A notice was issued by the Ministry of Finance (MoF) recently and the tender closes on 6 April.
The 19 acres (833,664 sq ft or 77,450 sq m) originally comprised six different parcels but these were amalgamated under one title for the sale. Previously residential, the tract has now been approved for mixed-use development with a plot ratio of 1:6.
The reserve price of RM833 million works out to RM1,000 psf for the land, which fronts Jalan Duta.
Commenting on the reserve price, VPC Alliance (M) Sdn Bhd managing director James Wong says, “We feel the floor price of RM1,000 psf is within market value. There are, however, pros and cons. It’s a sizeable piece of land in Damansara Heights, which is a good thing, but there may be restrictions due to its proximity to Istana Negara, such as the height of the development."
"Whatever development is built there in the future, the developer must be able to maximise the plot ratio of 1:6 with restrictions in place.”
The land is located literally beside the Istana Negara.
Another consultant who requested anonymity says there are a few issues with the land.
“Even though it allows commercial developments with a plot ratio of 1:6, it is located so close to Istana Negara, which means there would be limitations in terms of height and design, among other things. Because of this, I would consider the price of RM1,000 psf to be a bit high. Its ingress and egress may also be a problem as it is located along Jalan Duta and, again, close to the Istana.”
DTZ Malaysia managing director Eddy Wong acknowledges that it is hard to find a large piece of land in that area but agreed that its proximity to the palace could be restrictive.
“There’s potential but to achieve that plot ratio, you have to build high, which could be a problem if there is a height restriction. Let’s say that there is no height restriction and a huge component of the development is apartments. The developer will have to sell them at about RM1,200 psf and above. The question is, can you sell apartments at that price in that area?” he asks.
According to the MoF notice, the tender is open to both local and foreign bidders. A RM1 million tender deposit is required.
Analysts say they expect the government to sell more prime land in the city as another source of income to address the shortfall in government revenue as a result of the collapse in oil prices.
While the implementation of the Goods and Services Tax (GST) has been a big help, the government needs more revenue to meet not just its operating expenses but also its debt-servicing obligations.
News Source: The Edge Property, 28 March 2016