The Oval – A good deal for GuocoLand?

GuocoLand (formerly known as Hong Leong Properties Bhd) will launch its high-end condominium, The Oval, in the Kuala Lumpur City Centre (KLCC) enclave by mid of the year. The Oval is located on a 2.14-acre land along Jalan Binjai. It comprises two 41-storey blocks, East Tower and West Tower, with 70 units in each block. The estimated saleable floor area or net floor area is approximately 586,356sq.ft.

The Oval is an interesting project whereby it was formerly owned by a private developer, Titan Debut Sdn Bhd. The project was thence sold to tycoon Tan Sri Quek Leng Chan, for RM475.58 million or RM811psf when it was almost 30% completed. According to the Chief Executive of Guocoland, Paul Poh, approximately 30% of East Tower had been sold after a sales preview in Hong Kong last month. Most of the units are Sky Villa, offering a built-up area of 3,750 sq ft. Each block also offers eight Mansionary Villa, measuring 7,500 sq ft each. The price ranges from RM1,200 to RM1,900 per sq ft.

With this new selling price range, the estimated Gross Development Value generated by this project is approximately RM800million. The resale price is about double of what Tan Sri Quek has invested! Is this, then, a great deal by Guocoland? It is still too early to comment. The move by Tan Sri Quek reflected the confidence in the city’s luxury residential sub-sector. However, investors should not forget that the current rental market within the KLCC is experiencing a tremendous slowdown. Furthermore, there are a few more high-end condominiums such as Troika, Park 7, etc. which will crowd the market when they are completed.