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DeRuiter Consultancy - International Market and Investment SurveyorsDeRuiter Consultancy - A specialist company for the preparation and development of direct investments
A specialist company for the preparation and development of direct investments
DeRuiter Consultancy - When the world is your market
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A Gemstone Exhibition and Convention Centre in Malaysia

The official opening of the Kuala Lumpur Convention Centre - "the Centre" as it is nowadays called - took place in June 2005. Years earlier, in 1997, our company was awarded the contract to prepare an extensive feasibility study and subsequent business and investment plan for this remarkable real estate project in Malaysia. Recently we had the opportunity to compare our original plan with the reality of today.

The project to build a high- quality convention and exhibition centre was part of an immense real estate and land development plan initiated by Kuala Lumpur City Centre (KLCC) to create a landmark on the 40 hectares (100 acres) of the former Selangor Turf Club and Race Course.

Eventually the overall development plan provides for an area of more than 1.6 million m2 (18.3 million sq ft) of commercial, retail, office, hotel, residential, entertainment, convention and exhibition facilities, as well as a mosque within a park setting. The KLCC site is strategically well located, within the Golden Triangle of Kuala Lumpur, the very heart of the city. KLCC (Holdings) Sdn Bhd (KLCCH), the initiating company together with major KLCC shareholder, MAI Holdings Sdn Bhd, took up the redevelopment of the whole site in 1993. The most notable development on this famous site is certainly the 88-storey, 452-metre-high Petrona Twin Towers, for a few years the world’s tallest building until the "Taipei 101" building took over in 2004.

The assignment to draft the investment and business plan for the Centre was granted to us in 1977 by Amsterdam-based RAI Exhibition and Convention Centre in cooperation with KLCCH. Amsterdam RAI and KLCCH aimed for cooperation to invest, develop and manage the new exhibition and convention centre on the basis of the plans to be made. However, in 1998, after completion of the preparation phase, Amsterdam RAI withdrew from the investment and the venue´s management contract, to give priority to opportunities elsewhere. Convex Malaysia Sdn Bhd, a joint venture company between KLCCH and Ogden International Facilities Corporation Pty Ltd from Australia, now operates the Centre.

The execution of the assignment was a typical example of the cooperation our company strives for, with civil engineering and marketing expertise from RAI, marketing and legal experts from KLCCH, structural engineers from DSBV, architecture and engineering consultants of Rotterdam, and Davis Langdon & Seah, quantity surveyors and construction cost consultants from Kuala Lumpur. The temporary cooperation of the survey team covered a period of 6 months.

Besides determining the various functions, number of at-tending people and defining the related size of direct and service areas to be configured and built, a model to calculate detailed multi-year revenues needed to be developed to facilitate evaluation of the many alternatives at hand. The model therefore was purpose-built and successfully integrated into our standard model for 10-year financial feasibility projections. Later, in 2001, the same model for revenue calculations was used for a similar project, the Cape Town Convention Centre in South Africa.

Because our company was not involved in implementing the investment, it was a great pleasure for us to recently be invited by the present management to visit the Centre and to see and experience the building. But more importantly it was also an opportunity to compare today´s reality with the assumptions our survey team had once made about the different functions and revenue earners the Centre should have in order to make it a financially feasible and attractive investment.

It turned out that our estimations about the total investment had been quite correct, although a number of deviations from the initial plan had been made (smaller exhibition areas and larger convention spaces, predominantly a larger, very well-equipped auditorium next to a smaller one).

Although well within the overall estimations made in 1997, the revenue projections that were made differed widely in the various categories from the actual revenue composition. This was partly due to the different purposes and configuration of the space, and partly due to various Malaysian cultural aspects.

Paying to park a car, for example, is not widely accepted yet, so the revenue from this fell far below the estimates.

Typical mass consumer shows do not allow substantial revenues to be earned from visitors´ entry fees. Large Chinese wedding parties appeared to be very sensitive to Feng Shui building layout and location rules (for some Malaysian Chinese, the architectural layout was not considered ideal for happy weddings!). In addition, more and smaller trade shows and a larger number of conventions than anticipated resulted in substantial variations from the revenue projections made earlier.

The location of the Centre is extremely well positioned in the heart of Kuala Lumpur, while the anticipated high traffic circulation through the area (a well-surveyed aspect of the study) has been thoroughly and effectively taken care of by the municipality and KLCC. These factors, together with the almost boundless hotel capacity nearby, makes the Centre a real gem in comparison to rival centres in South East Asia.

This unique opportunity to re-evaluate the original assumptions made in the early conception phase of this major investment, gave us some very valuable feedback. It was exciting to see how the Centre, now in its mature state of operations, is in fact functioning beyond the expectations then formulated. Both the inventive and imaginative architect and the qualified and resourceful management of Ogden International have succeeded remarkably well in diverting to alternatives where determinative factors changed, or where assumptions made have proved to be no longer valid.