YNH Property Bhd is seeking as much as 1.2 billion ringgit (US$370 million) by selling in advance half of a tower being designed by Norman Foster for Kuala Lumpur, in the Malaysian capital's biggest commercial property transaction.
YNH is in talks with a "big property player" in Hong Kong, an Australian fund and a Singaporean investor, said Daniel Chan, head of corporate services at the Ipoh, Malaysia-based company. He declined to identify potential buyers. The company sold the first half of the development in January to Kuwait Finance House (Malaysia) Bhd for 920 million ringgit.
"There's been very little supply of Grade A buildings in Kuala Lumpur," said Ong Choon Fah, regional head of research at DTZ Debenham Tie Leung, a property consulting company. "It helps to have a 'starchitect,' and Foster is a global brand."
Developers including YNH, Sunway City Bhd and Mah Sing Group Bhd are increasing sales to foreign investors as rising Kuala Lumpur office rents push up returns on properties. Malaysia, the world's second-largest palm oil exporter and Southeast Asia's second-biggest oil producer, is benefiting from high fuel prices.
Shares of YNH rose as much as 4 sen, or 1.9 percent, to 2.15 ringgit on Malaysia's stock exchange yesterday. The stock has fallen 21 percent this year.
YNH expects to get 30 percent more for the second half of the 45-story development than its sale of the first half because of a shortage of best-quality office space in Kuala Lumpur and Foster's reputation, Chan said.
Foster & Partners, which designed the Beijing Capital International Airport's newest terminal and "The Gherkin" skyscraper in London, was appointed in March to design the 5,110-square-meter development.
"It will be a new benchmark pricing, with Norman Foster coming in" to design the complex, Chan said. "We are looking for parties who are interested to get yields."
The 30-percent premium YNH is chasing is "a bit on the high side," said Mervin Chow Yan Hoon, an analyst at OSK Research Sdn in Kuala Lumpur. Occupancy rates in Kuala Lumpur rose to 85 percent last year from 84.7 percent the year before, according to government data.
The planned supply of office space jumped 87 percent in the fourth quarter to 4.1 million square meters from the third quarter, government data showed.
The sale to Kuwait Finance will be completed in one to two months, and the deal for the remaining half will be done within six months, Chan said. Foster's building design will be presented by late this month to Kuwait Finance.