Tesco Malaysia is a property development company… too.

Tesco is Britain’s largest retailer. I used to patronize one particular one in Bristol city centre 20 years ago and was happy to revisit it when it came to Malaysia in 2001. Now a report in The Edge Malaysia says that Tesco Stores (M) Sdn Bhd plans to venture into property development. Here’s that article in EdgeProp.my  Basic idea is to redevelop some of its larger stores. A source in the article said, “wants to maximise the value of the land it owns and is seeking a property developer to partner and jointly develop the sites”. Within the same report, it was also reported, “domestic retail trends point to a consumer preference for smaller stores.”
Tesco Malaysia CEO Paul Ritchie said, “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.” Another source said that any redevelopment does not mean the store will be closed. “The land is big enough to allow the existing store to operate, while development is taking place around it.” Likely project would be condominiums though not the luxury type. The Edge Malaysia also wrote, “As for the gross development value of the planned development, based on the land size of 566,280 sq ft, a plot ratio of around four and a selling price of RM700 psf for the condominiums, a back-of-the envelope GDV is RM1 billion to RM1.2 billion.” That full article for reference in EdgeProp.my here. 
Before everyone thinks that this will be a trend, let’s understand that this kind of development of new high-rise developments will only happen to companies with large tracts of land which is more than what it needs for its current business. A supermarket without any property development experience for example is not likely to go out shopping for land and embark into property development. What Tesco is currently doing is more like sharing the potential profits from the redevelopment with developers who are able to provide them with an attractive proposal. Let’s see who will be that developer who could satisfy or exceed the requirements by Tesco for the ‘extra’ land.
written on 27 Oct 2018
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