KUALA LUMPUR: Years of promoting Tun Razak Exchange (TRX) as the city’s premier location will finally see the city’s financial centre welcoming its first tenant.
British insurance company Prudential Assurance Malaysia Bhd (PAMB) will be leaving Menara Prudential in Jalan Sultan Ismail to enter what has been promoted as the regional financial centre TRX “soon”, according to a statement from PAMB.
“TRX is a world-class and exciting commercial development. It meets our requirements for a strategic location, good infrastructure and transportation connectivity that is convenient to our people, including our employees and customers,” said a statement from PAMB.
The statement said three other business units of Prudential plc – Prudential BSN Takaful, Eastspring Investments Bhd and Prudential Services Asia – will also be moving to TRX. Prudential plc is headquartered in Britain.
An industry source said while the move has already started, the insurance company would take a month or thereabouts to be operational from TRX starting July.
The insurance company will occupy between 70% and 80% of what is currently loosely known as Menara Prudential 2. The TRX building is also known as Menara Prudential. The remaining office space has been leased.
The developer of TRX’s RM500mil Menara Prudential is IJM Construction Sdn Bhd, a wholly-owned subsidiary of IJM Corp Bhd, the building owner.
Menara Prudential is a Grade A, LEED Gold-certified and MSC-status office building with a gross floor area of 560,000 sq ft.
IJM Construction is also developing the RM505mil Affin Bank Bhd HQ and HSBC HQ, excluding lifts and facade works for RM392mil, according to Bursa filings.
Other than Menara Prudential, the other building expecting its first tenant by the end of this year is Mulia Group’s Exchange 106, which offers super prime office space of higher specifications than Grade A space, in the TRX district.
Because of the weak office market and the over supply of office space, the source said Exchange 106’s rental rate is likely to go down to below RM10 per sq ft (psf).
As a comparison, a Grade A building in the city used to command a range between RM7 and RM8 psf several years ago which means super prime space should command a higher rental.
Another industry source said super grade buildings, which is of a higher category than Grade A buildings, have a cost of construction which is about double that of Grade A buildings.
The cost of construction for a Grade A building is about RM1,000 psf on a net lettable area basis.
When the rent is between RM7 and RM8 psf, the building owner just about break even, the source said.
Without naming any buildings, the source said some of the buildings in TRX may be closer to the RM2,000 psf category. So they should be getting RM15 psf and not below RM10 psf.
Office rental rates in Kuala Lumpur business district fell again in the first three months of 2019, the sixth consecutive quarter fall, property consultancy Knight Frank said in its Asia-Pacific Prime Office Rental Index 1Q2019.
Office rental growth in Kuala Lumpur dropped by 1.4% compared with a year ago. Against October-December 2018, it fell 0.3%, the report said.
TRX is a 70-acre development earmarked to be the region’s financial centre. Exchange 106 will have 2.8 million sq ft of net lettable space.
HSBC and Affin buildings are scheduled to be completed next year.
The other feature in TRX is Australian property and infrastructure group Lendlease’s 17-acre mixed integrated development known as The Exchange.
The retail mall is expected to be operational by the third quarter of 2021.
Source: The Star