Tesco Stores (M) Sdn Bhd mulls venturing into property development, with the redevelopment of its bigger stores, Tesco Extra Ampang, reported The Edge Malaysia.
Signalling the first of several similar projects, the move comes on the back of the UK-based retailer’s effort “to maximise the value of the land it owns” and as domestic retail trends point to a consumer preference for smaller stores.
Sources revealed that Tesco is even looking to partner with a property developer that could help it jointly develop the sites.
“We are always exploring ways to utilise our assets and this includes exploring opportunities to transform our stores. It is early days for us to comment further. However, we can confirm that we will continue to serve our customers in Ampang,” said Tesco Malaysia CEO Paul Ritchie.
But while Tesco is looking to redevelop the site, it will not be shutting down the store, said another source.
“The land is big enough to allow the existing store to operate, while development is taking place around it,” explained the source.
It is understood that the development will likely feature condominiums.
“The location is better for affordable homes, which is the sort of property people need, and not luxury condominiums,” said an industry expert, while noting that the property market “is likely to have recovered by the time a deal is finalised and the building is ready”.
Based on a 566,280 sq ft land size, a plot ratio of four and a RM700 per sq ft selling price for the condominiums, the development will likely have a back-of-the-envelope gross development value of RM1 billion to RM1.2 billion.
Documents calling for expressions of interest have already been sent out to developers, with the closing date set in mid-December, said another source.
After Tesco Extra Ampang, the next store to be redeveloped will likely be in the Klang Valley also, added a source.
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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