HUB POTENTIAL: Positive initial demand for financial district’s Grade A offices

The Tun Razak Exchange (TRX) is poised to be a success as there has been positive initial demand for the multi-billion ringgit development's Grade A offices, a research house said.

UOB Kay Hian said TRX's Grade A offices had attracted strong interest from multinational financial institutions which view the exchange as an avenue to set up new hubs to support future growth.

Some of the potential tenants are currently not present in Malaysia, the firm added.

"We are optimistic on the development of TRX, given its close proximity to the heart of Kuala Lumpur and the concept offered," UOB Kay Hian said, after a meeting with TRX developer 1MDB's management on the mega project.

The first phase of the sprawling financial district is due to kick off in the middle of next year, with prime Grade A office towers offering a gross floor area (GFA) of between 750,000 sq ft and 1.2 million sq ft.

The phase is estimated to generate a gross development value (GDV) of between RM5 billion and RM6 billion.

Over its 15-20 years of development, TRX is projected to generate a GDV of RM26 billion.

UOB Kay Hian said TRX will be the new international hub for finance and professional services.

It will house a right mix of government institutions, top global institutions and support services companies.

The firm said to make TRX a "work-live-and-play" area, the development also offers a retail mall with up to 1.5 million sq ft (to be done in phases) of net lettable area, residential blocks and a hotel. The development is expected to be completed by 2017.

Construction companies such as Boustead Group, WCT Bhd and Mudajaya Group are likely to be the prime beneficiaries of TRX's construction contracts.

"1MDB's management highlighted that the infrastructure cost is estimated to be RM2 billion," it noted.

Given the land has a gradient which requires a sizeable amount of earthworks, UOB Kay Hian believes the first RM1 billion will be spent on earthworks and basement works. The remaining RM1 billion will go towards external infrastructure works and rejuvenation of the surrounding areas including Jalan Imbi to enhance connectivity.

"1MDB has not decided on the source of funding as it is still deliberating on a few available options. However, a portion of this is likely to come from foreign direct investments," it added.

Property developers is expected to benefit as well because of TRX's location and connectivity.

Tun Razak Exchange infrastructure may cost RM2bil
PETALING JAYA: The infrastructure cost for the Tun Razak Exchange (TRX) is estimated at RM2bil with about 10 pre-qualified contractors who are eyeing the earthwork packages of the overall project.

UOBKayHian said in a report that as the land had a gradient which required a sizeable amount of earth work, the first RM1bil would be spent on earthwork and basement works, while the remaining RM1bil would go to external infrastructure works and rejuvenation of the surrounding areas of TRX, including Jalan Imbi, in order to enhance connectivity.

“1Malaysia Development Bhd (1MDB) has not decided on the source of funding as it is still deliberating on a few available options. However, a portion of this is likely to come from foreign direct investments (FDI),” it said.

It said currently ground clearing works on the land were ongoing and the first physical construction would commence in mid-2013.

“We understand there are about three packages comprising earthwork, basement and civil works in phase one. We believe that the earthwork packages could be significant, with packages valued at RM500mil to RM1bil in total,” it said

It opined that the potential winner was WCT Bhd, which could leverage on its expertise and track record from previous jobs in Iskandar, KLIA and Vale to stand a better chance in securing the earthwork packages.

“Other potential winners are IJM Corp Bhd and Mudajaya Bhd, we believe. Property developers will benefit as well because of its location and connectivity. Other than being located in a prime area, the development will also feature a dedicated MRT (mass rapid transit) station, and an existing and upcoming network of public transportation systems,” it said.

It added these would greatly benefit developers who have developments or landbanks around the area, which include Sunway Bhd and Boustead Bhd (potential of replicating The Curve in their landbank near TRX).

“We are optimistic on the development of TRX, given its close proximity to the heart of Kuala Lumpur and the concept offered. TRX will be the new international hub for finance and professional services that will also house a right mix of government intuitions, top global institutions and support services companies,” it said.

It said the first phase of development would kick off with prime Grade A office towers, offering a gross floor area of between 750,000 sq ft to 1.2 million sq ft depending on demand.

“We understand that there has been positive demand for TRX’s Grade-A offices, especially from the multi-national financial institutions that view TRX as an avenue to set up new hubs to support future growth. Some of the potential tenants are currently not present in Malaysia,” it said.

To make TRX a “work-live-and-play” area, it said the development also offers a retail mall with up to 1.5 million sq ft (to be done in phases) of net lettable area (NLA), residential blocks and a hotel and is expected to be completed by 2017.

By The Star

In the recently tabled 2012 Budget, the Government has proposed several incentives to accelerate the development of Tun Razak Exchange (TRX).

The package includes; an Income tax exemption of 100% for a period of 10 years and stamp duty exemption on loan and service agreements for TRX status companies, Industrial Building Allowance and Accelerated Capital Allowance for TRX Marquee Status Companies and Income tax exemption of 70% for a period of 5 years for property developers in TRX. These incentives are necessary sweeteners, a first step towards bringing the best talent and infrastructure to the financial district.

1MDB has received a development planning approval from the City Hall for its master plan, prepared by Akitek Jururancang (Malaysia) Sdn Bhd and its global partner Machado Silvetti and Associates. The two companies represent the fusion of local and international talents that best translates 1MDB’s vision for the future financial district through their concept and rendering of the master plan.

AJM and MSA produced a vision for a highly functioning, interesting, innovative, and aesthetically pleasing urban district that will establish TRX as a financial centre of choice.

1MDB is committed to deliver a sustainable and modern TRX and implement the highest level of international design and progressive planning tenets, including industry-leading sustainability in buildings and infrastructure, a pedestrian-friendly green public realm, seamless links to public transportation, and guidelines for architecture of high international standards.

1MDB has also appointed eleven local and global companies covering various fields including sustainability, infrastructure engineering, landscape planning and traffic management were also appointed in 2011. The selection process, which adopted best global practices, included a pre-qualification and RFP process.

Work for TRX is on schedule with construction work expected in 2012.

BEIJING: Malaysian Ambassador to China Datuk Iskandar Sarudin lauded the initiatives under Budget 2013 tabled by Prime Minister Datuk Seri Najib Tun Razak on Friday, saying he was confident that Chinese companies would be attracted to the Tun Razak Exchange (TRX).

He said TRX was an opportunity for Chinese companies and provincial governments at the level of second and third tier cities to invest in Malaysia, and Chinese companies were aware of TRX.

Malaysian authorities however would need to promote TRX in China, he told Bernama here.

Iskandar said as an active global player, Chinese participation in TRX, an upcoming commercial and financial services hub in Kuala Lumpur city, would not only enhance, but also expand the scope of economic relationship between Malaysia and China.

Meanwhile, Malaysia External Trade Development Corporation (Matrade) senior trade commisioner cum commercial counselor Abu Bakar Yusof said tax exemptions on income to be given for 10 years to companies with TRX status, would certainly open up opportunities for international financial institutions from China to choose Kuala Lumpur as their investment destination.

"Subsequently, that could indirectly facilitate trading and investment activities between Malaysia and Chinese enterprises through diversified services," he said.

Najib tabled Budget 2013, themed "Prospering the Nation, Enhancing the Well-being of the Rakyat: A Promise Fulfilled" in the Dewan Rakyat on Friday.

He announced that an income tax exemption for a period of 10 years, stamp duty exemption as well as industrial building allowance would be given for TRX status companies.

The TRX commercial and financial hub is expected to attract 250 international companies and create 40,000 job opportunities.-- BERNAMA