Buying of TRX land from 1MDB not a rushed deal, says Affin

KUALA LUMPUR: Affin Bank Bhd, which is acquiring a 1.25-acre piece of land located in the Tun Razak Exchange (TRX) for RM255mil, has been in discussions with TRX since 2012.

“This is not a rushed deal. Affin Bank has been in negotiations with TRX. Affin Bank is just one of the many financial institutions we are currently talking to,” according to an executive close to the deal.

As a master developer with a comprehensive master plan process, the executive said it was implementing site-wide infrastructure, including transport connectivity, water management, district cooling and a sizeable public realm.

The development did not have a uniform plot ratio, said the executive.

A plot with a higher plot ratio will have greater potential to generate higher value, as it could build more gross floor area to generate higher income.

“So, investors do not just rely on purchasing a large piece of land,” said the executive.

“Affin Bank’s land has a plot ratio of 15.2 times and the price per square foot (psf) based on the gross floor area (GFA) is RM310. TRX as a whole will have a plot ratio of 6.8 times, as the higher plot ratios for the buildings are balanced out by the lower plot ratios for the public realm area, which includes an urban central park,” the executive said.

Previously, 1Malaysia Development Bhd (1MDB) had sold a 1.6-acre parcel of land to Lembaga Tabung Haji for RM188.5mil. It came with a plot ratio of 10.47 times.

1MDB has also signed a sale and purchase agreement with Indonesia’s Mulia Group for the development rights of Signature Tower, a 3.44-acre parcel in TRX. That transaction was valued at RM665mil.

The executive said that it was not “necessarily true” that TRX’s prices were higher than surrounding sites.

The executive said most of the transactions within the KLCC and Jalan Sultan Ismail area had been quoted in prices psf of the land.

“As illustration, recently, the German Embassy land was purchased by Malaysian Resources Corp Bhd for around RM3,100 psf of land. However, if as anticipated the land will have a plot ratio of between eight and 10 times, then the price on the GFA will be between RM310 and RM380 psf, with the potential for a higher price if the plot ratio is increased.

“Based on that comparison, the price on TRX is not considered expensive. On top of this, TRX provides comprehensive master planned infrastructure, TRX incentives and strong public transport connectivity,” the executive explained.

TRX has a development period of 15–20 years to be completed in phases. The initial Phase 1 is slated for completion in 2018.

The first earthworks package is already reaching completion, while the next package of work has been extended to the road works and tunnels to support its infrastructure.

This includes the underground road structures, installation of buried utilities and both at-grade and elevated road ways.