REAL ESTATE HIGHLIGHTS - RESEARCH 1ST HALF 2018 - Knight Frank
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RESEARCH
REAL ESTATE
HIGHLIGHTS
1ST HALF 2018
Photo by
KUALA LUMPUR PENANG JOHOR BAHRU KOTA KINABALU
HIGHLIGHTS KUALA LUMPUR HIGH END
Property market regained
CONDOMINIUM MARKET
momentum with more launches
during the review period. ECONOMIC AND MARKET following expansion in the labour force.
INDICATORS On the lending front, Bank Negara
Mismatch in supply and demand The Malaysian economy, as measured Malaysia raised the Overnight Policy
continues to put pressure on by gross domestic product (GDP), Rate (OPR) by 25 basis points to 3.25%
secondary pricing in KL City. continued with its strong expansion on 25th January 2018 supported by the
of 5.9% in 2017 (2016: 4.2%). During strong growth momentum of the local
1Q2018, the economy registered a economy.
Rentals in most localities
continued to hold steady with the commendable growth of 5.4% (4Q2017: SUPPLY & DEMAND
exception of Bangsar, where they 5.9%), supported by the services and
manufacturing sectors. For the whole The cumulative supply of high-end
are noted to be slightly lower.
year of 2018, GDP is expected to range condominiums / residences stood at
from 5.5% to 6.0%. 51,278 units following the completion
To improve sales target, of four projects during the review
developers are going on property Headline inflation increased to 3.7% period. They are Four Seasons Private
roadshows around the country to in 2017 (2016: 2.1%) mainly driven by Residences Kuala Lumpur (242 units),
boost sales of new products and higher domestic fuel prices. In 1Q2018, it The Residences by Tropicana (353 units),
to clear existing stock. slowed to record at 1.8% (4Q2017: 3.5%) Anggun Residences (384 units) and
due to smaller contribution of domestic Pavilion Hilltop (621 units).
fuel prices and a stronger ringgit
The historic conclusion of GE14 More projects are scheduled for
exchange rate. The headline inflation for
will see plausible return of completion by the second half of 2018
2018 is estimated at 2.0% to 3.0%.
property buyers and investors as and collectively they are expected to
they shift from the ‘wait-and-see Meanwhile, the labour market contribute some 2,084 units to the
approach’ to ‘actively looking conditions remained stable in 2017 existing supply. These schemes are The
to buy’ due to improved market with unemployment rate unchanged Ruma Residences (199 units), Pavilion
sentiment. at the previous year level of 3.4%. Suites (383 units), Premium Residences
During 1Q2018, the unemployment @ KL Gateway (466 units), Dorsett
rate improved to 3.3% (4Q2017: 3.4%) Residences Sri Hartamas (707 units), One
The three-month tax holiday
following the zero rating of
the Goods and Services Tax FIGURE 1
(GST) effective 1st June and Projection of Cumulative Supply for High End Condominiums /
the re-introduction of the Sales Residences 2014 – 2H2018 (f)
and Services Tax (SST) only on
1st September is positive and 60
provides a further boost to the
Cumulative Supply (No. of Units (’000))
property market. 50
40
Moving forward, a gentle
recovery in the high-end 30
residential market is expected
with more launches next year. 20
10
0 Year
2014 2015 1H2016 2H2016 1H2017 2H2017 1H2018 2H2018(f)
KL City Ampang Hilir/ U-Thant
Mont’ Kiara/ Hartamas Bangsar/ Damansara Heights
Note:
(1) (f) = Forecast
(2) The locality of Bangsar includes Bangsar, Bangsar South, KL Sentral, KL Eco City and Pantai Sentral Park
Source: Knight Frank Research
2
REAL ESTATE HIGHLIGHTS MALAYSIA
areas ranging from 782 sq ft to 1,632 sq
ft are priced from RM1.3 million each.
Scheduled for completion by 2021, the
selling points of Impression U-Thant are
its low density and dual-key design.
Inspirasi Mont’ Kiara by MKH Bhd is
a mixed development comprising two
blocks of 46-storey serviced apartments
complemented by shoplots on the
ground floor. The project spanning 2.56
Pavilion Hilltop
acres will house 640 units of serviced
Kiara - Tower A (118 units) and Inwood apartments sized from 940 sq ft to
Residences (211 units). 1,015 sq ft. It was launched in February
2018 with selling prices starting from
The freeze on approvals for condominium RM729,600 per unit or RM776 per sq ft.
/ serviced apartment projects offering
products priced above RM1 million KaMi Mont’ Kiara by a subsidiary of Ireka
effective 1st November 2017 may provide Corporation Bhd was officially launched
The Residences by Tropicana a breather to the oversupplied market on 9th June. The project consists of
although it seems to have a lesser impact 168 units of fully-furnished serviced
on earlier approved projects. apartments with a supporting F&B
outlet & convenience store within the
During the review period, a few notable building. The serviced apartments have
projects were launched and they include built-up areas of 840 sq ft to 1,604 sq
Impression U-Thant in the locality ft and selling prices starting from RM1
of Ampang Hilir / U-Thant; Inspirasi million per unit. The project comes with a
Mont’ Kiara and KaMi Mont’ Kiara in five-year guaranteed rental return of five
Mont’ Kiara and Damansara Fifty6 in percent for first two years and six percent
Damansara Heights. for the remaining three years. Slated
Impression U-Thant is a project jointly for completion by 2021, the project
being developed by Yong Tai Bhd, is a Japanese inspired development
KOF Holdings Sdn Bhd and RISDA. It with Japanese designed features and
features a 10-storey block of serviced facilities.
apartments offering a total of 108 semi- Damansara Fifty6 Sdn Bhd, a wholly-
furnished units. The units which come owned subsidiary of Allstones Group
Anggun Residences in six different layouts with built-up Asia Sdn Bhd, launched a 1.1-acre low
TABLE 1
Notable Launches in 1H2018
Name of
Impression U-Thant Damansara Fifty6 Inspirasi Mont' Kiara KaMi Mont' Kiara
Development
Type Condominium Condominium Serviced Apartment Serviced Apartment
United Time
JV between Yong Tai Bhd, Damansara Fifty6 Sdn Bhd
Alif Mesra Sdn Bhd Development Sdn Bhd
Developer KOF Holdings Sdn Bhd (Subsidiary of Allstone
(Subsidiary of MKH Bhd) (Subsidiary of Ireka
and RISDA Group Asia Sdn Bhd)
Corporation Bhd)
Locality Ampang Hilir / U-Thant Damansara Heights Mont’ Kiara Mont’ Kiara
No. of Units 108 56 640 168
Unit Sizing
782 - 1,632 sq ft 1,356 - 3,510 sq ft 940 - 1,015 sq ft 840 - 1,604 sq ft
(Min - Max)
Selling Price From RM1,700 per sq ft RM830 per sq ft on average From RM776 per sq ft From RM1,200 per sq ft
Source: Knight Frank Research
3
density project – Damansara Fifty6 on the launched price of Impression property market.
2nd March. Located in Bukit Ledang, U-Thant starts from RM1.3 million (or
The three-month tax holiday period
neighbouring the Damansara Heights circa RM1,700 per sq ft). The pricing
effective 1st June is also positive for the
enclave, the leasehold project consists on per sq ft basis is higher compared
property market. The zero rating of the
of two blocks of condominiums (4 and to other existing projects in the vicinity
Good and Services Tax (GST) is expected
11-storey). It offers a total of 56 units as the units offered are smaller in size
to boost the commercial sub-sector as
with built-ups ranging from 1,356 sq ft to and semi-furnished. Inspirasi Mont’
buyers purchasing commercial properties
3,510 sq ft and average selling prices of Kiara was launched at RM776 per sq ft during the tax holiday period pay 0%
RM830 per sq ft. onwards while units at Damansara Fifty6 GST. Thus, we expect to see more
Selected projects launched during command average pricing of RM830 per activities in this market segment. As for
1H2018 have reportedly achieved sales sq ft. the housing sector which is already GST
rate ranging from 20 percent to 30 In the secondary market, the exempted, there will not be significant
percent. transacted prices of mid to larger sized price movement in the short term.
condominiums / serviced apartments
PRICES AND RENTALS (1,300 sq ft to 3,400 sq ft) in the selected
In the primary market, with more
developers going on countrywide
During the first half of 2018, rentals of schemes such as The Troika and Pavilion roadshows to promote recently launched
most high-end condominium / serviced Residence remained resilient, averaging products and to clear existing property
apartment schemes in the various at RM1,200 per sq ft and RM1,700 per sq stock by offering rebates and better
localities under review, continued to ft respectively. promotional packages, we expect sales
hold steady. Asking rentals in Bangsar, to pick up albeit slowly.
however, were noted to be generally OUTLOOK
The rental market which is believed to
lower. Meanwhile, in KL City, amid the
In 1Q2018, a total of 216 condominium have bottomed out is also receiving more
tight leasing market, owners with weaker
/ apartment units changed hands in enquiries generally.
holding power are turning to online
Wilayah Persekutuan Kuala Lumpur,
marketplace and hospitality service The recent echo of improving sentiments
marginally lower when compared to
operator such as Airbnb, to offer their coupled with strong growth momentum
4Q2017 which registered 238 transacted
accommodation for short-term stay at of the economy and rebound of oil
units. Post-election, there appears to
higher yields. price among others, show that there is
be an uptick in enquiries from potential
a window of opportunities for recovery
In KL City, mismatch in supply and buyers due to renewed confidence in the
in the property market, including the
demand continues to put pressure on newly elected Government.
high-end segment. Malaysia is expected
secondary pricing. Meanwhile, asking
In the mass housing market, there is a to return to the radar of investors after
prices in other localities under review
plausible return of buyers and investors the market stabilises with more clarity
remained stable.
as they actively look for good deals in the policies of the newly elected
In the locality of Ampang Hilir / U-Thant, ahead of the anticipated recovery in the Government.
TABLE 2
Average Asking Prices and Rentals of Existing High End Condominiums 1H2018
Ampang Hilir / Damansara
KL City* U-Thant** Heights*** Kenny Hills Bangsar Mont' Kiara****
2.20 - 5.20 2.00 - 3.50 2.20 - 4.30 2.00 - 3.00 2.20 - 4.00 1.80 - 3.50
660 - 1,700 550 - 1,200 550 - 1,000 550 - 900 650 - 1,300 500 - 850
Asking Gross Rental Average Asking Price (RM per sq ft)
* Excludes Binjai on the Park and Pavilion Banyan Tree Signatures but includes Pavilion Residences *** Excludes DC Residency but includes Twins @ Damansara Heights
** Excludes Seri Hening **** Excludes Verve Suites which comprise mainly fully furnished small units
Source: Knight Frank Research
4
REAL ESTATE HIGHLIGHTS MALAYSIA
HIGHLIGHTS KUALA LUMPUR & SELANGOR
The serviced office and co-
OFFICE MARKETS
working sector remains active
with many operators exploring INTRODUCTION
new set-up or expansion amid
Knight Frank Malaysia has recently revised
rising demand from a multitude of
and improved the methodology to track
occupiers.
rental movements for both Kuala Lumpur
and Selangor office markets.
Flight to quality continues
The base year for computation of the
to impact the office market,
rental indices have been revised from
particularly the older and lower
2010 to 2015 for Kuala Lumpur.
grade buildings. Existing tenants,
particularly big space occupiers, Knight Frank Malaysia has renamed two
look to relocate to newer, localities in KL City: Golden Triangle to
better quality office space with New CBD and CBD to Old CBD. And for
landlords offering competitive Beyond Kuala Lumpur (Selangor), it has
rental packages to entice them. been renamed Selangor.
Knight Frank Malaysia has further
The cancellation of the Mass segregated established office locations
Rapid Transit Circle Line (also in KL Fringe from three previously to six,
known as MRT 3) will impact namely Damansara Heights, KL Sentral,
upcoming mega developments Taman Tun Dr Ismail, Mid Valley City / KL
in Kuala Lumpur such as KL Eco City, Bangsar South / Kerinchi and
Metropolis, Bandar Malaysia, Pantai / Bangsar.
Bukit Bintang City Centre and
Merdeka PNB 118 in the short MARKET INDICATIONS
term.
The Kuala Lumpur and Selangor office
markets remained flat during the review
period.
Despite having no catalyst to boost
demand, net absorptions for KL City
and KL Fringe turned positive while for
Mercu 2 @ KL Eco City
Selangor, it was negative.
forms part of the larger integrated
SUPPLY development of KL Eco City. The
42-storey corporate office tower with
As of 1H2018, the cumulative supply of
540,000 sq ft NLA has typical floor plate
purpose-built office space for both Kuala
size in the region of 15,000 sq ft.
Lumpur and Selangor was recorded
at circa 101.3 million sq ft following Meanwhile, the 33-storey Celcom Tower
the completion of three buildings with is an office component within Phase 1 of
combined NLA of approximately 1.21 PJ Sentral Garden City development that
million sq ft. also houses MBSB Tower, MyIPO Tower
and a medical facility. The office tower,
The recent completion of Mercu 2 @
which offers 450,000 sq ft NLA, has been
KL Eco City increased the cumulative
leased to Celcom Axiata Berhad for 21
supply for KL Fringe to 28.6 million sq
years.
ft while in Selangor, the completion of
Celcom Tower and Star Central (Phase Moving into 2H2018, office buildings
1C), brought its cumulative supply to 20.9 slated for completion include The
million sq ft. Exchange 106 and Equatorial Plaza in
KL City; South Point Office @ Mid Valley
There were no completions of new office
City and Menara Etiqa in KL Fringe; and
buildings in KL City.
Nucleus Tower, Menara Star 2 and Tower
Mercu 2 (formerly known as Setia Tower) 6 of Sky Park in Selangor.
5
OFFICE ANNOUNCEMENTS office units in Wisma MPL. Completed in Tenant movements out of Menara Weld
1973, the building was previously known and Menara HLA were balanced by new
There were several notable office related as Wisma MPI and later as Wisma HLA. take-up in Menara Worldwide, Menara
announcements in 1H2018.
Over in KL Fringe, Pintaras Jaya Bhd Prestige and Naza Tower.
In KL City, the Ministry of Finance (MoF) has been awarded a RM68.5 million As for the decentralised office locations
has taken control of the soon to be construction contract by Bina Puri in KL Fringe, the overall occupancy rate
completed skyscraper known as The Development Sdn Bhd for a mixed remained resilient at 83.8% in 1H2018
Exchange 106 at Tun Razak Exchange development in Brickfields. The contract (2H2017: 83.9%). The increase in office
(TRX). The MoF, via MKD Signature Sdn involves the piling and substructure space following the completion of Mercu
Bhd, has acquired a 51% stake in Mulia works for the proposed 54-level office 2 @ KL Eco City was offset by higher
Property Development Sdn Bhd which is suites and two blocks of 63-level take-up in several office buildings,
developing the 3.42-acre TRX land from serviced apartments. namely Wisma UOA Damansara II, HP
Indonesia’s Mulia International Ltd, a
subsidiary of Indonesia’s Mulia Group. OCCUPANCY Towers and The Gardens South Tower.
During the review period, the overall The overall occupancy rate for the
Honeywell, a global leader in connected
occupancy rate for KL City remained Selangor office market also remained flat
buildings, has been awarded a US$14
fairly stable at 79% (2H2017: 79.5%). at 79.2% in 1H2018 (2H2017: 79.5%).
million (RM54.7 million) contract to
supply smart building technologies that
include complete security and building
management systems for the iconic PNB
118 Tower. Located within the Warisan
Merdeka development, the 118-storey
skyscraper is set to become the fifth
tallest building in the world upon its
completion in 2024.
Malaysia Pacific Corp Bhd (MPCorp) is
in the midst of negotiating with The 21st
Metallurgical Development (M) Sdn Bhd
(T21) for the redevelopment of Wisma
MPL at Jalan Raja Chulan. Both parties
have agreed to incorporate a joint venture
(JV) company to acquire the shop lots and Star Central (Phase 1C)
FIGURE 2
Occupancy and Rental Trends in Kuala Lumpur 1H2012 – 1H2018
100 8
90
7
80
Rental (RM per sq ft / month)
6
70
Occupancy (%)
5
60
50 4
40
3
30
2
20
1
10
0 0
1H2012 2H2012 1H2013 2H2013 1H2014 2H2014 1H2015 2H2015 1H2016 2H2016 1H2017 2H2017 1H2018 Year
Occupancy (%) Rental (RM per sq ft / month)
Source: Knight Frank Research
6
REAL ESTATE HIGHLIGHTS MALAYSIA
New take-up in Tropicana City Office
Tower, SunGeo Tower and Block 9 of UOA TABLE 3
Business Park were balanced by tenants Notable Tenant Movements 1H2018
moving out from Crystal Plaza, Menara Building Name Approx. Space (sq ft) Remarks
Axis and CP Tower.
KL CITY
RENTAL Menara Prestige ~37,000 Moving in
• Petrofac Malaysia Limited
The average achieved rental rates for both
KL City and Selangor remained under Menara Worldwide ~21,500 Moving in
• Common Ground
pressure as the mismatch between supply
and demand continues to grow. Naza Tower ~54,000 Moving in
• Wood Group*
During the review period, the average
KL FRINGE
rentals for KL City and Selangor declined
to RM7.16 per sq ft (2H2017: RM7.20 Vertical Corporate ~18,500 Moving in
Tower B • IWG Shared Services*
per sq ft) and RM4.20 per sq ft (2H2017:
RM4.22 per sq ft) respectively. Menara LGB ~13,500 Moving in
• Hibiscus Petroleum
However, in KL Fringe, the average
SELANGOR
achieved rental rate remained resilient at
RM5.72 per sq ft supported by sustained Block H, ~40,000 Moving in
Empire City • Grab Malaysia
demand from foreign companies and
expansion by co-working operators. SunGeo Tower ~10,000 Expansion
• British American Tobacco Malaysia
In Kuala Lumpur, well-located Grade
Source: Knight Frank Research
A office space continued to command Note: *Deals closed by Knight Frank Malaysia
higher asking rents, ranging from RM6.00
per sq ft to RM11.00 per sq ft per month
while in Selangor, the asking rents are TABLE 4
more competitive, ranging from RM4.50 Selected Office Investment Sales 1H2018
per sq ft to RM6.00 per sq ft per month.
Building Name Location Approx. Lettable Consideration
Area (sq ft) (RM per sq ft)
INVESTMENT ACTIVITY
The review period recorded two sales Wisma Mont’ Kiara1 Jalan Kiara, Mon’t Kiara 181,992 670
of office buildings in KL Fringe, namely
Wisma UOA Pantai2 Pantai 157,083 764
Wisma Mont’ Kiara and Wisma UOA
Pantai. 1 Al Rajhi family of Saudi Arabia via R J Seven Sdn Bhd has acquired Wisma Mont’ Kiara, a 20-storey office
building, from Singapore-based ARA Asset Management Ltd, for a consideration of RM122 million. The office
Saudi Arabia’s Alrajhi family has acquired building forms part of large 1 Mont’ Kiara integrated development that also comprises 1 Mont’ Kiara Mall and
the 16-storey Wisma Mont’ Kiara office Menara 1 Mont’ Kiara Office Suites.
building from Singapore-based ARA 2 UOA Real Estate Investment Trust has disposed Wisma UOA Pantai, a 5-storey office building with 2
mezzanine floors and 3 levels of basement carpark, to CIMB Bank Berhad for a total consideration of RM120
Asset Management Ltd for an estimated
million.
RM122 million. The building, which offers
241,682 sq ft GFA and 181,992 sq ft NLA, Source: Knight Frank Research
is part of a larger integrated mixed-use
development. Wisma Mont’ Kiara is
There are a few buildings up for sale in following the signing of key tenants that
believed to be 98% tenanted, with 60% of
the market. include American Express Malaysia and
the NLA secured until 2020. Some 30% of
oil and gas service provider Petrofac.
the space is occupied by ServiceSource Kuwait Finance House (KFH) is reportedly
Asking rentals for the low and high zones
International (M) Sdn Bhd. Rents are putting up its Grade A, 36-storey Menara
range from RM7.50 per sq ft to RM8.50
said to be between RM4.50 per sq ft and Prestige near KLCC for sale with an
per sq ft per month.
RM4.80 per sq ft per month, including asking price of RM700 million to RM750
service charges. million (RM1,273 per sq ft to RM1,363 The Employees Provident Fund (EPF)
UOA Real Estate Investment Trust (UOA per sq ft). Situated at the corner of Jalan is studying the sale of the Axiata Tower
REIT) is disposing Wisma UOA Pantai Pinang and Jalan P. Ramlee, the office (formerly known as Quill 7) in Kuala
located off Jalan Pantai Baru to CIMB tower with 550,000 sq ft NLA and over Lumpur Sentral. The Grade A office tower
Bank Bhd for RM120 million cash. 800 car parking bays, is MSC-ready, is expected to fetch as much as RM530
The property was operating at a low though it does not carry MSC status. The million. The 30-storey building which has
occupancy rate of 19% as at April 2018. building is currently about 80% occupied circa 355,096 sq ft NLA is 91% occupied.
7
space with landlords offering competitive
TABLE 5 rental packages to entice them.
Selected Grade A Office Asking Rentals 1H2018
The outlook for both Kuala Lumpur and
Asking Gross Rental Selangor office markets continues to
Building Name (RM per sq ft / month)
remain lacklustre as impending supply
KL CITY coupled with tight leasing market continue
Integra Tower 11.00 to increase pressure on occupancy and
Menara Maxis 10.50 rental levels.
Vista Tower 9.00 On a positive note, with the crude oil price
G Tower 8.00 looking to stabilise, there appears to be
Menara Darussalam 8.50 some returning interest from the oil & gas
(O&G) and its related sectors. Leasing
Menara Binjai 8.80
enquiries for this sector as well as from
Menara Hap Seng 2 7.00 multinationals in other services industries
Menara Citibank 7.00 exploring the KL market, have picked up.
KL FRINGE
Also, with rising demand for flexible co-
Wisma Guocoland 7.00 working space catering to the growing
Menara CIMB 8.00 millennial workforce that comprises a
Axiata Tower 7.50 mixture of freelancers, start-ups, small
and medium size entrepreneurs (SMEs)
1 Sentrum 7.80
and MNCs, 2018 will see active enquiries
Menara LGB 6.50 and leasing activities from co-working
The Gardens North & South Towers 7.50 operators exploring new set-up or
Vertical Corporate Tower B 6.00 expansion.
Menara BRDB 6.50
SELANGOR
1 First Avenue 6.00
Surian Tower 5.50
The Ascent @ Paradigm 5.50
Puchong Financial Corporate Centre (Towers 4 & 5) 4.50
The Pinnacle 5.50
Wisma Mustapha Kamal 4.80
Quill 18 (Block B) 5.00
Source: Knight Frank Research
The Axiata Group occupies just over 30% next few quarters as and when there is
of the space, with other major tenants more clarity on the policies of the newly
including Perbadanan Insurance Deposit elected Government.
Malaysia, Ceo Suite (M) Sdn Bhd, Navis The cancellation of Mass Rapid Transit
Management Sdn Bhd, Google Malaysia Circle Line (also known as MRT 3) will
and Bombardier (M) Sdn Bhd. impact upcoming mega developments
in Kuala Lumpur such as KL Metropolis,
OUTLOOK Bandar Malaysia, Bukit Bintang City
Moving forward, the Business Conditions Centre and Merdeka PNB 118 in the
Index which dipped marginally to 98.6 short term.
points in 1Q2018 (4Q2017: 101.5 points) Flight to quality continues to impact
slightly below the demarcation level of the office market. Existing tenants, Photo by
100-point threshold of optimism (source: particularly big space occupiers, look Tun Razak Exchange photo taken on the election day
MIER) is expected to improve over the to relocate to newer, better quality office Source: Ho Chin Soon
8
Source: Knight Frank Research
REAL ESTATE HIGHLIGHTS MALAYSIA
HIGHLIGHTS KLANG VALLEY RETAIL MARKET
The MIER Consumer Sentiment
Index (CSI) improved to register MARKET INDICATIONS components. The five-storey retail mall
with NLA of 200,000 sq ft is anchored by
at 91.0 points in 1Q2018 but it The MIER Consumer Sentiment Index Robinsons and it offers a unique retail
remains below the 100-point (CSI) saw an improvement of 8.4 points experience with designer boutiques,
optimism threshold. in 1Q2018 to register at 91.0 points speciality stores and premium food &
although it remains weak below the beverage (F&B) outlets such as Atlas
optimism threshold level of 100 points. Gourmet Market & Bistro and Decadent
The Malaysia Retailers Association
(MRA) has revised upwards its Retail sales grew 2.6% in 1Q2018 driven
2018 retail sales forecast from by encouraging sales boosted by the
4.7% to 5.3% following the Chinese New Year festive season.
Government’s decision to zero
Despite the closure of fashion brands
rate the 6% Goods and Services
such as Gap and Banana Republic due
Tax (GST) effective 1st June.
to declining sales, the review period
continues to see the entry and expansion
Recent completion of circa of international and local retailers.
450,000 sq ft NLA of retail space
brings Klang Valley’s cumulative
SUPPLY & DEMAND
supply to 57.5 million sq ft in The review period saw the opening of two
1H2018. Retail space per capita, shopping centres with a combined NLA
analysed at circa 7 sq ft per of about 450,000 sq ft and the closure of
The Shoppes @ Four Seasons Place Kuala Lumpur
person, is one of the highest in Ampang Park shopping centre (256,319
Malaysia. sq ft NLA) for the construction of the by Four Seasons.
Ampang Park Mass Rapid Transit (MRT)
Meanwhile, Evo Shopping Mall in Bangi
station under Line 2. This brought the
Although challenges in the retail made its debut on 19th January 2018
cumulative supply of retail space in Klang
industry have led to the closure with four retail levels spanning across
Valley to circa 57.5 million sq ft.
of some brands due to declining 250,000 sq ft. The mall is notably the
sales, there are others that The recent completions are The Shoppes only one in Bangi to house a number
continue to see opportunities in @ Four Seasons Place Kuala Lumpur and of prominent anchor and key tenants,
the market evident from the debut Evo Shopping Mall in Selangor. namely Parkson, MaxValu, Samsung,
and expansion of international and Focus Point, Manhattan Fish Market,
The Shoppes @ Four Seasons Place
local brands in the review period. Caring Pharmacy, and Daiso.
Kuala Lumpur, which officially opened
on 15th May 2018, forms part of a larger The review period continues to see
integrated development comprising developers and operators of selected
a hotel and branded residence shopping centres embarking on asset
TABLE 6
Existing Cumulative Supply of Retail Space (Net Lettable Area) 1H2018
SELANGOR KL FRINGE
30.02mil sq ft 20.32mil sq ft
52.2% KL CITY
35.3%
7.15mil sq ft
12.4%
Source: Knight Frank Research
9
enhancement initiatives (AEIs) to address Sea, Hong Kong Sheng Kee Dessert, OUTLOOK
challenges in the retail landscape and to Fuwari, Macha n Co, Hogan Bakery,
continue attracting shoppers and tenants Mak’s Chee, Alibaba and Nyonya. As for Moving forward, Malaysia Retail
alike. the healthcare & beauty segment, new Association has revised upwards its full
players include Chanel, Sulwhasoo and year forecast from 4.7% to 5.3%. The
IPC Shopping Centre has fully reopened Government’s decision to zero rate the
YSL Beauty.
after its refurbishment to strengthen 6% Goods and Services Tax (GST) from
its market presence, offering fun-filled Global lifestyle brand, Guess, has
1st June augurs well for the retail industry.
shopping experience based on new relocated its main and kids stores from
The 3-month tax holiday pending the
leisure and family concepts. The mall Mid Valley Megamall to The Gardens Mall.
implementation of the Sales and Services
welcomes back popular tenants and new The upscale mall is also home to a SK-II
Tax (SST) on 1st September is expected to
tenants such as Harvey Norman, Brands boutique spa on the ground floor and a
increase demand for goods and services.
Outlet, AEON Wellness, Australian Nespresso Boutique on the first floor as
furniture retailer King Living, LC Wakiki, well as the upcoming standalone Laneige The SST, on the other hand, may spur
Ben’s Independent Grocer, Penang Road beauty and skincare store, United Nude spending with lower prices for necessity
Famous Teochew Chendul, Dome and and COS outlets among others. goods.
Sukiya. Other brands making their debut include Meanwhile, the proposed move on
Nene Chicken, Forty Hands Café, Sunny minimal wage will be a breather for lower-
Eleven new shopping centres /
Queen, DreamWorks Kung Fu Panda income consumers, and hence, may
supporting retail components with
Kitchen and Tai Croissant. strengthen purchasing power.
combined retail space of circa 6.6 million
sq ft are expected to enter the Klang Meanwhile, fashion brands that exited the
For the remaining of 2018, retail sales
Valley market by 2H2018. They are The market during the review period include
growth is expected to be sustained as
Linc, GM Bukit Bintang, KL Eco City Gap and Banana Republic. These stores
consumer sentiment improves with higher
Retail Podium, Kiara 163, Eko Cheras have continued to see declining sales
purchasing power.
Mall, Pinnacle, Empire City Damansara over the years.
Mall, Tropicana Gardens, Skypark @ We continue to see more consumers
The first two months of 2018 also saw
Cyberjaya, Pacific Star and Central i-City turning to online shopping for greater
the sudden exit of Parkson departmental
Shopping Centre (Central Plaza @ i-City). choices, bargains and convenience
store in Maju Junction Mall and Sungei
Wang Plaza amid continued challenges in evident from rapid growth in the
During the review period, the retail
the departmental store sub-sector. e-commerce segment.
sector continues to witness the debut
and expansion of international and local Besides hypermarket operators such
brands. PRICES & RENTALS as Tesco and AEON Big, leading F&B
The average monthly gross rentals of and consumer product players such as
In the vibrant Kuala Lumpur City, Pavilion
selected prime shopping centres remained Nestle and Unilever continue to embrace
Kuala Lumpur welcomed the first flagship
store of the American chain, Cold Stone resilient during the review period. e-commerce to improve sales.
Creamery. In Kuala Lumpur City, Suria KLCC and Official stores and brands of beauty
Aw Lab, the American sneakers Pavilion Kuala Lumpur continued to and health products such as Guardian,
specialist has opened its flagship store command higher average monthly rentals Watsons, NYX cosmetics and Silky Girl
on the third floor of Suria KLCC whilst of RM24.00 per sq ft to RM26.00 per sq have also widened their market reach by
the infamous ground floor sees new ft. These popular malls registered near full going online.
openings that include Malaysian home- occupancy of 97% and 99% respectively.
A new concept of cashless convenience
grown brand, the dUCk store and Diane In the city fringe, Mid Valley Megamall stores, namely Funmaii Signature and Iris
von Furstenberg occupying 3,000 sq ft and The Gardens Mall command average 100 yen have finally made their entry by
and 1,000 sq ft respectively. The review monthly rentals of RM17.00 per sq ft offering 24-hour cashless self-checkout.
period also saw the reopening of the and RM16.00 per sq ft respectively. The stores carry goods from six countries
newly refurbished Bally and Versace These malls registered 100% and 98% - Japan, Korea, Hong Kong, Taiwan,
outlets with 2,100 sq ft and 2,500 sq ft of occupancies, with back to back tenant China and Malaysia.
space respectively. movements and renewals.
To remain competitive due to rising
In Kuala Lumpur Fringe, Mid Valley The average monthly rentals for Sunway popularity of online shopping, the
Megamall continues to refresh its tenant Pyramid Shopping Centre and The Mines retail segment has been banking on
mix. Early this year, Mr. DIY launched in Selangor are RM14.00 per sq ft and securing tenants with services and
its flagship store spanning over 15,000 RM9.00 per sq ft respectively. These malls experience factor such as F&B, beauty
sq ft on the mezzanine third floor level. are 99% and 94% occupied respectively. and dermatology and sports and
New notable tenants in the Specialty
There were no notable transactions of entertainment.
and F&B segments include Christy Ng,
Happy Button, MGP Label, South China shopping centres in the review period. The review period saw the partial opening
10REAL ESTATE HIGHLIGHTS MALAYSIA
The current concern weighs more on the
TABLE 7 completed retail stock that have yet to
Incoming Retail Supply 2018 be filled and this puts further pressure on
Name of Shopping Mall Location Estimated Net Lettable Area occupancy levels going forward.
1H2018 - New Completion/ Opening Thus, to address the growing mismatch in
supply and demand of selected property
Shoppes @ Four Seasons Place KL City 200,000 sq ft segments including retail, Kuala Lumpur
Evo Shopping Mall Selangor 250,000 sq ft City Hall (DBKL) has recently frozen
approvals for all unapproved projects,
2H2018 - Expected Completion/ Opening including those built on hill slopes and
The Linc KL City 120,000 sq ft public spaces. This measure is expected
to provide a breather to the oversupplied
GM Bukit Bintang KL Fringe 100,000 sq ft retail market as it seeks to find its
equilibrium.
KL Eco City Retail Podium KL Fringe 250,000 sq ft
EKO Cheras Mall KL Fringe 625,000 sq ft
Kiara 163 KL Fringe 300,000 sq ft
Pinnacle Selangor 140,000 sq ft
Empire City Damansara Mall Selangor 2,300,000 sq ft
Tropicana Gardens Selangor 1,000,000 sq ft
Skypark @ Cyberjaya Selangor 565,000 sq ft
Pacific Star Selangor 240,000 sq ft
Central i-City Shopping Centre Selangor 940,000 sq ft
(Central Plaza @ i-City)
One Utama Extension – FlowRider
Source: Knight Frank Research
of Phase one of 1 Utama E, the newest bodyboarding and surfing, and AirRider
extension to the 1 Utama Shopping is an indoor skydiving wind tunnel for
Centre. Officially launched early this year, simulated sky diving.
it welcomed two sports tourism centres,
The partially opened Empire City
namely FlowRider and AirRider, the first
Damansara Mall in Damansara Perdana
of their kind in the country. FlowRider was the KL SEA Games venue for ice
is a simulated wave generator featuring skating and ice hockey. It has currently
sheet wave technology for flowboarding, secured tenants, mostly operating in
the F&B segment such as Boat Noodle,
Mr Tuk Tuk, Black Canyon, Shinmapoo,
Pizza Hut and Breadstory.
Despite the rise in online shopping, brick-
and-mortar outlets continue to remain
relevant in the local retail industry.
The Klang Valley retail landscape
continues to face strong headwinds and
the recent completion of some 450,000 sq
ft of space further heightens competition
One Utama Extension – AirRider in an already crowded market.
11HIGHLIGHTS SELANGOR INDUSTRIAL MARKET
New generation of gated
and guarded (G&G) industrial
MARKET INDICATIONS In 2017, Malaysia’s Industrial Production
Index (IPI) recorded an overall growth of
parks that come with workers’ Selangor, the industrial stronghold of 4.4%, largely supported by resilience in
accommodation and other Malaysia, continues to play a significant manufacturing activities which grew 6.1%
amenities bode well with role in the Malaysian economy. The year-on-year (y-o-y).
occupiers and investors alike. state, which is particularly dominant
in the manufacturing of electrical and It is expected that the strong growth
electronic products, contributed 22.7% trajectory of Malaysia’s industrial sector
Built-to-suit facilities are to the country’s gross domestic product moving into 2018 will continue to be
becoming more prevalent in (GDP) and 28.9% to the country’s supportive of the nation’s industrial
Malaysia. One-stop solutions are manufacturing sector in 2016. property market.
offered to companies which prefer
to operate in customized facilities
FIGURE 3
on long term leases, saving the
Cumulative Supply of Terraced, Semi-Detached and Detached Factories
hassle and capital expenditure
2013 - 1Q2018
associated with the construction
process. 30,000
Cumulative Supply (Total No. of Units)
25,000
Multi-storey warehouses,
which had been prevalent in
countries where land is scarce 20,000
and expensive such as Hong
Kong and Singapore, is gaining 15,000
popularity in Malaysia due to
surging land prices in recent 10,000
years.
5,000
Multinational corporations
such as the likes of Nestle S.A. 0
and IKEA, are establishing 2013 2014 2015 2016 2017 1Q2018 Year
Regional Distribution Centres Terraced Semi-detached Detached
(RDC) in Malaysia. This serves Source: NAPIC
as a testament that Malaysia’s
established infrastructure with
its network of well-maintained FIGURE 4
highways linking major growth Incoming Supply of Terraced, Semi-Detached and Detached Factories
centres to seaports and airports 2013 - 1Q2018
will support the growth of the 3,000
logistics sector.
2,500
Incoming Supply (No. of Units)
2,000
1,500
1,000
500
0
2013 2014 2015 2016 2017 1Q2018 Year
Terraced Semi-detached Detached
Source: NAPIC
12REAL ESTATE HIGHLIGHTS MALAYSIA
SUPPLY & DEMAND scheduled for completion in 1Q2018. transactions growing 19.5% y-o-y in 2017.
This feat, achieved despite most states
The cumulative supply of industrial The incoming supply of industrial recording a slowdown in market activity,
properties in Selangor stood at 40,071 properties in Selangor has slowed is testament that both businesses and
units as of 1Q2018 following the significantly in 2016 and 2017. investors alike continue to view Selangor
completion of 112 units. Correspondingly, the number of overhang as a strategic industrial hub and will
industrial properties in the state stood at continue to plough capital into the most
As of 1Q2018, Klang district has the
only six and 27 units in 2016 and 2017 urbanised and developed state in the
highest number of incoming industrial
respectively. country.
property supply with 482 units,
representing circa 44.3% of the state’s The industrial property market in Selangor Terraced factories remain the most
total impending supply of 1,088 units. A continued to outperform the general transacted industrial property type
total of 109 units in the said district are market with volume of industrial property in 1Q2018, with 207 units valued at
RM181.09 million changing hands. As
compared to 1Q2017, both volume and
FIGURE 5 value of transactions recorded y-o-y
Number of Transactions for Terraced, Semi-Detached and growth of 13.7% and 12.5% respectively.
Detached Factories 2013 - 1Q2018
1,600 PRICES & RENTALS
Land price has always played a
1,400 prominent role in determining the
feasibility of running an industrial facility.
1,200 Hence, it is worth noting how the price
Volume of Transactions (No.)
factor has affected the landscape of
some established industrial areas in
1,000
Selangor.
As a result of increasing land prices and
800
rapid urbanization, industrial areas in
Petaling Jaya such as Sections 13, 19, 51
600 and 51A, are undergoing transformation
with former industrial sites being
400 redeveloped into mixed-use schemes.
An increasing number of industrial units
200 in these areas are also being utilized as
showrooms or for other semi-commercial
purposes. Thus, we observed gradual
0
2013 2014 2015 2016 2017 1Q2018 Year relocation of manufacturing firms in these
areas to other industrial hubs such as
Terraced Semi-detached Detached
Shah Alam and Klang.
Source: NAPIC
Shah Alam which is home to some of the
most prominent industrial precincts in
FIGURE 6 Malaysia, such as the likes of Sections
Value of Transactions for Terraced, Semi-Detached and Detached Factories 15, 16, 23, Bukit Jelutong Industrial Park
2013 - 1Q2018 and Hicom Glenmarie Industrial Park,
3,000 will continue to retain its dominance
in the industrial property market as
2,500 manufacturers continue to set up facilities
Value of Transaction (RM Million)
in the area. This explains why developers
2,000 such as Exsim Group and Aspen Group
are still actively acquiring land banks to
1,500 develop logistics and industrial properties
in the area.
1,000
Meanwhile, proximity to Port Klang
500 coupled with cheaper land prices and
lower rental costs augur well for the
0 industrial property market in Klang. This
2013 2014 2015 2016 2017 1Q2018 Year
is in line with the incoming supply trend,
Terraced Semi-detached Detached which shows that industrial activities in
Source: NAPIC Klang is poised for growth in the years
13ahead. OUTLOOK provide its occupiers with a one-stop
industrial solution by offering business
The average asking rentals for detached Moving forward, initiatives such as the facilitation and property management
factories in Klang range from RM0.80 to Digital Free Trade Zone (DFTZ) in KLIA services.
RM1.30 per sq ft per month as opposed
Aeropolis will continue to be an extension
to RM1.50 to RM2.00 per sq ft per month Built-to-suit facilities are also becoming
of support for Malaysia’s industrial
in Shah Alam. more prevalent in the local industrial
property market. It is reported that
DFTZ strives to facilitate US$65 billion scene. One-stop solutions are offered
of traded goods and create 60,000 jobs to companies which prefer to operate in
for Malaysians by 2025. Moreover, DFTZ customized facilities on long-term leases,
also aims to optimize border clearance saving the hassle and capital expenditure
and handling, and improve cargo terminal associated with the construction process.
operations. This platform will serve as a Major players in the built-to-suit arena in
catalyst for the growth of e-commerce Malaysia includes Mitsui, Axis REIT and
that will put Malaysia on the global Kumpulan Hamodal.
logistics map. Logistics hubs and parks are emerging
Excellent Technology Park 2
It is noted that new trends are emerging amongst newer industrial developments
in the country’s industrial landscape. The in Malaysia. Typically developed / owned
new generation of gated and guarded by REITs or property investment funds to
(G&G) business parks that come with generate sustainable recurring income,
workers’ accommodation and other these multi-tenanted logistics and
supporting amenities bode well with warehousing facilities tend to be large
occupiers and investors alike. in scale, typically with at least 500,000
sq ft in lettable area. Notable companies
Notable industrial developments that which are active in the development of
have adopted the G&G concept include logistics hubs / parks include the likes
Nouvelle Industrial Park @ Glenmarie, of Mapletree Malaysia Management Sdn
Shah Alam Business Park in Section 22, Bhd and Kumpulan Hamodal Sdn Bhd.
Shah Alam and Eco Business Park V in
Eco Business Park V Artist Impression
Puncak Alam. The latter also strives to Another growing trend is multi-storey
warehouses, where the higher floors are
generally accessible via ramps and cargo
TABLE 8 lifts. This trend, which had been prevalent
Average Asking Prices and Rentals of Selected Industrial Areas 1H2018 in countries where land is scarce and
expensive such as Hong Kong and
Average Asking Rental Singapore, is gaining popularity in
Locality Property Type
(RM per sq ft / month)
Malaysia due to surging land prices in
Petaling Jaya Semi-detached 2.50 – 2.80 recent years. In fact, industrial private
(Sections 51 and 51A) Terraced 1.50 – 2.00 equity firms such as Area Management
Sdn Bhd and logistic firms such as Tiong
Shah Alam Detached 1.50 – 2.00
(Sections 15, 23, 26, 28 and Nam Logistics Holdings Bhd and Century
Semi-detached 1.70 – 2.00
Hicom Glenmarie) Logistics Holdings Bhd in Malaysia
Terraced 1.00 – 1.50
have started to place a high emphasis
Klang Detached 0.80 – 1.20 towards the development of multi-
(Kapar, Bandar Bukit Raja
Semi-detached 1.10 – 1.40 storey warehouses located not too far
and Port Klang)
Terraced 0.80 – 1.30 from the city centre with the intention to
Subang Detached 1.30 – 1.70 overcome the escalation of land prices,
(USJ 1, USJ 19, Taman Perindustrian UEP, Semi-detached 2.20 – 2.60 provide accessibility to serve city centre
Taman Perindustrian Subang)
Terraced 1.35 – 1.70 population and to generate higher yields.
Puchong Detached 1.40 – 1.70 Last but not least, new industrial
(Bandar Kinrara, Taman Mas,
Semi-detached 1.50 – 2.00 parks shall differentiate themselves by
Bandar Bukit Puchong and Puchong Utama)
Terraced 1.40 – 1.70 obtaining special licences or position
Balakong Detached 1.20 – 1.50 themselves as designated hubs for
(Cheras Jaya, Balakong Jaya carefully selected industries. Moreover,
Semi-detached 1.60 – 2.00
and Taming Jaya)
Terraced 1.30 – 1.40 the specification of factories shall also be
carefully evaluated to ensure that they are
*Asking prices and rentals for detached units in Petaling Jaya are not provided in view that prices will vary
significantly based on each unit’s specifications, type of use, land area etc.
practical and versatile enough to cater a
wider target market of end-users.
Source: Knight Frank Research
14REAL ESTATE HIGHLIGHTS MALAYSIA
TABLE 9
Selected Developments: Existing and Future Supply
Name of Development Location Developer Status Remarks
Zone Innovation Park Jalan Haji Titijaya Land Berhad Completed Notable Occupiers: Maxsilin Products Sdn Bhd,
Abdul Manan, in 2017 Sincor Furniture Sdn Bhd and
Klang BSEP Global Industries Sdn Bhd
Excellent Technology Taman Klanggroup Sdn Bhd Phase 1: Notable Occupiers: Shibata Asia Sdn Bhd,
Park 2 Perindustrian Completed 2016 Teson Aero Sdn Bhd, UGM Malaysia Sdn Bhd
Meru, Klang Phase 2:
Under construction
Welloyd Industrial Park Taman Welloyd Properties Under construction Components:
Perindustrian Sdn Bhd • 32 units of Semi-Detached Factories
Meru Selatan, • 16 units of Super-Linked Factories
Klang
Nouvelle Industrial Park Hicom Glenmarie Exsim Group Upcoming Components:
@ Glenmarie Industrial Park, • 14 units of Semi-Detached Factories
Shah Alam
Eco Business Park V Bandar Puncak Paragon Pinnacle Upcoming Components:
Alam Sdn Bhd Phase 1
• 72 units of Cluster Factories
• 28 units of Semi-Detached Factories
• Subsequent Phases under Planning
Shah Alam Section 22, Hap Seng Land Upcoming Components:
Business Park Shah Alam • 4 units of Detached Factories
• 12 units of Semi-Detached Factories
• 1 unit of Flatted Warehouse Building
Source: Knight Frank Research
TABLE 10
Notable Announcements 1H2018
Company / REIT Location Remarks Status
Agility Logistics / Section 26, Shah Alam Logistics provider Agility Logistics Sdn Bhd has been secured as the Tenancy expected
Atrium REIT Industrial Estate tenant for an industrial property situated in Section 26, Shah Alam to commence in
Industrial Estate. The landlord is Atrium REIT 2Q 2018
Prestar Kampung Baru Steel Maker Prestar Resources Bhd acquired a 2.05-acre parcel in Sale & Purchase
Subang, Shah Alam Kampung Baru Subang, Shah Alam for RM19.25 million, as it expands Agreement inked on
its material handling equipment trading and services business 5th March 2018
Tasco Port Klang Tasco Bhd is disposing 7.8 acres of industrial land in Sale & Purchase
Port Klang, Selangor to Onostatic Sdn Bhd for RM17.5 million Agreement inked on
12th January 2018
JT Persiaran Raja Muda, JT International Bhd has reportedly sold its 5-acre manufacturing The deal was reportedly
International Shah Alam facility in Persiaran Raja Muda to another Japanese firm sealed sometime in
early 2018
Ipmuda Rawang Integrated Ipmuda Bhd has sold its idle factory in Rawang Integrated Industrial Announcement in
Industrial Park Park to May Chemical Sdn Bhd for RM12 million April 2018
Mitsui Estate Co Bandar Sime Darby Property Bhd will be partnering Mitsui Estate Co Ltd Announcement in
Ltd joint venture Bukit Raja to jointly develop and lease built-to-suit industrial facilities with a May 2018
with Sime Darby gross development value (GDV) of RM530 million at Bandar Bukit
Property Bhd Raja in Klang, Selangor. Spanning 39 acres, the site will feature
warehouses and logistics facilities, offering tailored features to suit
operational requirements of business tenants.
Aspen Section 16, Aspen Group Holdings Ltd has acquired 71 acres of leasehold industrial Announcement
Group Shah Alam land in Section 16, Shah Alam from Chemical Company of Malaysia Bhd made on
for RM190 million. The purchase was made via Aspen’s 30% owned 13th June 2018
associate company Global Vision Logistics Sdn Bhd. Aspen plans to
develop the area into a logistics, warehousing and e-commerce hub.
Source: Knight Frank Research
15HIGHLIGHTS PENANG PROPERTY MARKET
Total proposed capital
investments into Penang jumped MARKET INDICATIONS Pier Cruise Terminal are expected to
increase to 350 and bring in 1.8 million
151% in 2017, hitting RM10.8 As per the latest figures released by the passengers compared to 270 cruise
billion from RM4.3 billion in National Property Information Centre liners with 1.35 million passengers last
2016, making it the state with the (Napic) for 1Q2018, there is an increase year.
second highest total investment of circa 7% for both total volume and
after Johor. In terms of foreign total value of transactions compared to Penang Port Sdn Bhd has allocated
direct investments (FDI), Penang 1Q2017. However, when contrasted RM180 million capital expenditure
tops the chart with a total RM8.5 against 4Q2017, there are decreases of (capex) this year to expand the North
billion or a growth of 209% year- 3.2% and 14.5% for volume and value of Butterworth Container Terminal (NBCT),
on-year, followed by Johor with transactions respectively. The residential mainly for operations to increase its
RM5.1 billion. sub-sector shows the highest activity handling capacity to 2.8 million - 2.9
with 69% in terms of total volume of million 20-foot equivalent units (TEUs)
transactions and 58% of total value. annually, from the current two million.
Eastern & Oriental Bhd (E&O) will
Works are scheduled to start in 3Q2018
remain focused on completing The recently re-elected State Government with completion within 18 months to
the reclamation of Seri Tanjung announced that they will continue to 20 months. The port is also planning
Pinang Phase 2 (STP2) in Penang push for approval for the three priority to expand its cruise operations at
by 2H2018. STP2, located in projects under the Penang Transport Swettenham Pier Cruise Terminal, under
the waters to the east of the first
Master Plan (PTMP), namely the LRT, the its joint-venture (JV) with American cruise
phase, covers an area of 308
Penang Island Link (PIL) and the Penang company Royal Caribbean Cruises Ltd,
hectares and the first tranche of
South Reclamation (PSR). These are in to support the port’s future growth. It will
reclamation works commenced in
various stages of submission, evaluation invest about RM155 million to expand
2016. Seri Tanjung Pinang Phase
and studies. On the undersea tunnel and the berth and increase the size of the
1 (STP1) covering an area of 97
three paired road projects, works on the cruise terminal to handle up to 12,000
hectares is fully reclaimed. The
5.7km bypass linking Air Itam to Tun Dr passengers at one time from 8,000
two-phased Seri Tanjung Pinang
Lim Chong Eu Expressway is expected to currently.
(STP) is a master-planned seafront
start in 2Q2019.
development on the northeast On the industrial front, Plexus announced
coast of Penang island. Tourist arrivals are set to increase further its acquisition of a 432,000 sq ft
with several airlines flying directly into manufacturing facility which is adjacent
Penang in 2018. Qatar Airways began to its existing Riverside manufacturing
its thrice-weekly flights from Doha with facility in Bayan Lepas, Penang, and
its inaugural service in February; Garuda when combined will result in a 37-acre
Indonesia’s low-cost subsidiary Citilink Riverside campus. The total investment
commenced its maiden flight from for the facility expansion is approximately
Jakarta on 25th March; Taiwan’s China USD40 million and is anticipated to be
Airlines is set to launch daily flights from operational by the end of Plexus’ fiscal
Taipei starting June whilst Malindo Air year 2018.
had launched its thrice-weekly Penang-
Knight Frank is the exclusive marketing agent
Banda Aceh direct flights on 15th March which handled the sale of the manufacturing
and low-cost airline AirAsia will fly 4 facility.
times a week Hanoi / Penang and daily Over in Batu Kawan Industrial Park
Phuket / Penang, starting 1st July 2018. in Bandar Cassia, UWC Group of
Passenger traffic (departure and arrival) Companies, a sheet metal fabrication
at the Penang International Airport (PIA) manufacturer has opened its 350,000
hit 7.2 million passengers last year. The sq ft new plant on a 5-hectare plot.
RM700 million PIA upgrading project, The new plant with an investment of
RM150 million is equipped with state-
expected to begin by year-end, will see
of-the-art machinery and assembly lines
the airport separated into international
for the production of diffusion pumps,
and domestic wings but under one roof.
semiconductor test equipment and
Penang tourism will also be given a heavy-duty handler products.
further boost in 2018 as international
Boustead Plantations Bhd announced
cruise ships berthing at Swettenham
16REAL ESTATE HIGHLIGHTS MALAYSIA
in January this year its disposal of three Bungah, asking rents are still generally generally range from RM2.80 per sq ft
parcels of agricultural land totaling between RM1.20 per sq ft and RM2.10 to RM3.00 per sq ft per month while
138.9 hectares in Seberang Perai Utara per sq ft per month with the upper band passing rents at the newer Hunza
for RM136 million via two separate asking from RM1.80 per sq ft to RM2.56 Tower is higher at RM3.80 per sq ft
sale and purchase agreements (SPAs) per sq ft per month. For similar sized per month. For buildings located out of
with two private companies. Following units in Gurney Drive, asking rents vary George Town which are enjoying almost
the completion of the sale of 677.78 from RM1.70 per sq ft to RM2.60 per sq 100% occupancy, asking rents for the
hectares, part of the 1,379-hectare ft per month whilst for smaller sized units respective sole unit of two buildings
Malakoff Estate in September 2017, in Tanjong Tokong and Gurney Drive, it sized 520 sq ft and 560 sq ft available for
Boustead will continue to own and ranges from RM2.38 per sq ft to RM3.00 rent are higher at RM5.00 per sq ft and
operate its plantation business on the per sq ft per month. It is noted that some RM4.10 per sq ft per month respectively.
remaining 562.33 hectares of Malakoff landlords are still asking higher rents of
Asking rent at Livingston Tower in
Estate. more than RM3.50 per sq ft per month.
George Town, newly refurbished and
HIGH-END CONDOMINIUM OFFICE accredited with MSC Status in 1Q2018,
is at RM3.90 per sq ft per month.
There were no new launches of high-end The existing supply of office space
condominiums in 1H2018. (buildings of 10-storey and above) on RETAIL
Penang Island remains at 2H2017’s
High-end condominiums which are The existing supply of purpose-built
level of 5.71 million sq ft. There was no
newly completed or nearing completion
incoming supply for 1H2018. shopping space on Penang Island
include Alila 2 in Tanjung Bungah, Setia
remained unchanged at 2H2017’s level of
V Residences along Gurney Drive and The occupancy rates for the four prime
6.99 million sq ft. No new purpose-built
the mixed development of Tropicana 218 office buildings monitored in George
shopping malls were completed on the
Macalister. Town in 1H2018 remained unchanged
island in 1H2018.
at 2H2017’s level, ranging from 90%
Of late, a number of residential
to 100% or an average of circa 94.5%. Balik Pulau will have its first “shopping
developments have been planned
The newer buildings located out of mall” by Year 2019. MTT Properties &
around the mixed development concept
Georgetown, namely, One Precinct, Development Sdn Bhd is expected to
comprising service suites (commercial
Suntech and Menara IJM Land commence construction on “Botanica
development), hotel suites and
collectively has an average occupancy CT Centre” in 3Q2018. The commercial
condominiums and these include Marriott
rate of about 99.6%, up from the average precinct within the Botanica CT garden
Residences - a mixed development
of 98% monitored in 2H2017. township will feature an 80,000 sq ft
which will feature 223 hotel rooms, 90
executive apartments over 15 levels and In George Town, asking rents for supermarket (TF Value Mart Sdn Bhd
312 residential units over 26 levels. three of the four buildings monitored signed up as anchor tenant), two drive-
There are few recorded transactions of
high-end condominiums in the secondary TABLE 11
market in 1H2018. In Tanjung Bungah, Asking Gross Rents of Selected Purpose-Built Office Space in Penang
two units in Springtide Residences sized
Building Name Location Asking Gross Rent
circa 5,100 sq ft were sold at RM768 (RM per sq ft / month)
per sq ft and RM828 per sq ft as against
RM705 per sq ft for a 4,294 sq ft unit at Hunza Tower Georgetown 3.80 (passing rents)
No. 1 Tanjong and RM757 per sq ft for Menara Boustead Penang Georgetown 2.80 - 3.00
a 3,369 sq ft unit at The Infinity. At The
Menara KWSP Georgetown 2.80 - 3.00
Cove, an older development, a 5,894
sq ft unit was transacted at RM411 per MWE Plaza Georgetown 2.80 (fixed rent)
sq ft. At Quayside Condominium within
Wisma Great Eastern Georgetown 3.00
Seri Tanjung Pinang, larger units sized
2,000 sq ft sold for RM810 per sq ft and Menara IJM Land Jelutong 3.15 - 3.60 (passing rents)
RM1,086 per sq ft for smaller units of
SunTech @ Penang Cybercity Bayan Baru 4.10 (only lot available sized 560 sq ft)
1,137 sq ft. Along Gurney Drive, sub-sale
transactions vary from RM664 per sq ft to One Precinct Bayan Baru 5.00 (only lot available sized 520 sq ft)
RM800 per sq ft for units sized 3,500 sq
ft to 4,200 sq ft in newer developments
as against RM582 per sq ft for a unit at
Silverton, a much older block.
Asking rents are noted to have dipped
slightly. For larger sized units in Tanjong Source: Napic / Knight Frank Research (as of May 2018)
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