This article first appeared in The Edge Malaysia Weekly on August 22, 2022 - August 28, 2022

IF one were to draw an analogy between Hap Seng Consolidated Bhd’s asset acquisition manoeuvres along Jalan P Ramlee and a board game, it would resemble Parker Brothers’ Monopoly. Property developer and investor Hap Seng — which in 2004 and 2005 purchased commercial assets and land and themed these into what is today Menara Hap Seng 1, 2, 3 and Wisma Mercedes-Benz — went on to buy the former Wisma KFC in 2021 and is now reportedly adding yet another nearby asset to its portfolio.

Sources say Hap Seng is poised to emerge as the new owner of the Menara Weld office building and The Weld Shopping Centre located at the corner of Jalan Raja Chulan and Jalan P Ramlee, Kuala Lumpur. It is learnt that Hap Seng and the vendor, Great Eastern Life Assurance (M) Bhd, are in the process of finalising a deal for between RM240 million and RM300 million.

This purchase, once completed, will see Hap Seng owning a collection of commercial buildings lined up in a row, stretching from the corner of Jalan Raja Chulan and Jalan P Ramlee to the intersection of Jalan P Ramlee and Jalan Sultan Ismail (see map).

When contacted for confirmation and details of the deal, Hap Seng managing director Datuk Edward Lee Ming Foo declined to comment. The Edge did not receive a response from Great Eastern.

In June, an office tenant at Menara Weld informed its employees that they would have to vacate the premises and relocate because of a possible change in ownership of the building. “With a possible change in ownership of our office building in Kuala Lumpur, the landlord has requested all tenants to vacate the office to facilitate this change … The last day in the current office is Sept 30, 2022,” reads an email sent to employees.

It remains unclear what Hap Seng plans to do with the asset once it is vacated. One source indicated that while it may have plans to renovate or to repurpose the office building, it may retain the retail component.

What price did Hap Seng pay for the 26-storey office tower with an adjoining six-storey retail mall?

The purchase price, industry experts estimate, could range from a 10% premium over the asking price of RM270 million to a 10% discount.

In late 2019, Great Eastern Life in Malaysia, a unit of Singapore-listed Great Eastern Holdings Ltd, called for bids via tender for Menara Weld and The Weld Shopping Centre and set a reserve price of RM270 million for both assets.

An estate agent who declined to be named says Hap Seng had been looking to take control of the Jalan P Ramlee stretch for a decade now and that he would not be surprised if it had paid a premium to secure the commercial asset.

Another estate agent, citing the tough property market and lingering effects of the Covid-19 pandemic, believes that the asset may have been sold at a 10% discount to the 2019 reserve price.

The building offers 400,000 sq ft in net lettable area (NLA) and sits on 68,932 sq ft. It has four levels of basement parking and 445 parking bays, and an NLA of 269,953 sq ft.

Even in 2019, industry experts noted that it would make sense for Hap Seng to purchase the property as it already owned several buildings on Jalan P Ramlee. Together, Hap Seng 1, 2 and 3 and Menara Mercedes-Benz — collectively known as Plaza Hap Seng — offer a total of 900,000 sq ft in NLA.

In 2004, Hap Seng bought the then MUI Plaza for RM190 million and invested another RM60 million for what is today Menara Hap Seng 1. In 2005, the company purchased a 1.1-acre freehold parcel next to Menara Hap Seng 1 from Eastern & Oriental Bhd for RM103 million and developed Hap Seng 2. Wisma Mercedes-Benz and Hap Seng 3 is located on the parcel formerly known as Hap Seng Star. The land was also acquired in 2005 for RM70 million.

Asked to comment on the Menara Weld purchase, Stanley Toh, executive director of real estate and valuation firm LaurelCap Sdn Bhd, says, “It’s a strategic move by Hap Seng, as by acquiring Menara Weld, it would control the entire stretch of properties along the upper side of Jalan P Ramlee and hence be able to create a synergy between all the commercial blocks to yield better value.”

He adds that by having control over the stretch, it would also help increase the value of Hap Seng’s assets, as it would have the option and freedom to redevelop or redesign the properties in the future if the market changes.

“It would appear that its existing assets and latest property acquisitions in Kuala Lumpur are situated close to the Jalan Sultan Ismail corridor. The corridor is prime location as it connects Bukit Bintang and the central business district, and provides convenient links to the KLCC area as well as Raja Chulan locality,” ExaStrata Solutions Sdn Bhd CEO and chief real estate consultant Adzman Shah Mohd Ariffin  tells The Edge.

Citing Hap Seng’s plan to convert the Wisma KFC building into a hospitality asset, he says it will start the ball rolling for the rejuvenation of the locality and repurposing of office buildings for hospitality use. “The redevelopment is expected to enhance property values in the locality and may even spur more redevelopments,” he adds.

Great Eastern bought The Weld from Cycle & Carriage Malaysia in 2003 for RM150 million before upgrading it at an estimated RM15 million.

The retail component once comprised Weld Supermarket, said to be the city’s first supermarket. Built in the 1960s, it was demolished and replaced with The Weld Shopping Centre in the late 1980s. The office tower was subsequently added in 1994.

Incidentally, Great Eastern owns an office block at Equatorial Plaza in Jalan Sultan Ismail, located a mere 500m from Menara Weld. The Grade A office building was completed in 2018 and Menara Weld was put up for sale in 2019.

Meanwhile, another office building owned by Hap Seng in Kuala Lumpur is Menara Citibank. Hap Seng has a 49.99% stake in the company that owns the building.

Apart from office buildings, Hap Seng is also expanding its hospitality division in the capital. It is currently in the process of repurposing the former Wisma KFC into a hotel. The company purchased the building for RM190 million from Singapore-based property developer and manager Royal Group. Royal Group had purchased the building from the Employees Provident Fund in 2019.

This repurposed asset, expected to be completed in the first quarter of 2024, will be rebranded as Hyatt Centric Kuala Lumpur. Another hospitality asset owned by Hap Seng will be the Hyatt Regency KL, a 33-storey hotel in KL Metropolis. The company is jointly developing the asset with Naza TTDI Sdn Bhd on a 70:30 basis.

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