According to DTZ Property Consultants, the economy has slowed slightly but the market remains steady.
- Better occupancy in prime offices but the office market expected to remain soft due to substantial pipeline supply
- Retail consumer sentiment remains strong but rising inflation will lead to mixed performance among malls
- Residential buying sentiment remains optimistic but caution setting in due to affordability
- Investment deal amount in Q1 2011 is similar to Q4 2010 with
cautiously optimistic outlook for the rest of the year being driven by
domestic investments under the Economic Transformation Programme
Offices
The overall occupancy rate of office buildings in KL increased
slightly from 86.4 per cent in Q4 2011 to 86.9 per cent in Q1 2011 due
to good take up at prime office buildings. A new prime office building,
Hampshire Place, added another 240,000 sq ft to existing stock. Office
rents increased marginally thanks to the better occupancy achieved in
some prime office buildings. Average prime office rents were stable with
minimal upward change, at RM6.12 per sq ft per month in Q1 2011. With
13.2 million sq ft of new office space in the pipeline between 2011 and
2014, the outlook for the sector is expected to be soft in favour of
tenants.
On a positive note, the take-up of strata titled office seemed to be
good, with strong response to launches. The Q Sentral at KL Sentral was
soft launched at an indicative price of RM1,400 per sq ft, and we noted
strong pre-sale at KL Eco City.
Mr Brian Koh, Executive Director of Consulting & Research
commented: “Launches of stratified offices is seeing good sales due to
latent demand being built up over the last few years and this is a
bright spot for the office market.”
Retail
With a sales growth of 8.4 per cent for the whole 2010, the occupancy
of prime shopping centres remains high and the average occupancy is
around 87 per cent in Q1 2011. Rental rates of most malls remain stable.
Overall, the performance of mall for the rest of 2011 is likely to be
mixed with selective prime malls continuing to out-perform but at a
slower pace compared to last year. This is due to the tighter credit
cards control and the increasing inflation rate which the appreciation
of the Ringgit may not be able to mitigate.
Residential
The market for prime condominium remains active with developers being
optimistic with new launches planned for the remainder of the year.
Encouraging take-up rates were noted in the few new high-end launches
such as The Capers by YTL in Sentul which set a new benchmark price in
the area. Although this clearly indicates that buying sentiment remains
positive, affordability seemed to be declining.
Overall, the average price of high-end condominiums in Kuala Lumpur
is stable at RM603 per sq ft in Q1 2011. Average rents declined
marginally to RM3.55 per sq ft per month from the previous quarter of
RM3.58.
Mr Eddy Wong, Head of Residential Marketing commented: “Demand
continues to be relatively selective notwithstanding some concerns about
new completions having some difficulties in leasing up.”
Note: -
DTZ is a global real estate services firm with offices in 140 cities
and 42 countries (across Europe, Middle East and Africa, Asia Pacific
and the Americas). The firm provides advice and on-the-ground delivery
to investors, developers, corporate and public sector occupiers and
financial intermediaries. DTZ works with clients across the breadth of
their real estate needs, spanning all real estate sectors and
encompassing Investment Agency, Leasing Agency and Brokerage, Property
Management, Project Management and Building Consultancy, Valuation,
Investment and Asset Management, Consulting, and Research. The parent
company, DTZ Holdings plc, has been listed on the London Stock Exchange
since 1987. www.dtz.com
