3 May 2012
CHALLENGING: The economy grew by 5.1 per cent in 2011 and is expected to grow between four and five per cent for 2012 driven by domestic demand with support from public expenditure, said leading property market researchers DTZ Research.
Investment activities experienced a slow start to the year with volume in Q1 dropping to about RM427.5 million, lower than the activity recorded in each of the four quarters of 2011. However, it is expected that activities will pick up in the later part of the year subject to availability of assets in the market as more foreign funds have new mandates for the country. Dismal market conditions in Europe have fortunately diverted attention to Malaysia and the region, leading to an increase in enquiries.
In the largest transaction recorded in the quarter, IGB Bhd purchased 50 per cent of the shares in the holding company of Renaissance Hotel. Other major transactions included: (i) Mapletree Logistics Trust’s purchase of two industrial warehouses in Johor; (ii) KrisAssets Holding Bhd planned injection of MidValley Megamall and The Gardens into a REIT this year; and (iii) the major shareholder of Dijaya Bhd’s intention to inject major personal assets into the listed Dijaya Bhd.
Significant investment deals in Q1 2012
|Renaissance Hotel||IGB||Stapleton Developments||RM355m|
|Fuji Warehouse||Mapletree Logistic Trust||Fuji Properties||RM31.5m|
|Celestica Hub||Mapletree Logistic Trust||Well-Built Holdings||RM27.5m|
|Swiss Hotel||Vincent Ng/Suhaimi Harun||DPS Resources Bhd||RM13.5m|
Opening of selected upcoming retail centres in Klang Valley
|Name of development||NLA (sq ft)||Opening|
|Setia Alam Mall, Shah Alam||700,000||2012|
|NU Sentral, Kuala Lumpur||700,000||2013|
|IOI City Mall Putrajaya, Putrajaya||1,300,000||2014|
Capital and rental values in the office sector remained firm, but are likely to face downward pressure in view of the anticipated economic slowdown and oversupply. The average office occupancy rate improved slightly to 86 per cent in Q1 2012 and prime rents remained unchanged from the previous quarter at RM6.25 per sq ft per month. The market will however see more competitive pressure on rents with pending completions as well as planned projects such as the Kuala Lumpur International Financial District, a rival office district to KLCC.
The retail sector will continue with moderate growth but in view of pipeline supply and the sluggish global economy, occupancy rate remains a major concern. The retail sector is anticipated to grow slower because of more cautious consumer spending, job uncertainties and an anticipated tightening of credit card spending.
Nevertheless, new upcoming major retail centres continued to attract retailers who are selective and would still lease space in centres that are expected to see high footfall.
Setia City Mall in Shah Alam with over 740,000 sq ft of net lettable area (NLA), due to open in May 2012, recorded overwhelming response with about 95 per cent of its retail outlets already leased out. Meanwhile, klia2 at the new low cost carrier terminal (LCCT), adjacent to the Kuala Lumpur International Airport (KLIA) in Sepang with an approximate NLA of 350,000 sq ft has received strong interest from international and local concessionaires.
The residential market was relatively quiet in the quarter with no new completion recorded and no launches seen due to the seasonal effects of various public holidays. Stricter guidelines on personal loans, anticipated to cool the residential market to some extent, have led developers to focus on smaller and more affordable units.
“Developers are now focusing on smaller and more affordable units, and at the same time leveraging on the Developer Interest-Bearing Scheme (DIBS) to attract buyers,” Eddy Wong, Executive Director and Head of Residential Marketing, commented.