Rethink of Titijaya’s Odeon KL project
Khairul Khalid 
The former Odeon Cinema is set to be redeveloped in a project worth some RM1.5 bil

PROPERTY developer Titijaya Land Bhd’s plan to redevelop the iconic Odean Cinema in Kuala Lumpur appears back on track with the announcement of a new joint venture (JV).

However, the government’s move to freeze approvals for high-end projects to control oversupply in the property market could throw a spanner in the works.

A property analyst tells FocusM that although the residential component might not be affected, the retail mall in the Odean Cinema project might be scaled down.

“The residential units at the site of the former Odeon cinema are said to be less than RM500,000 per unit. If that remains, it could still proceed as it falls under the affordable homes category.

“However, Titijaya could still revise its plans for the shopping mall. This is because although there is a glut of shopping centres especially in the Klang Valley, the new guidelines on approvals for their construction are still quite vague,” says the property analyst.

A JF Apex Securities Bhd research report says there is a possibility that Titijaya may review the scale of the project.

“The new government ruling of an indefinite freeze on the development of shopping malls, offices and luxury properties [worth more than RM1 mil] could prompt the group to revise its plan to build a retail mall.

“We believe the gross development value (GDV) of the project could be scaled down,” it says.

On Nov 17, Titijaya announced that its wholly-owned subsidiary Tamarind Heights Sdn Bhd will form a JV with Golden Vogue Sdn Bhd, Mohd Hazmil Mohd Kassim and Lim Soo Huen to co-develop 1.17ha in Jalan Tuanku Abdul Rahman, Kuala Lumpur.

The project was first announced by Titijaya in February last year when it acquired Tamarind Heights for RM2 and inked a JV agreement with Dreamvista Development Sdn Bhd.

The beneficial owner of the land is Golden Vogue Sdn Bhd.

With Titijaya’s new joint venture with Golden Vogue, the previous agreement with Dreamvista was terminated and rescinded.

Titijaya did not respond to queries on the matter.

The company’s initial plan for the project was reportedly a mixed development with a GDV of some RM1.5 bil.

“We understand that Titijaya targets to launch the project, named Odeon KL, next year, by constructing a retail mall and two blocks of serviced apartments with built-up ranging from 450-850 sq ft, and an indicative selling price of RM450,000 onwards per unit,” says JF Apex.

As part of the JV deal, Titijaya will pay the landowner 20% of the gross development profit (including land cost).

The joint venture is not expected to impact the net assets and gearing of the group for FY18 ending June 30, next year, as the total cost will be funded internally.

The project is not expected to affect substantial shareholders as it does not involve any issuance of new Titijaya shares.

Neither is it subject to the approval of shareholders or government.

The Odeon KL development is expected to be completed by 2022.

Titijaya targets RM1.8 bil worth of new launches in FY18, mainly for the mass market segment.

Some 70% of them will be priced below RM600,000 per unit to cater for affordable housing, while the remaining 30% will be priced above RM700,000 per unit.

JF Apex also believes that Titijaya is in the midst of concluding more strategic tie-ups in the likes of transit-oriented developments (TOD) in the vicinities of mass rapid transit (MRT) stations.

The decision to freeze approvals to develop upscale shopping complexes, offices, serviced apartments and luxury condominiums was taken by the government following a report by Bank Negara Malaysia on the glut of high-end properties.

Amid market confusion, the government clarified that the move was not a blanket stop order and project approval will be reviewed on a case-by-case basis.

Bank Negara cautioned that the oversupply of office space and shopping complexes in major states may be worse than during the Asian Financial Crisis of 1997-1998.

The central bank says the supply-demand imbalances in the property market have worsened since 2015.

Unsold residential properties are at a decade high, with the majority of units being in the above RM250,000 price category.

This article first appeared in Focus Malaysia Issue 260.