Rejuvenating Chow Kit
V Sanjugtha 
Look past the traffic chaos, dreary old shophouses, and congested stalls and you will not fail to notice the huge potential of an area caught in a time warp, despite being just 3km from the Kuala Lumpur City Centre (KLCC).

This is Chow Kit, in the heart of Kuala Lumpur, traditionally known as a red-light district. Glancing back at old photographs of the area, it is remarkable that changes have been few and far between, save perhaps for the absence of the daredevil pink minibuses of the 70s to 90s.

Chow Kit, dubbed a mini-Jakarta, is as busy as ever, but the merchants and stallholders are mostly foreigners peddling traditional medicine and household goods and various services. Fortunately, the number of transvestites soliciting clients, and drug peddlers has declined over the years.

All that will soon change under a dramatic transformation plan. Chow Kit can look forward to modernisation and development with the joint efforts of Kuala Lumpur City Hall (DBKL) and Kampong Bharu Development Corporation (PKB).

The plans entail upgrading infrastructure, modernising facilities and building residential units to encourage an inflow of locals to live and work there. There is also a plan to weed out unpleasant activities of foreigners which have been rising steadily over the years and also resulted in the influx of more illegal traders.

But with the modernisation plans, there will be an increase in the number of retail business units, office blocks and serviced suites, in line with the government’s Kuala Lumpur Structure Plan 2020 (KLSP).

Chow Kit is part of the Malay heritage area of Kampung Bharu, which covers an area of 8.3 million sq m. This is about three times the size of KLCC. Plans are afoot for a commercial development comprising hotels, serviced residential units and commercial lots with a GDV of RM8.6 bil.

The main idea is to modernise and improve businesses in Chow Kit. A spokesperson from PKB tells FocusM that according to the Kampong Bharu Comprehensive Development Master Plan, Chow Kit was identified to be developed according to the Business Improvement District Scheme (BIDS).

KLSP aims to increase the population of Chow Kit and its surrounding areas to 245,600 in 2020 from 128,721 in 2000. The number of employed people in the area in 2000 was 396,036 and this is projected to be about 438,010 by 2020.

City Hall has appointed a consultant to maintain the historic elements of the city while developing the area to spur economic activities. This is where the charm of the old retail lots meets the new wholesale businesses.

Some projects have already been completed, such as the redevelopment of Masjid Jamek Kampong Bharu and Arina Uniti Tower. The latter is a 21-storey office tower which was launched in 2013 at a starting price of RM450 psf and is currently transacting at about RM688 psf.

Shopping on the rooftop
Six projects with a collective GDV of RM1.66 bil are under way. It is understood that PKB is planning to announce projects currently in the planning stage, with a GDV of RM6.02 bil.

Other notable developments in the pipeline are the second phase of Pasar Raja Bot wet market redevelopment, 30-storey Majlis Agama Islam Wilayah Persekutuan, Zikay Towers, Legasi Residences by UDA Holdings Bhd and M101 Entity’s M101 Skywheel.

The Skywheel is a high-end retail shopping concept on the rooftop which also features the highest Ferris wheel located on the 52nd floor. This development is adjacent to Setia Sky Residences.

There is also a proposal for a development called YHI Residence and International Gold Centre by YaPEIM Hospitality International. Malaysian Resources Corporation Bhd plans to build affordable housing in Kampung Atas.

Business improvement
Assisting businesses that are not doing well is one of BIDS’ objectives. The PKB spokesman explains that the programme will encourage conservation of buildings of heritage value and identity, while increasing connectivity through block connectors and continuous pedestrian walkways. All this will create a business area that is clean, safe and attractive. Proposed improvements in the urban facilities provided, such as increasing the pedestrian network to 3.66km, are also in the works.

Some charm of the old will be maintained, such as the infamous back alleys. However, the alleys will be transformed to be part of public space by infusing life via street art and a pedestrian walkway.

Of course, getting rid of the illegal foreign traders can be a challenge. “The target is to encourage more locals to live here and contribute some activity to the area. While there is no intention of restricting legal foreigners, PKB would certainly like to dispel the notion that this is a foreigner-run area, and many are running their business illegally,” he stresses.

New twist to old trade
Chow Kit is also known for its Indonesian-run businesses, selling traditional medicine and herbs. For over half a century, the area has been the transit point for retailers seeking medicine as well as plastic ware and preserved food. Business is said to be very good and the stalls could be as small as 40 sq ft.

Depending on location and size, stall rentals can be anywhere from RM3,000 to more than RM10,000.

Despite a general slowdown in the retail industry and high rentals, the wholesale business in Chow Kit is thriving and is estimated to have an annual turnover of over RM2 bil. This is mainly due to the boom of e-commerce. Seeing the opportunity, New Paradise Development Sdn Bhd’s CEO and founder, Datuk Michael Lim, plans to create a one-stop centre to house these traders. The 10-storey mall is to be called Chow Kit Trade Centre (CKTC).

CKTC, with a GDV of RM156.8 mil, is scheduled for completion in 2019. It will be built on 10,000 sq ft adjacent to the Kuala Lumpur International Hotel, owned by the Royal Malaysian Police Cooperative. It is understood that land in the area is currently transacting at RM800-1,000 psf.

Datuk Siders Sittampalam, managing director of PPC International, believes the development projects under way in Kampung Bharu and its vicinity will also help drive the mall’s business. “CKTC’s location is excellent and its timing could not be better. Its plan to open in 2019 is spot on as we expect the market to recover by then,” he explains.

Siders believes Chow Kit is an area with lots of potential. He also notes that the move to retain its old-world charm while focusing on its traditional role as a wholesale hub will pan out positively in time to come. “A big part of CKTC’s success factor will lie in the rental pricing model. If it prices-up, it risks losing out as its target market is very price sensitive,” he warns.

Tan Hai Hsin, managing director of Henry Butcher Retail, also believes CKTC has the right location. He notes that Plaza GM and Plaza TAR are located nearby, and that the shop offices in Chow Kit have been occupied by a large number of trading companies, distributors and suppliers of retail goods for decades.

Fear of change
A transformation project like this will undoubtedly not be without teething problems. Some traditional traders may be unhappy and oppose the change. Siders emphasises that rental rates must be attractive enough to win over the traders.

He believes CKTC will eventually make a reputation as a one-stop centre for wholesale traders. “If City Hall makes it compulsory for the traders to move, which they may eventually, it will be a smoother ride,” he observes.

A real estate agent familiar with the area notes that the biggest challenge CKTC would face is getting the traders to move into the building, as many are unlicensed. He observes that many of the existing wholesale buyers are used to parking illegally by the kerb while making their purchase in congested shoplots stacked high with goods.

“The mall would mean they have to park (inside) and this may be viewed as cumbersome,” he explains.

The agent, who recently transacted a 250 sq ft unit in Plaza GM for RM950,000, says it will take some time for CKTC to achieve a similar price range.

Like Siders, he too believes CKTC’s entry price will play a significant role in its success as the exiting traders will not move unless they see the value.

Out with the old, in with the new

Home to the largest wet market in the country, Chow Kit is also known for its Bundle Market for used clothing. The area obtained its name from a popular figure in the Chinese community, Loke Chow Kit, a Penang-born business tycoon.

Back in the day, the enclave used to be P Ramlee and Sudirman’s favourite haunt. Legend has it that Datuk Ramly Mokni started his famous Ramly burger business here, in his humble flat in Jalan Haji Hussein.

For some of us though, Chow Kit brings back memories of Sudirman’s popular song of the same name, which inspired his free concert in 1986 which earned him a spot in the Malaysian Book of Records. It is said that about 100,000 people thronged the streets of Chow Kit that night to hear Sudirman, and left with the Chow Kit Road tune resonating in their head.

The need for change is inevitable. The old ways of parking by the roadside and dashing off to make a purchase, needs to make way for an organised and systematic structure of business. This is what the Chow Kit Trade Centre (CKTC) wants to do – blend the old and the new. It will position the mall as a cultural heritage centre, showcasing traditional Malay culture and food. The rooftop will house outlets showcasing the best of Malay food from renowned food operators around the Klang Valley in a more luxurious and high-end setting.

CKTC will comprise 254 lots, ranging from 52 to 181 sq ft. Prices range from RM101,400 to RM1,411,800. The first three floors are designated for local products, and so will house the existing traders scattered around Chow Kit.

Marketing efforts are being made to pull in similar traditional wholesale operators from other states. The idea is to recreate the cultural feel of the 50-year-old trade synonymous with Chow Kit in a modern building.

The subsequent floors will showcase cosmetics and healthcare products from China, Indonesia, Thailand and South Korea.

“We intend to retain the ground floor and rooftop for F&B, while the remaining floors will be sold to investors. We have already sold 40% of the units,” says Datuk Michael Lim, CEO and founder of New Paradise Development Sdn Bhd which is undertaking the project.

According to CKTC’s brochure, its top two levels will be taken up by MK Curtain and Hypershoe Wholesale and Factory Outlet, Lim’s shoe business under Vinsoon Group.

Lim, who made his money selling shoes in Chow Kit over 20 years ago, believes CKTC can fetch a rental yield of about 6%. He is confident the units can fetch RM40-60 per sq ft.

He intends to splurge on advertising and promotions to promote the rich, cultural history of Chow Kit in a bid to drive footfall and encourage tenancy. He is confident of an 80% occupancy rate come the launch in 2019.

Lim notes that not many young people are aware of the wholesale trade in the area that dates back several generations.

“Everybody wants to dabble in the online business today. But I would like them to know the cost-effectiveness of obtaining merchandise via wholesale,” he says.

Lim elaborates that a direct link to manufacturers requires high volume and capital, but wholesale traders are able to meet the stock needs of small online businesses.

Is wholesale the way to go?

In Malaysia, wholesale centres are still a new real-estate concept. It generally thrives in countries with a high number of retail SMEs and a relatively large population.

Tan Hai Hsin, managing director of Henry Butcher Retail, explains that wholesale centres are commonly found in Indonesia, Thailand, China and South Korea, where these pre-conditions are met. They are usually large and house a few thousand operators in a building.

Tan adds that the chances of success are higher when the building is located in a commercial area with thriving businesses that are similar to the trade mix of the wholesale centre.

In Malaysia, the SME industries in retail goods are not large, forcing traders to import finished retail goods, eroding their margins. This hinders the growth of wholesale centres, he opines.

Creating a wholesale centre from scratch is a major undertaking. But Tan points to GM Klang Wholesale City and Nilai 3 Wholesale Centre as good examples. GM Klang focuses on a niche of toys and accessories, while Nilai 3 is known for textiles.

GM Klang is the largest purpose-built wholesale centre in the country. Working to its benefit is its proximity to the airport and seaports. Tan also attributes its success to previous experience as it is run by TSI Holdings, which also manages Plaza GM in Lorong Haji Taib near Chow Kit.

This article first appeared in Focus Malaysia Issue 241.