KUALA LUMPUR: The 106.72-hectare "Duta enclave" in Kuala Lumpur should be valued at no more than RM6 billion, according to property experts.
Veteran property analyst Sr. Samuel Tan estimated the land's value to be between RM5 billion and RM6 billion, averaging around RM500 per square foot (psf).
"This valuation takes into account the location and comparable land values near the KL Metropolis development. Smaller plots of less than 20 acres within and around KL Metropolis have transacted at an average of RM774 psf. However, it's important to note that the Jalan Duta land lacks a development order and is a significantly larger parcel, so a discount has been applied," he told Business Times.
The Duta enclave currently hosts several government buildings, including the Malaysian Institute of Integrity, the National Archives, the Kuala Lumpur Syariah Court, the Inland Revenue Board building, the Malaysian Anti-Corruption Commission Academy (MACA), the National Hockey Stadium, and parts of Jalan Duta (now Jalan Tuanku Abdul Halim) leading to Segambut, as well as some portions of the Federal Territory mosque.
The government originally acquired the land in 1956 for RM1.32 million under the then-Land Acquisition Enactment with the intention of developing a diplomatic (Duta) enclave.
However, the land's original owner, Semantan Estate (1952) Sdn Bhd—founded by Eng Lian Group and Ng Chin Siu & Sons Rubber Estates Sdn Bhd—disputed the acquisition.
Eng Lian Group is best known for developing Bangsar in Kuala Lumpur, including Bangsar Village, while Ng Chin Siu & Sons reportedly owned much of Desa Hartamas and Mont Kiara during their peak.
In 2009, the High Court ruled that the government had trespassed on the land, a decision upheld by the Court of Appeal and the Federal Court in 2012.
In November 2018, a Federal Court bench led by then-Court of Appeal president Tan Sri Ahmad Maarop dismissed the Malaysian Government's application to review the 2012 decision, leaving the judgment intact.
Semantan Estate claimed it retained beneficial interest in the 106.72-ha land in Mukim Batu, alleging that the government had unlawfully taken possession of it.
The company argued that the government should pay mesne profits as damages for trespassing, with the amount to be determined by the court.
On Oct 25, 2022, Semantan Estate's liquidators initiated a claim against the Federal Government for wrongful possession of the land, seeking mesne profits.
Mesne profits refer to the rents and profits a trespasser could have earned during their occupation, which must be paid to the rightful owner as compensation for the trespass.
During ongoing trials before High Court judge Datuk Ahmad Shahrir Mohd Salleh, Semantan Estate's valuation of the mesne profits from 1957 to 2021 reportedly ranged from RM3.1 billion to RM6.646 billion with simple interest, and up to RM13.242 billion with compound interest.
However, the Ministry of Finance's Valuation and Property Services Department disputed this sum, arguing that compensation should be RM290 million.
In a decision with significant implications for the land industry and the government, the High Court on Aug 7, 2024, granted Semantan Estate's liquidators' application for the 106.72-ha land to be returned to the company.
However, on Aug 8, 2024, the government filed an appeal against the High Court's decision ordering the transfer of the land to Semantan Estate.
It was reported on Aug 19, 2024 that the government's application to stay the High Court's decision will be heard on Sept 12.
According to a court system check, the application will be heard before Judge Datuk Ahmad Shahrir Mohd Salleh at 10 am.
An industry insider described the Semantan Estate judgment as unique to its circumstances.
"This ruling highlights the fairness and equity of the legal process in addressing any wrongdoing by government agencies. This is not a settlement but a court judgment. While there have been attempts to settle this case, the courts have now made a definitive decision," he told Business Times.
Great potential for redevelopment
Tan, meanwhile, suggested that if the 106.72-hectare Duta enclave land is fully redeveloped with Grade A office towers, luxury residences, hotels, a lifestyle mall, and boutique retail spaces, it could potentially generate over RM30 billion in gross development value.
"Logically, if the land is returned to the original owner, then the properties currently on it should also revert to the original owner," Tan explained.
"The court did not mandate vacant possession of the land or require it to be restored to its original state before development. Once the land titles are transferred to the liquidator of Semantan Estate, the government will effectively be trespassing, which could lead to damages."
Tan said that as the landowner, Semantan Estate would have the typical rights, including the possibility of clearing the government buildings or allowing them to remain under a rental agreement, should both parties agree.
"We're awaiting the final settlement to understand the full implications," Tan added.
To resolve the situation, Tan said that the government could enter into a long-term lease with Semantan Estate, or purchase or compulsorily acquire the land.
"While this would be a costly process, it would provide a clear resolution," he said.
Alternatively, Semantan Estate could consider contributing portions of the land that house important properties, such as the mosque, National Archives, Inland Revenue Board building, and sports complex, to the government.
"The remaining undeveloped land could then be repossessed by Semantan Estate for future development. Given the existing structures, the market value of the estate has already appreciated significantly," Tan noted.
However, Tan acknowledged that any settlement could have far-reaching implications.
He emphasised that compulsory land acquisition, even when necessary, must strictly adhere to the law, or the consequences could be severe, especially as the land's market value has increased over time.
"It's not just about market values, but also mesne profits. The final amount for mesne profits could surpass the market value," he said.
Tan also warned that a final settlement might encourage similar cases to be filed, consuming significant court time and potentially resulting in substantial financial losses for acquiring authorities if they lose.
"If the parties involved in the original acquisition are no longer around (due to death or winding up), the aggrieved parties will suffer major losses. Returning the land to the original owners would introduce a new set of problems, as current occupants would lose ownership and their interests would be jeopardised," he concluded.