HIGHER OFFICE REVENUE: Barragry says the response after the MSC status launch is encouraging, given that 300,000 sq ft office space has been dedicated for MSC-status companies.
Office turnover at Mid Valley City in Kuala Lumpur will grow some 80 per cent to RM90 million by next year as The Gardens North and South Office Towers are fully leased out and occupied.
While office revenue for 2008 is expected to be between RM50 million and RM55 million, the incremental growth will be fuelled by Mid Valley City receiving its MSC Malaysia Cybercentre status last month.
Mid Valley City Gardens Sdn Bhd chief executive officer Antony Barragry said the response after the MSC status launch was encouraging, given 300,000 sq ft of office space had been dedicated for MSC-status companies.
"We will use much of the balance of the Gardens North Office Tower for our commitment to the MSC (status). We are in active negotiations with quite a few parties, and are confident that we should lease out in the next six months," he said.
Current occupancy rate at the Gardens South Office Tower is 76 per cent, while 86 per cent has been leased out. Meanwhile, the Gardens North Office Tower has an occupancy rate of 15 per cent and 25 per cent leased out.
The towers also target high-end corporate businesses albeit in the financial, marketing and oil and gas segments, as there has been pent up demand for Class A office space in the area.
Rental for office space will average RM6 to RM7 per sq ft as it will provide the company a sustainable business over the long term.
Barragry said the Mid Valley City development has a strong retail mix from its two malls, combined with three hotels and large office space.
"It gives us a dynamic mix and a sustainable model. For us as a group, most of this is recurring income so it allows us not only to operate but keep abreast with the latest technology," he said.
Mid Valley City is expected to contribute some 41 per cent to its holding company IGB Corp Bhd group projected revenue of RM1.15 billion for financial year ending December 31 2008.
The total revenue of RM470 million estimated to come from Mid Valley City development encompasses the office revenue, some RM280 million from retail and RM90 million from the hotels.
The RM470 million represents between 80 to 90 per cent of its full potential turnover upon completion of the development.
As the Gardens Hotel and Office Towers become fully operational and leased out next year, overall revenue contribution by sector in Mid Valley City will be 55-60 per cent retail (including car parks), 20 per cent offices and 20 per cent hotels.
The Mid Valley City development still has some 0.81 ha of land left to develop. Originally, the land was to be used for the construction of a convention centre but now it will see high-end condominiums.
"We recognise that Mid Valley City is a business hub so we are looking at whether we can bring some commercial element into this development. We have enough space to put two towers," Barragry said.
He said the company was currently negotiating with City Hall to wrap up the deal and should be able to firm up their plans by the coming Chinese New Year.
Barragry added that the company will study the Klang Valley market for the next five to 10 years and decide if this development was suitable before proceeding.
By New Straits Times (by Jeeva Arulampalam)
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