- MRT Corp has clarified in a press statement that its principal focus lies with the development of the Sg.Buloh-Kajang (SBK) MRT project ' and not property development. MRT Corp was responding to concerns over a report by The Malaysian Insider (TMI) that the businesses of Bumiputera retailers within the area would be affected once MRT Corp gains possession of BB Plaza in 2013. We understand that at least 60% of some 150-odd retailers operating within BB Plaza are Bumiputeras.
- UDA Holdings is the owner of BB Plaza at the heart of Kuala Lumpur city centre. The BB Plaza station forms part of the 51km-long SBK MRT line, where most of the major shopping centres around KL city centre are supposed to be linked with underground stations. Based on news reports, MRT Corp wants gain possession of the basement of BB Plaza to put its equipment and tools for construction of the underground station.
- The TMI report had earlier claimed that the occupants of BB Plaza would have to vacate the building next year to pave the way for MRT Corp to commence underground station works. The report added that businesses within the mall were only privy to very little details regarding compensation for being asked to move out.
- Our ground checks have revealed that the MRT Corp would first gain possession over the frontage of BB Plaza that adjoins the Yayasan Selangor building, before moving on to their basements to construct the underground station. By the middle of next year, the entire occupants of the mall would have to clear out.
- Another report by Business Times also quoted UDA Corp Chairman Datuk Nur Jazlan Mohamed as saying that UDA may seek to dispose BB Plaza to MRT Corp for RM474mil, including RM100mil as compensation for BB Plaza retailers who may have to leave before their respective leases expire. The concern is that the Bumiputera agenda could be in jeopardy if rental rates at BB Plaza were to be raised to offset a higher replacement cost for any redevelopment plans on the mall.
- Earlier this year, MRT Corp had paid UDA a combined RM80mil to acquire UO Superstore and Plaza Warisan - ~RM40mil below the market price - to build MRT stations at the sites. In its reply, MRT Corp has since denied having any intention to acquire BB Plaza but said it is in on-going discussions with the Ministry of Finance (MoF) on the proposed station linkages. While it did not disclose any compensation plans, MRT Corp however believes that the BB Plaza retailers could instead benefit from any redevelopment plans for the mall, particularly with an underground station running through it.
- Importantly, we expect no real impact on the contractors involved as MRT Corp or other federal-backed agencies should be responsible for any land acquisition issues or compensation to affected parties. Instead, we draw comfort that the momentum of contract awards should intensify going into 2H12. The latest award for pre-cast concrete tunnel segment linings to Kim Lun Corp brings the total value of major jobs awarded to-date to ~RM14bil out of an estimated initial cost of RM20bil.