Wednesday, 21 June 2017

(The Star) TRX project proceeding smoothly

KUALA LUMPUR: Malaysia’s newest financial district is taking shape and drawing investment after spending years mired in controversy for its links to a state investment fund.

The Tun Razak Exchange (TRX) has reached critical mass for its initial phase after HSBC Holdings Plc this month said it would invest US$250mil to build its local headquarters in the development, according to TRX City Sdn Bhd chief executive officer Datuk Azmar Talib.

The 70-acre site in downtown Kuala Lumpur has at times been the focus of domestic furore surrounding 1Malaysia Development Bhd (1MDB).

Named after Prime Minister Datuk Seri Najib Tun Razak’s father and the country’s second premier, the development has a projected sales value of RM40bil.

“It did have an impact in the past,” Azmar said in an interview at the project’s gallery near the construction site, referring to the unwelcome spotlight as 1MDB made global headlines. “We are, however, now in a better position.”

Construction at the TRX is proceeding 22 hours a day and the first office building in the development is set to open by the end of 2018. A new mass rail transit may soon stop within the development at a station that will eventually house the only interchange for two train lines in the city centre.

The project, which started around 2013, would be completed over the next 15 to 20 years, the company said.

The outlook is improving for Azmar who has had arguably one of the toughest jobs in property development in Malaysia. Formerly the property arm of 1MDB, his team had to battle negative perceptions of the development as investors became increasingly wary of any project linked to the fund.

The purchase of a plot of land in the district by Lembaga Tabung Haji, the national Hajj pilgrims fund, sparked protests and a public outcry on social media in 2015, prompting the Prime Minister to order the trust to sell it just days after the acquisition was disclosed.

Second Finance Minister Datuk Seri Johari Abdul Ghani said in May 2016 that troubles surrounding 1MDB had deterred banks from extending financing to TRX’s project partners.

TRX City is now under the finance ministry after an ownership transfer this year. About 70% of available land in the project has been commercialised and there’s no hurry to sell the remaining four plots in the current phase, Azmar said.

“The transfer has provided us more stability and has boosted confidence in the development,” Azmar said. “TRX is a national project and we are glad that we can now deliver the project unencumbered by unrelated matters.”

The HSBC investment is a “very significant milestone” for TRX after four years of courtship, Azmar said. Another international financial institution has signed a long-term lease for an office block, he said, without giving details.

Indonesia’s Mulia Group is developing a 106-story Signature Tower, which will be taller than the Petronas Twin Towers when ready by mid-2019. A retail mall with a rooftop park the size of up to seven soccer fields is planned within the lifestyle quarter that TRX is developing with Australia’s Lendlease Group, Azmar said.

“TRX is a very strategic and important development for Kuala Lumpur to be successful and on par with other international cities,” said Sarkunan Subramaniam, managing director of property consultant Knight Frank Malaysia Sdn Bhd.

In the older part of the city centre, “a lot of the buildings are 20, 30 years old and they lack the modern requirements like fibre optics, which are important for the multinational corporations to come in,” he said.

While TRX will enhance the Kuala Lumpur skyline, it may also exacerbate a supply glut that’s garnered the attention of policymakers. Lenders should be concerned with the sizable surplus in commercial property such as office and retail space, central bank governor Datuk Muhammad Ibrahim said in May. — Bloomberg