This article first appeared in The Edge Malaysia Weekly on December 20, 2021 - December 26, 2021

HSBC Bank Malaysia Bhd has placed Menara HSBC South Tower, located on Leboh Ampang, Kuala Lumpur, up for sale. Industry experts say that the 42-year-old building will be able to fetch between RM95 million and RM110 million.

This comes as HSBC prepares to vacate the building in phases and move into its spanking new headquarters, Menara IQ, in Tun Razak Exchange. In confirming the planned sale, HSBC tells The Edge, “HSBC is currently vacating the former head office building in Leboh Ampang. The targeted completion date is 2Q2022.” The bank branch will relocate in February 2022.

A recent advertisement sighted by The Edge shows that CBRE|WTW has been appointed to seek a buyer for the 19-storey building. The advertisement describes the building as a landmark in the Kuala Lumpur Central Business District, located near public transport, and within walking distance of the Masjid Jamek LRT station and Pasar Seni MRT and LRT station.

It adds that the building use could potentially be changed “to other commercial use such as hotel and education” with the approval of the local council.

The building has a gross floor area of 250,247 sq ft, a net lettable area of 172,245 sq ft, two levels of basement, and 55 car park bays.

When asked how much the asset is likely to fetch, CBRE|WTW says, “There are various potential uses of the property. Hence, we will allow the market to dictate the price, based on the intended use. CBRE|WTW will assist and guide the prospects on the bid price.” The advertisement did not indicate a closing date for the sale, which will be conducted via a tender exercise.

This is not the first time that HSBC is inviting bids for the asset. It was also put up for sale in 2018, more than three years before HSBC started vacating the premises. At the time, the asking price was reportedly RM120 million.

In 2018, when HSBC was trying to dispose of the building for about RM120 million, it was fully tenanted. Had the building been sold then, the asset would have likely come with a guaranteed rental as HSBC continued to rent the space pending the completion of its new building in TRX.

Industry observers note that the scenario has now changed.

A valuer who declines to be named places a price tag of between RM95 million and RM100 million for the asset, noting that it has been on the market for a while and has yet to be sold. He adds that it would be tougher to sell an untenanted asset.

Another valuer-cum-real estate agent gives a higher back-of-the-envelope estimated value of RM110 million for the building. But he expects the sale to face challenges, pointing to the existing office space oversupply in Kuala Lumpur. He adds, “While this is not a Grade A office building, it is sited at a very good location.” The building, No 2, Leboh Ampang, is located next to the ongoing River of Life project and enjoys high footfall.

“If rented, the building might be able to fetch between RM3 psf and RM3.50 psf, including service charge,” he says.

On converting the office into a co-working space, he says with more people opting to work from home, the demand for co-working space is currently low. As for converting the building into a hotel, which is what has been done with some buildings nearby, he says this would be possible but it is likely buyers would try and drive a hard bargain.

HSBC has been occupying the Leboh Ampang building since 1979. In June 2017, it emerged as the first foreign bank to invest in TRX when it signed a deal with TRX City Sdn Bhd and announced a US$250 million investment. HSBC bought a 1.3 acre site in TRX, reportedly for RM185 million, and built a tower with 568,000 sq ft of space.

The new headquarters, Menara IQ, is a 33-storey building. HSBC will take up 22 floors while the remaining floors will be leased to companies supporting the TRX ecosystem, such as fintech, financial and professional services firms. The building was named IQ, meaning intelligence, as it is a Smart/Intelligent building.

HSBC used to lease another office building on Leboh Ampang, previously referred to as the North Tower, which was vacated at the end of 2020.

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