Home Development Harrods Hotel deal is off

Harrods Hotel deal is off


PETALING JAYA: The Harrods Hotel in Kuala Lumpur, planned as one of three in the world, has been scrapped. However, the other components that make up the mixed integrated development will go ahead as planned, according to sources.

It is uncertain why Harrods Hotel was scrapped but sources said the Qataris have decided not to go ahead with their initial plan to locate their first Harrods Hotel in Malaysia, which was announced in 2012. The other planned locations of the “seven-star hotel” are in London and Italy.

“Harrods Hotel makes up a small component of the entire project. The rest will go on,” sources said. “There will be a hotel there but 16it will not be a Harrods Hotel.”

According to sources, those involved have been told to “look out” for another international brand of considerable standing to fill the space.

Harrods Hotel was to be located on a 5.48-acre site to be known as Harrods Square, where Chulan Square and Sri Melayu restaurant formerly used to be. With the change in plans, the project is expected to be renamed.

Estimated to have a gross development value of RM5.5bil, Harrods Square is located on two pieces of land, sandwiched between Jalan Raja Chulan and Jalan Conlay in the city. A developer in the vicinity said in late September they heard about its cancellation.

A whiff of Harrods Hotel being mothballed surfaced earlier this year. The deal was finally scraped in August.

The three largest parties for the development of Harrods Square include Qatar Holding LLC, Tan Sri Desmond Lim Siew Choon and Tradewinds Corp Bhd.

Qatar Holding LLC is a global investment house established by the Qatar Investment Authority (QIA).

QIA also has stakes in Qatar’s biggest lender, Qatar National Bank (QNB). In September,Reuters reported that QNB halted talks with Kuwait Finance House (KFH) to buy its Malaysian unit.

As for Harrods Square, that project fronts Lim’s KL Pavilion mall, which is under Pavilion Real Estate Investment Trust (REIT), where he is chairman. Lim is also Malton Bhd executive chairman. Malton built KL Pavilion integrated development which comprises the mall, offices and serviced residences. The mall was subsequently put into Pavilion REIT.

The Tradewinds group is redeveloping the site of Crowne Plaza Mutiara Hotel, formerly KL Hilton, which is a stone’s throw away from KL Pavilion and the-then Harrods Square.

The Tradewinds group also owns Istana Hotel, one of about 10 in Malaysia. Initial plan years ago was to have some sort of underground connectivity to connect the-then Bukit Bintang Plaza to Istana Hotel to other landmarks in the area, even as the underground mass rapid transit station was being planned and built.

Lim’s plan was also to build a pedestrian bridge to connect KL Pavilion to Harrods Square. The strategy was to extend the vibrancy of the Jalan Bukit Bintang-KL Pavilion area over to the Jalan Conlay stretch with a pedestrian link bridge.

As for Harrods Square, the game plan then was to set up a joint-venture company known as Jerantas Sdn Bhd.

PS Trading Sdn Bhd, a unit of Tradewinds Corp, was to have a 34% stake in Jerantas, while the remaining 66% was to be held by Gagasan Simfoni Sdn Bhd, with Lim and Qatar Holding having equal share. It is uncertain if the Qataris will continue to have a stake in Jerantas, the source said.

Tradewinds holds the Harrods retail franchise in Malaysia, while Qatar Holding owns the rights to the Harrods brand. Tradewinds, a diversified conglomerate with some 4,000 acres across Malaysia, has made known its aim to go big in the property sector.

Lim’s role was to make another winner out of Harrods Square, with his keen eye on retail details and marketing skills and to stitch the financial backers together.

The components comprise four blocks, of which the 102-room Harrods Hotel was to have occupied a 27-storey block, with 60 units of serviced apartments. Two of them, a 61 and a 52-storey building, will have a total of about 1,000 units of serviced apartments and commercial retail space and a 31-storey office block.

Lim seems to be accumulating malls. Recently, Pavilion Reit proposed to acquire from Global Oriental Bhd the Subang Jaya mall for RM488mil cash.

According to sources, Pavilion Reit also bought the retail mall at The Intermark from the world’s largest asset manager BlackRock Inc a few months ago. Although The Intermark Mall is only about 200,000 sq ft, it is “an integral part of that development”. Real estate consultants estimate the value of the mall to be around RM200mil.

BlackRock owns the mixed integrated Intermark development, which comprises of two office blocks, a hotel and the mall. It had tried to sell it as a single entity, but after about a year, it had to break up the different components because at about RM2.2bil, the price was “rather prohibitive”.

The Retirement Fund Inc, or Kumpulan Wang Amanah Pekerja, subsequently bought Integra Tower for RM1.065bil in April this year, purportedly with an annual yield of 6%. In the same month, Singapore’s Royal Group bought the 540-room, four-star DoubleTree Hotel for RM388mil, or about RM700,000 per room. They were offered the mall, but nothing came out of it.

As for Lim, besides the USJ mall and the Intermark Mall, he will also be developing Bukit Jalil City and Pusat Bandar Damansara, both of which are expected to have malls as part of the integrated development.