KUALA LUMPUR (Feb 13): The developer of Bukit Bintang City Centre (BBCC) is unfazed by the office supply glut that is haunting the Klang Valley property market now, saying the RM8.7 billion integrated development is still getting a substantial amount of interest from potential investors or owners.
Datuk Richard Ong, chief executive of the project’s developer, BBCC Development Sdn Bhd, told reporters last Friday that offices within the 19.4-acre (7.85ha) land in Jalan Hang Tuah here, where the Pudu Prison was formerly situated, possess numerous advantages, especially in terms of public transportation.
“We are not at all concerned or worried about that (the office supply glut issue) because this project has a lot of unique [selling points] like the transportation system, which is very important for people who work in offices,” he explained.
“Secondly, we are a fully integrated development. We have a mall, entertainment, hotels and apartments. These will increase the [project’s] traction and attractiveness. These are what offices would like to have as well, so it is the integrated nature of this project that we are banking on,” he added.
The ability to secure powerful parties to participate in the project is equally important for it to succeed, said Ong.
He was speaking after signing an agreement to lease (ATL) with Sony Music Entertainment (Japan) Inc’s subsidiary, Zepp Hall Network Inc, which will be a tenant within BBCC’s entertainment hub, in which it will operate a Zepp-branded concert hall.
Ong said the concert hall would occupy about 70,000 sq ft, making it the anchor operator of BBCC’s entertainment hub. Slated to open by end-2020, the hall will have an expected audience capacity of 2,500 people, he said.
The plan now is for BBCC Development to build the structure and foundation of the hall, and Zepp will participate at a later stage to equip the hall with its fittings, he said.
“The hall is part of the retail mall. The cost of building Zepp Hall would be around RM100 million,” he explained.
Ong said the lease tenure under the ATL is 20 years, though both parties had yet to finalise the annual lease rate.
“It would take us about four years to complete Zepp Hall. We will worry about that (annual lease rate) until after the completion by 2020. But roughly, both of us are looking at turnover sharing, plus some base rents, which is the common way for similar businesses elsewhere,” he said.
BBCC Development is jointly owned by UDA Holdings Bhd (40%), Eco World Development Group Bhd ([EcoWorld] 40%) and the Employees Provident Fund (20%).
EcoWorld closed one sen or 0.67% lower at RM1.48 last Friday, with a market capitalisation of RM4.17 billion.
This article first appeared in The Edge Financial Daily, on Feb 13, 2017.