A stir in Empire City

Buyers cry foul but developer says it has fulfilled all obligations

The low level of activity at the massive development of the RM5bil Empire City along the Damansara-Puchong Highway has caused a stir in the soft property market.

Built on a 28-acre piece of land, the developer Mammoth Empire Holdings Sdn Bhd had planned for the building of 12 tower blocks and the city’s biggest mall with a net lettable area of 2.5 million sq ft.

It is bigger than Pavilion Kuala Lumpur and Mid-Valley Megamall.

The integrated commercial lifestyle development comprises a mall, hotels, serviced office suites, SOHO offices as well as studio suites over a piece of land directly opposite the PJ Trade Centre and Empire Damansara in Damansara Perdana.

When they started on project about five years ago, the developer Mammoth Empire Holdings consciously decided to undertake the development of the mall together with 12 tower blocks at one go -- a mammoth effort for a developer that is unlisted and has a relatively short history compared to the giants in the industry .

Of the 12 blocks, they have handed six to the buyers.

However several issues have arisen from the handover of vacant possession of Empire City’s residential units to buyers last June.

Among them is making the buyers liable for monthly maintenance fees when the development of the entire project is not completed and the building not having its Certificate of Completion and Compliance (CCC) yet.

When the project was launched in 2011, the scheduled deliverables were meant to be staggered over 2014/2015. However delays in the completion of the retail mall have lead to speculation that the project was facing hiccups.

Mammoth Empire vehemently denies all speculations of the project being slowed down or that it has short changed its buyers.

According to its group executive director Datuk Danny JY Cheah the structural portions of the development were completed and hence from the outside it would seem that work has slowed down.

“Compared to the exterior works in the earlier phases of construction, this current phase gives people the impression that work has slowed down when that’s not the case at all,” Cheah tells StarBizWeek in an interview at its headquarters in Empire Tower in Subang.

Cheah also says that the mall is entirely owned by the group and they have no obligation to complete it on time.

“We don’t have any obligations to fulfil within time. Also some of the tenants have asked for a deferment of their opening of the mall,” he says.

Nevertheless he said that they were looking at segmental opening of the mall starting with food and beverage outlets to cater for the residents and tenants at Empire City.

“We hope to undertake segmental opening of the retail mall by year end to cater for the buyers and tenants there,” he says.

Some of the buyers of the units complain of the ongoing construction in the surrounding vicinity of their blocks. Under such conditions, buyers feel that they are unable to move in comfortably nor rent out their units.

In relation to this, Cheah says that their obligations are to hand over the properties when it was ready as stated in the sales and purchase agreement.

“Our lawyers made it very clear to them that we would hand over the units once they were ready,” he said.

Cheah also says that the maintenance fees that they pay is to upkeep the place.

“The maintenance fees do not come to us.

“It goes to another company that maintains the buildings as we are not in the business of making money off maintenance fees,” Cheah says.

As for the mortgage fees that they pay (when there is no CCC yet), such was the deal we agreed on when they signed the sale and purchase agreement. We can’t be carrying this “baby” forever.”

Having said that, Cheah says that the local authorities had recently conducted their inspection on four blocks and the developer was expecting to receive the CCC in about two weeks’ time, with the remaining blocks to follow.The mall’s intended opening was meant to be in December 2015, however, it was differed on the basis that Mammoth Empire owns it and does not have any sale and purchase agreements to fulfil, allowing the developer to have more time to complete it.

“We didn’t want to rush anything so we took more time on the components that we own. This entire development has been a very challenging task for us. We want to impress with our architectural mall front. There are various treatments and designs involved as this is a building that will last the next 50-100 years.

“Since we didn’t have any obligations to fulfil and we had already reached 80% of tenancy agreements, we wanted to do a good job of it,” Cheah says.

He added that some retailers had even requested to differ their opening, meaning that no one was complaining about the mall not being ready.Some 20% of the mall’s tenancy mix will be first-time brands in Malaysia. Some of them are Korean brands to cater to the growing popularity of the K-pop culture among youngsters, he says.

It was publicised earlier that Mammoth Empire took on a RM900mil loan from AmBank, leading to further speculation as to the size of the loan and what was happening behind the loan.

However, Cheah has clarified that the group’s borrowing tied to the Empire City project was RM315mil and it is mainly for the retail block that comes together with three levels of underground car park.

Among Mammoth Empire’s completed projects are Empire Subang, Empire Damansara, The Loft Bangsar, The Ara Bangsar and Empire Galeri Klang.

Asked if the recent debacle had hurt the group’s reputation, Cheah says: “We have been here for 16 years and plan to be around.” - The Star