PNB rising high, will Merdeka 118 take it higher?

DEEP in the heart of Kuala Lumpur, a towering skyscraper is fast and surely making its presence felt in the city skyline.

Dubbed the Merdeka118, the soon to be completed landmark is set to be cosmopolitan KL's latest pride and joy.

However, with the already oversaturated property market in the Klang Valley, will the new tower be a boon or a bane for its owner PNB or Permodalan Nasional Berhad?

Merdeka 118 is PNB's crown in the jewels

Late last month, the media was given a sneak preview of the behemoth.

Propelling 118 floors (hence its name), Merdeka 118 is 92 percent completed and is expected to open its doors by the end of the year.

As a mark of endorsement, five-star hotel chain The Park Hyatt will occupy several floors of the building.

But will the tower which houses the TRX or Tun Razak exchange financial hub assure good returns for PNB and its unit holders and group of companies.

Or will the tower sink like a rock and become the latest casualty of the country's property overhang?

Property market is soft

Will the opening of Merdeka 118 exacerbate an already age-old problem in the Klang Valley - property overhang.

Or will the new structure stimulate KL's fledgling property market?

According to the Property Market Report 2021 by the National Property Information Center, the Klang Valley already has a property overhang of an all-time high of 36,863 worth almost RM23 billion.

Property consultation firm Rahim & Co. meanwhile said there is currently some 150,000 square feet of vacant office space aggravated by the pandemic.

"Yes, the property overhang could worsen if the economy does not pick up.

We could move towards global recession if the war in Ukraine persists and the Taiwan-US tensions continue to seethe," a property executive from Emkay Group told DagangNew.com.

Will Merdeka 118 soar above the stratosphere or fall flat on its face? Only time will tell.

Maybank, Sapura, SP Setia to relocate?

There are rumours that PNB's investee companies such as Maybank, Sapura Group and SP Setia will relocate to Merdeka 118.

The Edge reported on Monday that Maybank will shift to Merdeka 118 from its current Menara Maybank headquarters in Jalan Tun Perak.

This would be an interesting development to watch as Maybank alone would occupy some 33 floors of Merdeka 118.

A Maybank source confirmed the plan has been discussed as a "board paper" was tabled to the directors.

The news report said even PNB's icon headquarters in Jalan Ampang would shift to Merdeka 118 which is the world's second largest building after the Burj Al-Khalifa in Dubai, United Arab Emirates.

What's next for PNB

PNB is now at a critical stage as it ponders at the crossroads.

Relocating all its assets to Merdeka 118 could be a wise move as it becomes leaner and more efficient with all its operations and stable of companies under one roof.

PNB would also stand to earn a recurring rental income derived from its vacant assets such as Menara Maybank which could be rented out.

However, the rationalising and streamlining could also be a huge gamble for the state-owned fund as it bets against the property market which is still recovering from the pandemic.

Whichever way, the investing community and the rakyat looks forward to the day when Merdeka 118 open its door to the rakyat perhaps by year-end and are proud to be part of PNB's legacy. - DagangNews.com