrangements.
“The question arises for businesses if they need such a huge office space. It implies that the increased prevalence of WFH will be bad for older buildings,” Siders adds.
The WFH trend and the glut in office space are a double whammy that will see older buildings bearing the brunt in the occupancy space.
“Older buildings are bound to see a decline in value – unless they refurbish. Some have to go through retrofitting and remodeling to sustain their value as tenants have many choices for office buildings.
“It is a tenant-market now.
“Of course certain buildings in good location and new ones can still sustain their yields,” he says.
Meanwhile, Zerin Properties chief executive officer Previn Singhe says the value of a building is a function of its relevance to the times it is in.
“The same will apply to a home or hotel that is old. Upon refurbishment, values will go up. “Look at the case of Plaza Batai. As for the price, office buildings, like any other yielding assets, will need to be refurbished to be relevant,” Previn says.
“Factors like security turnstiles, Multimedia Super Corridor status, lifts, lavatories will need to be constantly upgraded. Even the car park systems are moving toward number plate recognition.
“I see the building-sale to Time as a good purchase for the company and it also shows that the property market in KL is still robust, with businesses still needing space,” Previn adds.
He also notes of other sales that have taken place recently included Menara MIDF, which will likely see the office building being repurposed into a hotel.
A local business weekly reported at end-2020 that Permodalan Nasional Bhd (PNB) had sold Menara MIDF located along Jalan Raja Chulan to Singapore-based JD Hospitality Sdn Bhd.
The sole tenant in the 21-storey building is PNB’s unit Malaysian Industrial Development Finance Bhd which will soon relocate to PNB 118.
Tan Sri Desmond Lim Siew Choon of Pavilion had also reportedly bought Plaza Batai in Damansara Heights.
Plaza Batai is a 48-year-old building comprising 16 units of two-storey terraced shoplots with mostly upmarket restaurants.Its ground floor has a net lettable area (NLA) of 21,000 sq ft while the units on the first floor has a NLA of 25,400 sq ft.
In a sign that the property market is still moving along, it was reported in December 2021 that Hap Seng Consolidated Bhd had purchased Wisma KFC along Jalan Sultan Ismail, Kuala Lumpur.
It had acquired the building from Singapore-based property developer and manager Royal Group for an unconfirmed amount of RM190mil.
Royal Group had reportedly purchased the building from the EPF for RM116.5mil some three years ago.