En­ter Four Sea­sons Ho­tel, exit Grand Sea­sons

The Star Malaysia - StarBiz - - Biz Property - [email protected]­tar.com.my

In­dus­trial mar­ket

Knight Frank Malaysia cap­i­tal mar­kets ex­ec­u­tive di­rec­tor Al­lan Sim an­tic­i­pates higher level of land bank­ing ac­tiv­i­ties among in­dus­trial prop­erty de­vel­op­ers in 2019.

“This is be­cause strong la­tent de­mand con­tin­ues to be om­nipresent es­pe­cially for in­dus­trial prop­er­ties with high spec­i­fi­ca­tions, as oc­cu­piers un­der­stand the need to jump onto the In­dus­try 4.0 band wagon in or­der to fu­ture-proof their busi­nesses.

“This presents a unique op­por­tu­nity for de­vel­op­ers and in­vestors alike to gain at­trac­tive mon­e­tary re­turns by pro­vid­ing end-users with the right prod­ucts.”

In­dus­try 4.0 refers to the par­a­digm that ma­chines are now able to au­tonomously adapt and co­or­di­nate their tasks to meet hu­man needs.

Mov­ing for­ward, Sim says he ex­pects to see new large-scale in­dus­trial de­vel­op­ments tak­ing shape in strate­gic lo­ca­tions due to ro­bust de­mand for ware­houses.

“For ex­am­ple, the pro­posed Free Trade Zone in Pu­lau In­dah, which was re­cently un­veiled by the gov­ern­ment, is ex­pected to gen­er­ate in­ter­est from man­u­fac­tur­ers and lo­gis­tics op­er­a­tors alike.

“As for es­tab­lished in­dus­trial parks, we con­tinue to see re­de­vel­op­ment of de­bil­i­tated fac­to­ries into multi-storey fa­cil­i­ties as a mean to mit­i­gate high land costs.

“All in all, Malaysia’s in­dus­trial prop­erty sec­tor, which has been the sil­ver lin­ing for Malaysia’s sub­dued prop­erty mar­ket in re­cent years, is set to con­tinue its re­silience,” he says.

Knight Frank Malaysia says the prospects for the Klang Val­ley’s in­dus­trial and lo­gis­tics prop­erty mar­ket re­main pos­i­tive this year, as more clar­ity in the poli­cies of the newly elected gov­ern­ment un­folds.

“Sev­eral mea­sures an­nounced un­der the re­cently tabled Bud­get 2019 will sup­port growth of the in­dus­trial sec­tor, es­pe­cially high-tech­nol­ogy in­dus­tries. The Na­tional Pol­icy on In­dus­try 4.0 strives to catal­yse growth of key sec­tors in the realm of elec­tri­cal and elec­tron­ics, ma­chin­ery and equip­ment, chem­i­cals, aero­space and med­i­cal de­vices.

“It will pave the way for en­hanced pro­duc­tiv­ity, job cre­ation and high skilled tal­ent pool in the man­u­fac­tur­ing sec­tor.” AS own­ers and guests sit down to a grand din­ner at the of­fi­cial open­ing of the new Four Sea­sons Ho­tel Kuala Lumpur in Novem­ber 2018, the Grand Sea­sons Ho­tel pre­pares to close.

Lo­ca­tion mat­ters, among other fac­tors. The Four Sea­sons is lo­cated at Jalan Ampang, ad­ja­cent to the gleam­ing and glam­orous Petronas Twin Tow­ers. Grand Sea­sons shares the same street as the Kuala Lumpur Hos­pi­tal on Jalan Pa­hang, near Chow Kit area.

Built around the time of the Asian fi­nan­cial cri­sis in 1997, the 678-room Grand Sea­sons Ho­tel will be clos­ing at the end of Fe­bru­ary, about 20 years since it opened its doors.

Two phone calls to the ho­tel on Jan 4 pro­duced vary­ing an­swers. The first said they are clos­ing for ren­o­va­tion. The sec­ond said they are clos­ing. Pe­riod.

At­tempts to reach the owner at press time was un­suc­cess­ful. An Eng­lish weekly ob­tained an in­ter­nal memo dated Dec 21, 2018 re­gard­ing its clo­sure.

The clo­sure of Grand Sea­sons comes at a time when there is a clutch of ho­tels up for sale, in­volv­ing bud­get to up­scale ho­tels, some of them hav­ing just re­cently opened for busi­ness.

Trop­i­cana Corp Bhd is said to have put the re­cently op­er­a­tional W Ho­tel in Jalan Ampang for sale at RM2.4mil a room. W has 150 rooms, bring­ing that to RM360mil.

Two in­dus­try sources say the RM2.4mil price tag per room seems a bit high but there may be po­ten­tial Chi­nese buy­ers who may be com­fort­able with the price be­cause of the Twin Tow­ers fac­tor, lo­cated less than 400 me­tres away on the for­mer Le Coq D’or land.

To­day, that site is oc­cu­pied by a 55-storey build­ing, with the ho­tel on the eighth to the 24th floor and the ser­viced apart­ments Trop­i­cana Res­i­dences from the 25th to the 55th.

About 90% of the 353 ser­viced apart­ments have been sold and with price cur­rently go­ing at RM2,600 per sq ft (psf ).

“It makes sense for Trop­i­cana to let W go, to re­duce gear­ing and move to an as­set-light strat­egy,” an in­dus­try source says.

Trop­i­cana group cor­po­rate com­mu­ni­ca­tions se­nior man­ager Joshua Chan de­clined to com­ment. Two in­dus­try sources con­firmed they have been ap­pointed, prob­a­bly among oth­ers, they reckon. Tan Sri Danny Tan Chee Sing is the younger brother of Ber­jaya Group’s Tan Sri Vin­cent Tan. Danny has a wide spec­trum of busi­nesses like prop­erty de­vel­op­ment, prop­erty in­vest­ment, re­sort man­age­ment, res­tau­rants and leisure through his in­vest­ments in pub­lic and pri­vate lim­ited cor­po­ra­tions. Danny has al­ready sold his Sky Ho­tels, which he used to hold pri­vately, say a source.

The other ho­tel that is up for sale is 253-room Sher­a­ton PJ on the op­po­site of the Fed­eral High­way across from PJ Hilton. Ac­cord­ing to press re­ports in May 2018, the Sher­a­ton is for sale for an in­dica­tive price of RM350mil, which works out to RM1.38mil a room.

The ho­tel is part of the Pin­na­cle Petaling Jaya Pin­na­cle PJ, a 1.73acre de­vel­op­ment in Jalan Utara, Sec­tion 52, Petaling Jaya. J&C Homes Hold­ings Sdn Bhd de­vel­oped the Pin­na­cle of­fices and ho­tel.

Other smaller ho­tels are also up for sale, among them the Sen­tral group’s port­fo­lio of 10 ho­tels, which range from bud­get to three-star de­vel­op­ments and scat­tered across the coun­try from the east coast to Pe­nang to Malacca. The port­fo­lio in­cludes three ho­tels in the Klang Val­ley, among them Sen­tral Ho­tel in Brick­fields, Kuala Lumpur.

Ac­cord­ing to in­dus­try sources, and which was con­firmed by a com­pany staff, the fam­ily-run Sen­tral Group has a price tag of RM625mil for the 10 ho­tels.

Tourism is among Malaysia’s top rev­enue earner but of late, there seems to be is­sues. Ac­cord­ing to Tourism Malaysia web­site, tourist ar­rivals dipped to 19.39 mil­lion in 2018 from 25.95 mil­lion in 2017. Tourism con­trib­uted RM82.2bil to rev­enue in 2017, a marginal drop of 0.1% from 2016, ac­cord­ing to Tourism Malaysia.

Ac­cord­ing to Leong PK, pres­i­dent of Malaysia Bud­get Ho­tel Asso­ciations con­nec­tiv­ity is an is­sue. The lack of in­vest­ment to strengthen the sec­tor is also lack­ing.

Malaysia has sun, sea, hills and moun­tains but these are not pro­moted well. Get­ting to Pangkor, Frasers Hill and these off-city lo­ca­tions are lack­ing, which ex­plains why, de­spite all its nat­u­ral at­trac­tions, the av­er­age length of stay in 2017 for for­eign tourists de­creased to 5.7 nights from 5.9 nights in 2016.

Leong, who rep­re­sents 2,000 bud­get ho­tels, says ho­tels as an as­set class of­fers a range of yield for their own­ers. Our peak years were from 2008 to 2012, Leong says. Since 2012, the golden years have grad­u­ally lost its shine. “To­day, if we breakeven we are lucky,” Leong, who has his own bud­get ho­tel, says. Some of his mem­ber ho­tels are los­ing money. There are about 6,000 bud­get ho­tels in the coun­try.

Leong says Malaysia lacked bud­get ho­tels sev­eral years back. Tourist dol­lar prompted many to go into the sec­tor.Now bud­get ho­tels are on sale.

CBRE|WTW man­ag­ing di­rec­tor Foo Gee Jen says bud­get and one to two-star ho­tels have mush­roomed in Malacca. Some are do­ing well, oth­ers just get by.

“Pe­nang ho­tels have a higher room rates and are gen­er­ally do­ing bet­ter those in the Klang Val­ley. So this sub-seg­ment of the com­mer­cial prop­erty sec­tor is very lo­ca­tion spe­cific, in terms of how well they are do­ing, their rates and over­all yield,” he says. Yields are not fan­tas­tic, he says.

Its profitabil­ity is de­pen­dent on other prod­ucts or ac­tiv­i­ties around it, for ex­am­ple how at­trac­tive are the tourist prod­ucts, health­care ser­vices around a par­tic­u­lar ho­tel.

Kuch­ing ho­tels are not do­ing well but those in Kota Kinabalu are do­ing well be­cause there are a lot more tourism at­trac­tions there to at­tract the Chi­nese, Ja­panese and Ko­re­ans, says Foo.

It is a mix­ture of busi­ness and tourism in the Klang Val­ley, he says.

Ho­tel oc­cu­pancy is be­tween 65% and 70% for the coun­try, Foo says.

He sug­gests ex­am­in­ing the real es­tate in­vest­ment trusts like Sun­way Reit and YTL Reit.

Sun­way is a mixed Reit com­pris­ing re­tail, ho­tel and of­fices.

YTL Reit is pri­mar­ily hospi­tal­ity but not do­ing as well.

Zerin Prop­er­ties chief ex­ec­u­tive of­fi­cer Previn Singhe has dif­fer­ent views. He thinks the 5.5% to 6.5% yield is worth­while, con­sid­er­ing to­day’s low in­ter­est rate regime, the flood of of­fice and mall space which is putting pres­sure on rental.

“There is no one yield for the ho­tel busi­ness. It de­pends on how the owner man­ages it, its tar­get au­di­ence and its lo­ca­tion,” says Previn.

A third quar­ter 2018 Jones Lang Woot­ton re­search re­ported that the Klang Val­ley room sup­ply is 55,221 com­pared to 34,058 3Q2008, with an av­er­age an­nual growth over the decade of 2,116 rooms, a com­pound an­nual growth rate of 6%. Pro­jected sup­ply is ex­pected to be 62,114 by 2020.

In a ta­ble of 29 ho­tels rang­ing from in­ter­na­tional brands to bud­get ho­tels, 10 of them saw their pro­mo­tional room rates ex­clud­ing tax de­creas­ing over a four-year pe­riod be­tween 2014 and 2018.

By THEAN LEE CHENG Im­pos­ing im­age: The Four Sea­sons Ho­tel Kuala Lumpur which had its of­fi­cial open­ing in Novem­ber.

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.