Malaysian Property Market Outlook and REITs
CIMB Investment Bank Berhad has arrange a FREE seminar on the Malaysian Property Market Outlook and REITs exclusively for all i*Trade@CIMB customers.
Registration is on a first-come-first-serve basis.
The term REIT stands for Real Estate Investment Trust.
It is a trust fund that holds and invests in RENTAL commercial properties. Its major incomes is rental income and it is required by the law to distribute most of its profit as dividend to its shareholder holders.
REIT can be one of the very exciting instrument for the purpose of cumulating income generating assets without the hassle managing the rental on your own.
For more about REIT read Reviewing Malaysian REITs
*** I would say REIT is a Hidden Gem!
*** A good alternative to Direct Property Investment. 😀
If you a not a i*Trade@CIMB customers, just open an account with them & the opening account cost is very minimal.
As many people wanted to trade oversea other then Malaysia market but do not know where to open their account to trade. As a customer, you can even do Cross Border Trading.
This facility offers the flexibility to trade in Non-Ringgit markets which include Singapore Stock Exchange (SGX), American Stock Exchange (AMEX), New York Stock Exchange (NYSE), NASDAQ and Hong Kong Stock Exchanges (HKSE).
Malaysian Property Market Outlook and REITs
Date: 15th August 2009 (Saturday)
Venue: Kristal Ballroom 1, West Wing, PJ Hilton, Malaysia
Programme
8.30 am – Registration
9.00 am – Opening Remarks
9.10 am – Malaysian Property Market Outlook 2009 by Mr. Allan Soo, Managing Director, Regroup Associates
9.50 am – What is a REIT? by Stewart LaBrooy, CEO, Axis REIT Managers Bhd
10.20 am – Refreshment
10.45 am – AmFirst REIT Corporate Presentation by YPLim, CEO, Am ARA REIT Managers Sdn Bhd (Office and Retail Properties)
11.05 am – AmanahRaya REIT Corporate Presentation by Pn. Sharizad Jumaat, CEO, AmanahRaya-JFM Asset Management Sdn Bhd (Hotels, Higher Education, Office, and Industrial Properties)
11.25 am – Axis REIT Corporate Presentation by Stewart LaBrooy. CEO, Axis REIT Managers Bhd (Industrial, Warehouse and Office Properties)
11.45 am – Q&A with Panel of Speakers
11.50 am – Closing Remarks
12.00 pm – End
[…] Investment Bank Berhad has arrange a FREE seminar on the Malaysian Property Market Outlook and REITs exclusively for all i*Trade@CIMB customers at Ipoh, […]
AmanahRaya REIT to buy two buildings for RM227mil
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AmanahRaya Real Estate Investment Trust’s (REIT) management company, AmanahRaya-REIT Managers Sdn Bhd, has proposed to buy two leasehold buildings for RM227mil.
In an announcement to Bursa Malaysia on behalf of the management company, ECM Libra Investment Bank Bhd said the acquisitions and related expenses would be part-funded via a proposed placement to raise RM119mil.
“The actual number of placement units to be issued pursuant to the proposed placement will be determined based on the final issue price of the placement units, which shall be determined later,” the investment bank said adding that AmanahRaya-REIT Managers proposed to acquire the six-storey Selayang Mall and the 13-storey Dana 13, a stratified office building that is part of the Dana 1 Commercial Centre in Petaling Jaya.
fr:biz.thestar.com.my/news/story.asp?file=/2010/1/16/business/5485210&sec=business
Sunway City hires bankers for REIT IPO
KUALA LUMPUR: Property developer Sunway City Bhd has hired RHB Investment Bank and Credit Suisse as the main coordinators for the planned listing of its real estate investment trust (REIT) in Malaysia, sources with knowledge of the deal said yesterday.
The listing of the REIT, the biggest ever in the South-East Asian country, was likely to happen in the first half of 2010 and the company may raise about RM1bil in its public offering, one of the sources told Reuters.
“The REIT will have a market capitalisation of more than RM3bil,” said one source.
Credit Suisse will act as the international global coordinator while RHB will handle all domestic issues.
Sunway City was not immediately available for comment, while RHB and Credit Suisse declined to comment.
Sunway City, valued at US$440mil, told Reuters last year that it may revive the plan to float its property assets in 2010 depending on the recovery in markets.
Sunway City said earlier this month the REIT would group at least four properties in Kuala Lumpur and one in Penang
fr:biz.thestar.com.my/news/story.asp?file=/2010/1/28/business/5561530&sec=business
REIT players hope for better year
After two quiet years in the local real estate investment trust (REIT) market, industry players are hoping for a better year in 2010 through more active retail interest, asset expansion plans, and entry of new players.
According to Malaysian REIT Managers Association (MRMA) protem committee chairman Stewart LaBrooy, news of some existing REITs’ plans to grow their portfolios after a two -year hiatus is encouraging.
Quite a number of REITs have plans to expand their asset portfolio, with expansion by UOA REIT, AmanahRaya REIT and Al-Aqar REIT to involve new investments of RM1bil.
He said REITs would have better upside yields accretion potential if they had steady portfolio expansion through regular strategic asset acquisitions.
On whether raising enough funding for their asset expansion plans still posed a challenge to REITs, LaBrooy said: “Since the global financial crisis, there has been a game change on the regulatory environment that is helping REITs and capital markets cope with issues like faster capital raising and more self regulation.”
“Although under existing Securities Commission (SC) rules REITs can place out new units of only up to 20% of their unit base and it can be done only once every 12 months, the SC is prepared to grant specific approval to REITs to raise additional capital within 12 months on a case to case basis,” he told StarBiz.
It is possible that with the upcoming capital raising plans and new listings, there is potential for the market size to be increased to RM18bil from the current RM8bil.
LaBrooy said if the listing of a few more sizeable REITs took place by this year-end, it would further add to the depth and liquidity of the market.
The upcoming REITs include the Sunway REIT which is estimated to have asset value of around RM4bil and Malaysia’s first cross-border REIT, the RM1bil Qatar REIT.
“The coming onstream of these new players will inject a lot of liquidity into the market. This will create more excitement in the REIT sector in terms of size and asset class diversification and should place REITs on the radar of more local retail investors and larger foreign funds,” added LaBrooy, who is also Axis REIT Managers Bhd chief executive officer.
Currently, retail investors only account for 10% to 15% of the total REITs’ market capitalisation of close to RM6bil. The biggest portion comes from institutional investors who account for close to 60% and REITs promoters at 25%,
To promote greater trading interest and volume for REITs, the target is to raise the retail portion to 40% of the market capitalisation.
“With the huge liquidity in the local system now, there is huge potential to expand the retail interest for REITs,” LaBrooy said.
He added that retail investors were generally ill informed of the benefits of investing in REITs. “Investor education is essential and as a result the MRMA, has undertaken to conduct an investor outreach programme. So far we have conducted public roadshows in Penang, Ipoh, Klang Valley and Malacca. Our next roadshow will be held in Kuching on May 8.”
LaBrooy said to make REITs more popular with the retail investor, there was a need for more liberalisation on the regulatory front and the removal of the withholding tax for individuals.
Currently, both local and foreign retail investors have to pay 10% witholding tax to the Government.
He said the recently established MRMA, with nine out of the 11 REIT managers as members, would engage the regulators to overhaul the prevailing regulations and speak as an industry body on tax issues affecting REITs in time for the 2011 budget.
On challenges ahead, LaBrooy said: “The biggest challenge for local REITs is to reach a size of US$500mil and grow beyond this. This is the minimum requirement if we are to attract foreign funds to our market and has to be an aggressive strategy for each manager.
“To achieve this, the REITs have to have four conditions in place – stock price that trades at a premium to net asset value (NAV), so that capital can be raised in a non- dilutive manner; an identifiable pipeline of new assets to acquire; market yield that is achievable at the time of acquisition; and a recovery in the bond market so that new sources of financing can be obtained without reliance on bank lending,” he pointed out.
fr:biz.thestar.com.my/news/story.asp?file=/2010/4/5/business/5988973&sec=business
Sunway City to place properties under REIT
KUALA LUMPUR: Sunway City Bhd (SunCity) and its subsidiaries are proposing to dispose their entire interest in selected properties to a real estate investment trust (REIT) to be set up by SunCity and listed on Bursa Malaysia.
The purchase consideration, which will be determined later, will be satisfied by way of cash or units in Sunway REIT or a combination of both, the company told Bursa Malaysia yesterday.
SunCity said the proposed properties would include the Sunway Pyramid Shopping Mall, Sunway Resort Hotel & Spa, Pyramid Tower Hotel, Menara Sunway, Sunway Carnival Mall, Sunway Hotel Seberang Jaya, Suncity Ipoh Hypermarket and Sunway Tower.
The company is also disposing three parcels of leasehold land measuring 19,406 sq metres in Selangor to its subsidiary Sunway Pyramid Sdn Bhd (SPSB) for a consideration to be determined later.
SunCity owns a 52% stake of SPSB while the other 48% stake is held by Reco Pyramid (M) Sdn Bhd.
SunCity has also proposed to acquire 48 million shares or 48% of SPSB from Reco Pyramid (M) Sdn Bhd (RPSB) and 9.6 million shares or 48% stake in Sunway Resort Hotel Sdn Bhd from Reco Resort Hotel (M) Sdn Bhd.
SunCity said the investment objectives of the Sunway REIT were to provide the unitholders with an exposure to a diversified portfolio of authorised investments that would provide stable cash distributions with the potential for sustainable growth of the net asset value per unit.
“Subject to the approvals of the relevant authorities, Sunway REIT proposes to undertake a public issue of units in Sunway REIT and subsequent listing of and quotation for its entire issued and paid-up units on the Main Market of Bursa Malaysia,” it said.
SunCity said the proposed disposal of the land and properties would allow the group to realise its investments in the properties.
The proceeds from the proposed disposal of the land and the properties would be used to acquire land bank, working capital, future business expansion and to repay the group’s borrowings, it said.
SunCity added that the disposal of the land and properties would also enable the group to enhance the development of the real estate investment market in Malaysia through its proposed holdings in the units in Sunway REIT as well as its involvement in the management of Sunway REIT upon the completion of the proposed listing.
SunCity said subject to the approvals of relevant authorities,
Sunway REIT has proposed to undertake a public issue of units in Sunway REIT on the Main Market of Bursa Malaysia
fr:biz.thestar.com.my/news/story.asp?file=/2010/4/8/business/6012951&sec=business
REIT market to swing upwards in value
KUALA LUMPUR: Malaysia’s real estate investment trust (REIT) market is expected to swing upwards closer to their net asset value (NAV) in the next six months, with the entry of new players that can attract foreign investors, said Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam.
Besides YTL Corp Bhd’s Starhill REIT, he said the bigger ones that could cross the RM4bil threshold include Sunway REIT, which has a stable brand name including Sunway Resort and Monash University.
“The moment an individual REIT achieves a value of RM4bil, it will attract foreign investments.
“Foreigners may put in US$100,000 into the REIT, or maybe buy 5% or 10% of it,” he told reporters after speaking at The Edge Investment Forum on Real Estate 2010 on Saturday.
He said with a bigger local REIT market, foreign investors may even opt to put a large sum in one of the larger REITs and spread the rest of the investments into smaller REITs.
“Right now, with the exception of Axis REIT, most are trading at about 15%-18% below NAV, compared with property stocks, which are trading at 30% below NAV,” he said.
Among those that are expected to trade closer to NAV are Quill Capita Trust, Axis REIT, Starhill REIT and UOA REIT as they have plans to attract foreign investors, he said.
Tharmalingam said the NAV would also rise due to the revaluation of undervalued properties such as those under UOA REIT.
fr:biz.thestar.com.my/news/story.asp?file=/2010/4/12/business/6036185&sec=business
AmanahRaya to pay higher dividend
PETALING JAYA: AmanahRaya Real Estate Investment Trust (AmanahRaya REIT) has declared a higher dividend of 1.86 sen per share in the first quarter ended March 31, up from 1.8 sen per share previously.
The distribution was on the back of higher net profit of RM8.67mil, or 2.01 sen per share, posted in the quarter under review versus RM7.76mil, or 1.8 sen per share, previously.
The increased profit was on the back of improved revenue to RM12.2mil against RM11.47mil before. The improved performance was attributed to an increased in rental rates, which came into affect in the second quarter of last year.
fr:biz.thestar.com.my/news/story.asp?file=/2010/4/14/business/6050024&sec=business
REITs set to ride on recovering economy
PROPERTY is a relatively stable sector for investment, and with the better economic outlook, real estate investment trust (REIT) players are already looking to cash in on the improved sentiment.
AmanahRaya-REIT Managers Sdn Bhd chief operating officer Abas A. Jalil claims that many investors are already starting to look at the REIT market positively.
“Previously, people perceived that Malaysian REITS had slow growth in returns,” he tells StarBizWeek.
“However, with the announcement of Sunway City Bhd (SunCity) and Qatar-based REITs, you will see more activities in the local (REIT) scene, which will in turn become the engine for the overall property growth in Malaysia.”
According to Maybank Investment Bank’s recent research note, the asset size of Malaysian REIT market could double to RM18bil by year-end due to three impending listings – the SunCity REIT (with an asset size of RM4bil), CapitaRetail Malaysia Trust (up to RM3bil) and Malaysia’s first cross-border REIT, the Qatar REIT (RM1bil).
Abas believes that the local REITs will spark more interest among investors and the sector will become more vibrant.
“The old perception that the REIT market is not active is no longer there. Investors’ understanding of this segment has also changed,” he says.
“Now they (investors) are seeing REITs as an alternative form of liquid investment that provide a very stable yield as well as a potential upside in terms of pricing.”
AmanahRaya-REIT is the manager for AmanahRaya Real Estate Investment Trust (ARREIT), which is targeting to grow its total assets to RM1.5bil in the next two years, from RM748mil currently, by injecting new properties into its portfolio and improving the value of its existing assets.
Abas, who is confident of achieving this target, says ARREIT has a good mix of tenants with good occupancy rates. It will acquire Selayang Mall in Selayang, Selangor, and Dana 13 in Ara Damansara, which are expected to boost its total asset value to RM1bil.
“ARREIT was listed in February 2007 with an asset size of RM345mil. In three years, we have reached RM1bil. I think this is a good achievement,” he adds.
He says ARREIT also became the first local to be rated by Standard & Poor’s in early 2010, earning a rating of BB+.
Axis REIT Managers Bhd chief executive officer Stewart LaBrooy says the local REIT market has often been criticised by foreign funds as lacking depth and liquidity, adding however that the new listings will make it more attractive.
Axis REIT announced early this year it was targeting to grow its total assets to at least RM1bil from RM907.7mil as at end 2009. LaBrooy says the target is achievable.
“We have also announced our first acquisition for 2010 – a RM30mil logistics warehouse at the Port of Tanjong Pelapas in Johor. This brings our total assets under management to RM957.78mil and we should be on track to cross the RM1bil target before year-end,” he says in an e-mailed response.
Axis REIT Managers is the promoter of Axis REIT. Its strategy currently is to acquire office and industrial assets that are syariah-compliant, focusing on properties in the Klang Valley, Johor and Penang, says LaBrooy.
“We have just disclosed our first-quarter dividend of 3.7 sen, which is much higher that our peers in the Malaysian market. We are on track to improve on last year’s performance as our recently refurbished Quattro West and Shah Alam SADC 1 welcome new tenants,” he says.
Hall & Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam believes that the REIT market is looking buoyant and recommends it to anyone looking for stable returns.
“The REITs purchase quality assets and the investments are mostly in commercial buildings. These buildings are mostly in the city centre and the tenancy rate is always good,” he adds.
He says REITs are defensive stocks with long-term capital appreciation, adding that he is optimistic about the Qatar-based REIT.
“I think the prospects are good. The country has good oil reserves and is not affected by the world economy. The only problem is that the property is overseas and the investor needs to travel to Qatar to see them.”
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Sunway woos REIT cornerstone investors
KUALA LUMPUR: Malaysia’s Sunway City may place out about a fifth of its planned initial public offering (IPO) of a real estate investment trust (REIT) to cornerstone investors who have greater holding power for the shares, sources with direct knowledge of the deal said.
The country’s sixth biggest property company by market value is in talks with seven local funds in the hopes of getting some of them to become cornerstone investors in the IPO which is expected to raise around $500 million, the sources said.
The Sunway REIT, with a fund size of 2.78 billion units, is set to become Malaysia’s largest when it is listed in the third quarter of this year.
Sunway’s planned REIT offering has received positive response from investors so far due to its size, steady income source and good growth prospects, a source said.
“This is something significant that investors would not want to miss. The interest is definitely there, the question is pricing,” said the source.
The Sunway REIT will feature some 1.65 billion units for public subscription, of which 1.5 billion are for institutional and selected investors, the company said earlier this month.
“They are talking to seven funds, which consist of insurance funds, unit trust funds, governmentlinked investment companies, and a few pension funds,” said a second source.
Sunway is looking to place out about one fifth of the offering to cornerstone investors, one of the sources said.
Cornerstone investors normally commit to buy shares before a public listing and promise to hold them until a later date.
Sunway City declined to comment.
The issue price of the Sunway REIT will be determined in a bookbuilding process.
Earlier this month, Sunway City said it would receive RM2.7bil ringgit in cash and about 1.0 billion units in the REIT for the eight properties it will inject into the unit.
The properties, comprise of shopping malls, office towers, and hotels, have a combined market value of about RM3.7bil.
Sunway City Group, controlled by businessman Tan Sri Jeffery Cheah, will own about 38% of Sunway REIT after the listing, which the company said might be completed in mid-July
fr:biz.thestar.com.my/news/story.asp?file=/2010/5/25/business/6330152&sec=business
Tenants give landlords ‘electric shock’
PETALING JAYA: It is a case of “electric shocks” of a different kind for houseowners.
They are residential landlords left to foot large amounts of power bills, amounting to tens of thousands of ringgit in some cases, not settled by tenants who have moved out.
The landlords are helpless as they are held responsible by Tenaga Nasional Bhd (TNB), and cannot re-connect supply for new tenants or sell their homes without paying the bills.
Many are blaming TNB for their predicament, saying the bills would not have surged to such high figures if the utility company had been strict and cut off supply to errant consumers at the early stages.
The largest unpaid power bill reported to the MCA Public Services and Complaints Department was RM47,483.93!
“And this case concerned a residential property. We have not even touched commercial premises yet,” said department head Datuk Michael Chong.
He said his officers had received 29 reports of such cases since 2008, with unpaid bills amounting to RM216,348.48.
“This is just the tip of the iceberg. Many cases could have gone unreported. I am just as curious to know why TNB allowed the power bills to reach such extravagant sums,” he told The Star.
Several online forums confirmed that the problem was widespread, with many residential property owners expressing frustration with their tenants’ unpaid electricity bills.
“It can be years that tenants did not pay, and it’s unusual that TNB did not cut off the power supply even though the outstanding amount hit four figures. Many (owners) just pay up and forget the whole issue,” commented a consumer who lives in USJ.
Businessman Stanley Sien, 50, said he had to deal with “a recalcitrant” tenant who did not pay rent for a house in Puchong for almost a year and accumulated utility bills totalling RM6,640.34. The power bill alone came up to RM5,774.38.
“What’s worse, the tenant was a TNB employee. When I asked a TNB customer service officer why they had allowed the outstanding amount to balloon, she said the employee could have reconnected the supply on his own.
“She said there was nothing TNB could do to help me,’’ he added, showing the bill that he finally had to settle with TNB.
“There was no progress despite me waiting for many months. I spent RM16,000 repairing the damaged house to rent it out again. I had to pay up in order to get TNB to reconnect the supply,’’ he added.
Lawyer C.V. Devan advised landlords to pursue legal action against defaulting tenants.
“Just sue them. The landlord will most definitely have a strong case because there is a tenancy agreement that the case can fall back on. For cases amounting to less than RM5,000, there is the Small Claims Court where one does not need to hire a lawyer,’’ he added.
fr:thestar.com.my/news/story.asp?file=/2010/6/13/nation/6462448&sec=nation
CapitaMalls REIT listing expected to raise RM864mil
By THEAN LEE CHENG
It is expected to be Malaysia’s largest shopping mall REIT
PETALING JAYA: CapitaMalls Asia Ltd, one of Asia’s largest listed shopping mall developers, owners and managers by property value and geographic reach, has launched the prospectus and retail portion of what will be the largest shopping mall REIT (real estate investment trust) in Malaysia to date.
CapitaMalls Asia is part of Southeast Asia’s largest property developer Singapore’s CapitaLand Ltd.
The listing of CapitaMalls Malaysia Trust (CMMT) REIT on the Main Market of Bursa Malaysia on July 16 is expected to have a market capitalisation of RM1.4bil if an over-allotment option of up to 15% of the offering of 786 million units is exercised. If this portion is not exercised, it may raise RM864mil.
Its initial portfolio of three shopping malls – Gurney Plaza in Penang, Sungei Wang Plaza in Kuala Lumpur and The Mines in Selangor – has a total net lettable area of 1.88 million sq ft and has been valued at RM2.13 bil.
The CMMT IPO will have a total of 1.35 billion units in issue, of which 719 million units were offered to institutional investors at between RM1 and RM1.10 each in late June and 67.5 million units for individual investors at an indicative price of RM1.08 yesterday, with a forecast distribution yield of 6.9% for 2011. The final price will be determined on July 8.
CapitaMalls Asia CEO Lim Beng Chee told a press conference that occupancy and rental yields had increased for all three malls in its stable despite a weak economy in the last two years.
“We see acquisition opportunities in Malaysia’s shopping mall sector, with its fragmented ownership structure.
“CapitaMalls Asia will give CMMT a right of first refusal over any retail properties that we may acquire in future, including the extension that is being carried out at Penang’s Gurney Plaza. If acquired, Gurney Plaza extension will increase CMMT’s asset size by about 11%,” he said.
CIMB Investment Bank Bhd, JPMorgan Chase & Co and Maybank Investment Bank Bhd are jointly managing the IPO sale.
“As part of our long-term commitment, CapitaMalls Asia also plans to set up a Malaysia retail property fund to acquire and develop retail properties in Malaysia. CMMT will similarly have a right of first refusal over this pipeline of retail properties,” Lim said.
CIMB Investment Bank Bhd, JPMorgan Chase & Co and Maybank Investment Bank Bhd are jointly managing the sale. -ends-
Individual investors will get a refund if the final price for institutional investors is lower than the retail price.
CMMT’s sponsor, CapitaMalls Asia Ltd, will retain a stake of 41.74% in CMMT.
If an over-allotment option of up to 117 million units is exercised, CapitaMalls Asia’s stake in CMMT will be 33%.
The IPO follows the RM1.5bil raised by Sunway Real Estate Investment Trust in its initial sale last week and underscores rising investor appetite for equities in Malaysia amid an economic rebound.
fr:biz.thestar.com.my/news/story.asp?file=/2010/6/29/business/6566489&sec=business
Outlook for KL office market remains soft
By ANGIE NG
Average rental rates facing downward pressure going forward
PETALING JAYA: The Kuala Lumpur office market is expected to remain soft for at least the next six months, with average rental rates facing downward pressure, including for some prime office buildings, property consultants said.
DTZ Nawawi Tie Leung executive director Brian Koh said with the large incoming supply of new office space, especially in the next two years, office occupancy and rental would come under pressure until at least 2012.
“It will take sometime for the market to recover. We expect monthly average rentals in the prime office areas to ease from RM6 per sq ft now to around RM5.80 in the coming months,” he told StarBiz.
DTZ Nawawi Tie Leung, in its latest DTZ Property Times Kuala Lumpur report, said the local office market had increasingly become a tenants’ market as supply would continue to surpass demand.
“This is due to a significant increase in incoming supply later this year and over the next few years. That will allow tenants to negotiate for cheaper rates upon renewal and when signing for new leases,” it added.
By the second half of the year, another 2.06 million sq ft of new office space is scheduled to come onstream.
Between 2010 and 2014, about 14.9 million sq ft of space is in the pipeline, with about seven million sq ft scheduled for completion in 2012.
“With the significant supply of new office space coming on-stream, competition is expected to intensify further among new office buildings to secure tenants, and office rents are expected to see further downward pressure,” the report said.
It added that the outlook for the sector remained cautious, “until a more convincing and firmer economic performance is achieved”.
Although the overall occupancy rate of office buildings in Kuala Lumpur rose from 87.2% in the first quarter of this year (Q1’10) to 87.9% in Q2’10 due to a lack of new supply, the average monthly rental of office space fell from RM6.02 per sq ft (psf) in Q1’10 to RM6.00 in Q2’10.
YY Property Solutions, in association with Cushman & Wakefield, in its latest Kuala Lumpur Office Marketbeat report, said although there were more active enquiries in Q2’10 compared with the previous quarters, “the pace of demand for office space has yet to match the improved economic environment.”
“It is still largely a tenants’ market with landlords offering better terms to tenants under growing competition from existing and newly completed office buildings,” it added.
Lauding Bank Negara’s issuance of five new commercial banking licenses as “giving a boost to the office market”, it said demand for office space was essentially driven by employment generation in the services sector.
The report pointed out that the capital value of real estate in the investment market was expected to remain stable this year.
CB Richard Ellis Sdn Bhd executive director Paul Khong concurs that the market is very much a tenants’ market and rental rates are very competitive.
“Landlords need to fight harder to attract tenants and various financial incentives are now thrown in to package a deal,” he said.
However, Khong is more optimistic in his outlook of the office market and believes rentals will be stable “with some nominal increases for the rest of 2010 while occupancy rates will continue to improve slightly further.”
“Over the next six months, we expect to see further activities in the office market and more relocation of tenants to newer buildings,” he added. Khong noted that the market held on rather well in the first half of the year with areas like KL Sentral, Jalan Bangsar, Mid Valley, Damansara Heights, Petaling Jaya and Mutiara Damansara, recording a higher occupancy rate.
Monthly rentals for Grade A office space in KL’s city centre are within the range of RM6.50 to RM7 psf inclusive of service charges, at RM7.50 to RM8 psf in KLSentral, and RM5 to RM5.50 psf in Bangsar and Damansara Heights. Average office rental in Petaling Jaya is around RM4.50 psf.
fr:biz.thestar.com.my/news/story.asp?file=/2010/7/29/business/6753375&sec=business
Malls, more malls everywhere
By EUGENE MAHALINGAM
WITH the opening of 20 malls in the Klang Valley with a total net floor area of 4.4 million sq ft this year, the retail property market is likely to face an oversupply situation with pressure on rental rates, property consultants say.
Many shopping mall projects that were put on hold are back on track, and shoppers can expect to see a plethora of new retail centres on the horizon, especially within the Klang Valley area, comprising Kuala Lumpur, Selangor and Putrajaya.
According to statistics by the National Property Information Centre, as at March 2010, there were currently 49.98 million sq ft of existing retail space within the Klang Valley. Another 7.18 million sq ft is under development and 7.5 million sq ft of new space under planning.
Henry Butcher Retail managing director Tan Hai Hsin believes the new malls that are coming on stream will create an oversupply situation in the market.
“With the completion of at least 20 retail centres this year, the retail property market share will be squeezed,” Tan says, adding that the negative impact will be focused on certain locations with multiple malls.
“For example, the retail market in Cheras will be even more competitive when at least five new retail centres enter the market this year. In Subang, existing shopping centres are facing more challenges with four new players.”
He says newly-completed shopping centres will face pressure on rental rates.
“There are indeed too many malls within the Klang Valley. Newly-opened shopping centres in the last few years have been facing problems in securing sufficient tenants and shoppers. Many of their problems are due to market saturation, not the financial crisis.”
However, not all new malls will be casualties, even when there are already other existing, established shopping centres within the vicinity, says Malaysian Association for Shopping & Highrise Complex Management member Richard Chan.
“The Wangsa Walk Mall was opened in August last year in Wangsa Maju. Despite several prominent shopping centres (Jusco, Giant and Carrefour) already established within the area, retail space for the new mall (Wangsa Walk) has been fully taken-up,” he says.
A new mall can always be successful if it can meet the needs and wants of customers that were not met by existing shopping centres, he says, adding: “Malls are taken up because of a retail gap that cannot be met by the other malls. If you can fill up this gap, to the point of attracting the crowd from far away areas and meet the demands of the people, it will be a success.”
Chan cites KB Mall in Kota Baru, Kelantan, which is attracting customers from as far as Thailand.
“People from Thailand are going to the mall to get things that they cannot get in their own areas,” he says.
Khong & Jaafar Sdn Bhd managing director Elvin Fernandez believes that the success of potential new shopping centres is dependent on two key factors – their management and locations.
“Mall developers should conduct a study and understand the market before constructing.
Sometimes, they (the developers) will own part of the mall, say 50%, and divest the rest to different parties to manage. When that happens, you lose control,” he says.
Chan concurs that the number one criteria for the success of a shopping mall is management, rather than location. He says the next most important requirement is “accessibility.”
“The Mid Valley Megamall in Kuala Lumpur is strategically located but would it be successful if it didn’t have all those roads surrounding it? Your shopping centre might be in a good location but it would be pointless if it can’t draw the crowds,” he adds.
Fernandez says rental rates of downtown shopping centres (namely Suria KLCC and Pavilion in Kuala Lumpur) and suburban shopping centres (like Mid Valley in Kuala Lumpur, One Utama and Sunway Pyramid in Selangor) have been holding steady for a while.
Even during the global economic crisis, rates remained fairly steady and we expect them to remain steady for the remainder of 2010, he says, adding that he does not expect a “shoot-up” in rates.
According to Fernandez, rent for average prime space at downtown and suburban shopping centres are currently averaging RM50-RM60 per sq ft and RM30-RM35 per sq ft respectively.
“(Healthy) consumer spending and (good) tourism levels have managed to help keep the (retail) rates up,” he says.
With the improved economic conditions, the outlook for the retail sub-sector in Malaysia seems positive, regardless of the multiple malls, Chan says. “There are more festive holidays in the second half of the year and shopping malls also tend to have sales (in conjunction with the holidays) and year-end sales that will help boost business for the (retail) segment.”
Tan believes that the local retail industry will grow by 5% this year, with total sales turnover expected at RM74.6bil.
fr:biz.thestar.com.my/news/story.asp?file=/2010/8/7/business/6796926&sec=business
GuocoLand unit ups stake in Tower REIT
PETALING JAYA: GuocoLand Malaysia Bhd’s wholly-owned HLP Equities Sdn Bhd has acquired 4.55 million units, or 1.62%, in Tower REIT for RM5.1mil including transaction costs via a direct transaction.
The acquisition raised GuocoLand’s interest in Tower REIT to 21.66% from 20.04% previously, it told Bursa Malaysia yesterday.
Tower REIT is a real estate investment trust that owns three office buildings – Menara HLA, Menara ING and HP Towers.
fr:biz.thestar.com.my/news/story.asp?file=/2010/8/7/business/6817314&sec=business