More than a transport hub

More than a transport hub
By Sharen Kaur
sharen@nstp.com.my


April 24 2007


CHAN Chee Meng remembers how hard it was to convince businesses to open at KL Sentral six years ago. He was responsible for the development of a transport hub that would also double up as a massive commercial development.

Investors were not prepared to make the move. It is located in Brickfields, famous for quarters of the national railway staff, a stark contrast to its up-scale neighbour Bangsar.


"It was difficult to convince business people to open shops at the main building at Stesen Sentral when it was launched in 2001 as many thought they would not prosper due to the location and lack of infrastructure," Chan, CEO of Kuala Lumpur Sentral Sdn Bhd (KLSSB) said.


But it is different today.


The main building at Stesen Sentral is now fully occupied and bursting at the seams with shops, allowing travellers and shoppers to buy goods ranging from shoes to luxury items.


Brickfields has also changed drastically.


There are new pedestrian walkways, old buildings repainted, roads upgraded, shops being transformed and more quality retailers and budget hotels moving in, spicing up the area.


Property prices have also shot up.


"Since the landmark of Brickfields has changed, many business people are flocking to the area to have a presence at KL Sentral while prices of neighbouring properties such as shoplots, shophouses, offices, serviced apartments and condominiums, have shot up by three times," Chan added.


History has proven that KL Sentral is a good idea. However, like many large projects during the late nineties, it had to contend with the Asian financial crisis.


KLSSB's parent, Malaysian Resources Corp Bhd (MRCB), had more than RM800 million in short-term debt and it made a net loss in 2001. This is hardly the position that a firm wants to be in when it's supposed to develop a multi-billion-ringgit project.


Chan admitted that financing was the main problem and the project only took shape starting 2004 because investors' confidence started to build up.


"In terms of development, the early start was difficult but now we are in a stronger position as we have refinanced our existing bonds with a new sukuk (Islamic bond)," he said.


The project also got another boost when pension fund the Employees Provident Fund, an investor with deep pockets, became MRCB's new major shareholder.


Today, about RM1.8 billion or 27 per cent of the project has been completed. There are some RM2 billion worth of projects or 29 per cent of the entire development that is being carried out currently.


Apart from Stesen Sentral, the other completed components include Plaza Sentral Phase 1 in 2001, three blocks of corporate office towers that made total sales of RM254 million, and Plaza Sentral Phase 2.


This consists of office suites that was done in 2006.


The Suasana Sentral condominium, completed in 2002, fetched a total revenue of RM249 million, while five-star Hilton Kuala Lumpur and Le Meridien Kuala Lumpur opened their doors for business in 2004.


MRCB, meanwhile, has completed building a purpose-built 30-storey corporate office tower for Lembaga Tabung Haji for RM161.46 million, early this year.


"The estimated RM8.3 billion KL Sentral project is now undertaking one of the largest commercial developments, which are estimated to generate over RM2 billion in GDV," Chan said.


He said the commercial development comprises of the Suasana Sentral Condominiums with a total of 600 units and four blocks of office buildings to house the headquarters of UEM Group, Malaysian Industrial Development Authority (Mida), Suruhanjaya Syarikat Malaysia (SSM) and the Quill group.


It would also have a lifestyle centre, known as Sooke Sentral, which includes a fitness, spa and business centre, restaurants and alfresco dining facilities.


Additionally, a massive RM450 million retail development comprising a mall, which will be linked with Stesen Sentral through the KL Monorail, is also being built now.


The commercial and retail developments are due to be completed by late 2008 or early 2009.


And after all of that, KL Sentral will still have about 13 hectares of land for future developments. These include a massive commercial centre and entertainment and media hub.


KLSSB is also in the midst of building an immigration centre, a one-stop investment approval centre, for foreign investors.


Chan, however, refuted claims that the project was doing well as it was getting a lot of support from government-owned companies and agencies.


He said government bodies like Mida and SSM came in as they saw the huge potential at KL Sentral.


"Properties around transportation hubs have always generated good values around the world. People like staying next to infrastructure.


"It just so happens that we have government agencies that want to be here such as Mida and SSM as they see great potential here, where they can estimate the kind of customers they would get, thanks to the infrastructure," he said.


Apart from being the heart of the country's transportation hub, the KL Sentral project would be a catalyst to the country's property and tourism sectors, which would indirectly boost the economy further.


"We have shared our success story with countries like Singapore, Indonesia, Malawi, India, Nepal and some countries in the Middle East, which do not have such a massive infrastructure development similar to KL Sentral. The KL Sentral concept is still new in South-East Asia," Chan said.


In fact, MRCB has pitched to replicate the concept of the project in other Malaysian cities and abroad.


In developed countries, there are integrated hubs similar to KL Sentral such as IFC in Hong Kong, Shinjuku in Japan, Canary Wharf in London and Atlantic Station in the US.