Tall & Urban News

Malaysia’s next supertall building will be ready to take in tenants in December 2019, its developer said on October 23, 2019, as backers look to move past its links to the 1MDB scandal and focus on making headway in an oversupplied property market.

The Exchange 106 is the first project to be completed in the Tun Razak Exchange (TRX), a new financial district in Kuala Lumpur, that was started by now-defunct state fund 1Malaysia Development Berhad (1MDB), from which about US$4.5 billion was misappropriated, according to prosecutors.

The tower, taller than the Petronas Towers, came under scrutiny in March 2018, after the then-government of Prime Minister Najib Razak, who co-founded 1MDB in 2009, bought a 51 percent stake in the project. He acquired the stake just two months before he was ousted in a general election amid allegations of corruption.

But with the completion of the 106-story glass-and-steel tower, and support from the new administration led by Najib’s former mentor-turned-foe, Mahathir Mohamad, Indonesian developer Mulia Group believes the specter of 1MDB is now behind them.

In February 2019, Finance Minister Lim Guan Eng declared the TRX “detoxified” of 1MDB’s issues, after a review found that the government would be able to recover its opportunity cost and investments, according to local media reports.

The building, which has a sweeping view of the city, already has a fifth of its 2.6 million square feet (240,000 square meters) of rental space leased, with its first tenants expected to move in between December 2019 and June 2020, said Mulia official Patrick Honan.

“We expect the take-up to grow to 1.3 million square feet (120,000 square meters) by the end of next year,” Honan said during a media tour.

Some potential tenants include a top Fortune 500 global consulting firm, a Hong Kong-based personal care brand, e-commerce platforms, and a serviced office and co-working brand.

Besides Exchange 106, HSBC and Affin Bank are building a tower each in the TRX, and Australian property firm Lendlease is building a shopping mall, hotel and several condominiums.

However, Kuala Lumpur’s office rental market outlook “remains cloudy”, as new buildings that have no major tenants end up competing with existing office space, global property consultant Knight Frank said in its H1 2019 report on Malaysian real estate.

Honan remained optimistic, saying that confirmed and prospective tenants are looking at the big picture of the future potential of the TRX. “We will see dramatic moves in occupancy once the full TRX development is complete,” he said.

For more on this story, go to CNA.