Mark Titus, Business Reporter

Digicel Group is still negotiating with the Urban Development Corporation (UDC) for the 4.3-acre Kingston waterfront site on which it will put its new global headquarters.

CEO Colm Delves said Wednesday the company had not finalised costings on the project but would spend "tens of millions of US dollars" to erect two buildings - one of which was likely to be at least 125,000 square feet.

Topography and geotechnical surveys are being done on the property, Delves said.

The site is currently being used for parking - called the Western Car Park.

Likely market value

The Financial Gleaner was unable to immediately ascertain the likely market value of the 4.3 acres, because, according to Deborah Cumming, managing director of Century 21 Heave-Ho Properties, the downtown market has been dormant.

But it the price is likely to be about 50 per cent less than properties elsewhere in the capital, Cumming said.

However, the price per square foot for high-rise structures, as contemplated by Digicel, could run J$8,500 to J$9,000 per square foot, added the real estate expert.

On that basis, the 125,000-square foot edifice alone could run US$11 million to US$13 billion.

Digicel plans to complete the project in two years, saying by 2011 its 1,000 employees in Jamaica should be relocated from New Kingston, where the company operates from two locations, to the waterfront.

In the meantime: "There are a lot of issues that need to be addressed in the intervening period and crime is certainly among those concerns, because the safety of our workers is of paramount importance," Delves said Wednesday.

"It is something we have discussed extensively with the Government and they have given the commitment that the concerns are going to be addressed."

A new transportation hub is already under development by UDC in walking distance from the Digicel locale, allowing for some ease of movement for staff in a volatile part of the city.

A five-acre site in New Kingston that the company acquired about four years ago to be its headquarters will remain in its possession for now.

Shelved plans

Digicel shelved plans to put its headquarters in that locale - which is inside a prime real estate zone called The Golden Triangle - saying the land was considered better suited for residential development.

Informed sources say Golden Triangle residents had quietly protested having the company and the high volume business traffic it would have generated, so close to their homes in the ultra-quiet area.

Delves said Digicel founder and chairman Denis O'Brien had a preference for downtown.

Prime Minister Bruce Golding is already talking up Digicel's move and trumpeting opportunities for small and medium businesses to set up services nearby, saying "restaurants, pharmacies, even a gym, will become necessary, then."

On completion, the multimillion-dollar facility will house the company's headquarters and possibly another commercial structure.

A Digicel store is expected to be included in the plans.

"Where we are at the moment is that we have the concept and we know what we are looking for in 125,000 square feet for one building," said Delves.

"One building is what is required by Digicel, which can accommodate a thousand employees, but we are also looking at a second building - while it is the early stages - which will be available for other corporate operations and government bodies."

The plan will put Digicel in line for tax breaks.

The Urban Renewal Tax Relief Act allows investors to claim tax relief on capital outlay for new construction over a two-year period, instead of over the life of the asset, and claimable tax credits have been increased, from 25 per cent to 33.3 per cent, for central head offices.

"Capital allowances is the most relevant one to us, but a tax incentive was not the inspiration behind the decision," said Delves, downplaying its importance to the company's waterfront pick.

"We should be one of the largest taxpayers in the country. The tax break is not all that important because we are a large company."

Digicel has almost nine million subscribers across 32 markets worldwide.

- mark.titus@gleanerjm.com

SOURCE: Financial Gleaner, Friday, October 30, 2009