REAL ESTATE HIGHLIGHTS - RESEARCH 2ND HALF 2018 - Knight Frank
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RESEARCH
REAL ESTATE
HIGHLIGHTS
2ND HALF 2018
Photo by
KUALA LUMPUR PENANG JOHOR BAHRU KOTA KINABALU
HIGHLIGHTS KUALA LUMPUR HIGH END
There were noticeably more
CONDOMINIUM MARKET
completions and launches during
the review period. ECONOMIC AND MARKET 53,033 units following the completion of
INDICATORS four projects during the review period.
They are Ruma Residences (199 units),
Prices of high-end condominiums Malaysia’s economy recorded sustained
Pavilion Suites (383 units), Premium
/ serviced apartments remained growth at 4.4% in the 3Q2018 (2Q2018:
Residences @ KL Gateway (466 units)
resilient in the secondary market. 4.5%), driven mainly by expansion in
and Dorsett Residences Sri Hartamas
As for the lettings market, there domestic demand and higher private
(707 units).
was a marginal rental decline in investment. The country’s GDP for the
Damansara Heights. whole year of 2018 is expected to be in By 1H2019, the scheduled completions
the region of 4.8%. of Inwood Residences @ Pantai Sentral
Park (211 units), One Kiara – Block A
Slight upward revision in stamp The headline inflation at 0.5% in 3Q2018
(118 units), Residensi Sefina (245 units)
duty and real property gains tax was the lowest since 1Q2015 (0.7%) and Opus KL (357 units) will collectively
(RPGT) rates as announced in following the 3-month tax holiday from contribute an additional 931 units to the
Budget 2019 unlikely to have June until September. Overall headline existing stock.
significant impact on the high- inflation is expected to ease to 2.0% this
end condominium market. year (2017: 3.7%). During the review period, there were
noticeably more previews and launches
The labour market conditions continued compared to 1H2018. Notable project
The mass and affordable housing to remain favourable with unemployment launches include Agile Bukit Bintang
segments will kick-start the rate at 3.4% in 3Q2018 (2Q2018: 3.3%). (Block B) and Yoo8 of 8 Conlay (Block
residential market moving into B) in KL City; Windsor Suites @ Pavilion
During the review period, the central
2019, supported by various Damansara Heights and; Trinity
bank kept the Overnight Policy Rate
exemptions and initiatives under Pentamont and Residensi Astrea in Mont’
(OPR) unchanged at 3.25% to remain
Budget 2019. Kiara.
accommodative and supportive of
current economic activity. Agile Bukit Bintang, a project that is
More launches of high-end
residential products in the
SUPPLY & DEMAND jointly developed by Agile Group and
Tropicana Corporation Berhad, features
pipeline with improving market The cumulative supply of high-end three residential towers offering a total
sentiment. condominiums / residences stood at of 1,501 units, 66 SOVO units and 14
Malaysian buyers are becoming FIGURE 1
more discerning while foreign Projection of Cumulative Supply for High End Condominiums /
buyers find our residential Residences 2014 – 1H2019 (f)
products attractive for investment
purpose due to the country’s 60
liberal ownership policies and
Cumulative Supply (No. of Units (’000))
50
with no additional stamp duty.
40
30
20
10
0 Year
2014 2015 2016 2017 1H2018 2H2018 1H2019(f)
KL City Ampang Hilir/ U-Thant
Mont’ Kiara/ Hartamas Bangsar/ Damansara Heights
Notes:
(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
parcel. To date, three residential towers,
TABLE 1 namely Private Residences, Service
Completion of High End Condominiums / Residences 2H2018 Suites 2 and Windsor Suites (formerly
known as Service Suites 1) have been
Project Location Area Total Units
unveiled. Windsor Suites, the latest
tower previewed on 20th October 2018,
The Ruma Residences Jalan Kia Peng KL City 199
offers 568 units of one to four-bedroom
Pavilion Suites Jalan Bukit Bintang KL City 383 serviced residences with typical sizing
Premium Residences Bangsar South Bangsar 466 ranging from 614 sq ft to 1,831 sq ft and
@ KL Gateway penthouse sized 6,483 sq ft. The selling
prices range between RM1,700 per sq ft
Dorsett Residences Sri Hartamas Mont' Kiara / 707
Sri Hartamas Sri Hartamas and RM2,116 per sq ft.
Source: Knight Frank Research PRICES AND RENTALS
Secondary pricing of high-end
commercial lots. Launched in June 2018,
condominiums / serviced apartments in
the first phase saw the unveiling of Tower
the selected localities under review were
B, a 60-storey building comprising 21
SOVO units and 678 semi-furnished generally flat. As for the lettings market,
residential units that come in six layouts there were marginal dip in rentals of
with built-up areas ranging from 625 sq ft selected schemes reviewed in the locality
to 1,157 sq ft. The units are priced from of Damansara Heights.
RM1.1 million onwards with completion Typical units sized between 1,000 sq
expected by 4Q2022. ft and 1,400 sq ft at Marc Serviced
KSK Land previewed Tower B, its second Residence and The Troika were
branded residence tower of Yoo8 @ 8 transacted at around RM1,250 per sq ft
Pavilion Suites
Conlay in July 2018. The 57-storey Tower and RM1,500 per sq ft respectively.
B which was launched recently features notable integrated developments that
Meanwhile, in the primary market,
498 units of branded residences with have been in the watch list since they
available units of selected schemes
sizing between 705 sq ft and 1,328 sq ft were unveiled in 2016. Both projects
launched previously, namely 8 Kia
and priced from RM3,260 per sq ft. The have continued to launch their residential
Peng, Eaton Residences and Lucentia
units are designed by UK-based interior products braving the prevailing weak
market condition in the high-end Residences @ BBCC are selling from
designer, Kelly Hoppen.
segment. about RM1,500 per sq ft to RM1,950 per
Trinity Group Sdn Bhd has launched its sq ft for units sized below 1,000 sq ft.
residential project in Mont’ Kiara named BBCC, which sits on a 19.4-acre prime Schemes launched recently are observed
Trinity Pentamont in September 2018. address in KL City, is a joint development to have higher composition of units with
The 41-storey condominium sits on a by UDA Holdings Bhd, Eco World and smaller built-up area below 1,000 sq ft,
2.9-acre freehold site and offers 330 EPF. To date, the project has unveiled resulting in lower quantum pricing but
condominium units comprising 300 dual- its initial phase comprising the Mitsui higher price on per sq ft basis.
key and 6 penthouse units sized from Shopping Park Lalaport KL Mall,
1,379 sq ft to 4,115 sq ft. The units come Canopy by Hilton Hotel, the lifestyle In contrast to KL City, the latest launches
with at least two car park bays and are street and landscape podium, transit in Mont’ Kiara namely Trinity Pentamont
priced from RM640 per sq ft. Slated for and entertainment hubs, The Stride and Residensi Astrea offer larger units
completion by 2022, the project features strata office and Lucentia Residences sized above 1,300 sq ft with selling prices
penthouse-style units targeted at the (Residential Suites 1 and 2 with total of from RM640 per sq ft and RM800 per sq
upper-middle class families with children 666 units). The upcoming phase will kick- ft respectively.
and upgraders. start with the third serviced apartment
As for the remaining units of schemes
Officially launched in October, Residensi block in 2019, focusing on different
launched in 2016 and 2017 such as Arte
Astrea by UEM Sunrise is a 37-storey target market. Other components in
Mont’ Kiara and Solaris Parq Residensi,
project featuring 240 condominium units. Phase 2 include two blocks of serviced
the selling prices are between RM900 per
Available in six layouts with built-up areas apartments and the BBCC iconic
sq ft and RM1,350 per sq ft depending
from 1,364 sq ft to 1,859 sq ft, the units 80-storey signature tower.
on the scheme, built-up area, floor level
are priced between RM1.2 million and Meanwhile, Pavilion Damansara Heights, and other factors. The remaining units
RM1.7 million. The freehold residential the rejuvenation of the former Pusat at Arte Mont’ Kiara and Solaris Parq
project is targeted for completion by Bandar Damansara, will feature nine Residensi, both forming part of larger
1Q2023. office blocks, retail space and circa integrated developments, command
Bukit Bintang City Centre (BBCC) and 1,300 residential units with sizes ranging higher selling prices (on per sq ft basis)
Pavilion Damansara Heights are two from 600 sq ft to 2,800 sq ft in the first due to their smaller unit sizing.
3
TABLE 2
Notable Launches in 2H2018
Pavilion
Name of Agile Bukit Bintang YOO8
Damansara Heights Residensi Astrea Trinity Pentamont
Development - Block B - Block B
- Windsor Suites
Type Serviced Apartment Branded Residence Serviced Apartment Condominium Condominium
Tenure Freehold Freehold Freehold Freehold Freehold
JV between Impian Ekspresi Modern Pandora
Milik Harta Sdn Bhd
Agile Group and Sdn Bhd Sdn Bhd
Developer KSK Land Sdn Bhd (Subsidiary of
Tropicana Corporation (Subsidiary of (Subsidiary of
UEM Sunrise)
Berhad 1 Pavilion) Trinity Group)
Mont' Kiara / Mont' Kiara /
Area KL City KL City Damansara Heights
Sri Hartamas Sri Hartamas
No. of Units 678 498 568 240 330
Unit Sizing
625 - 1,157 sq ft 705 - 1,328 sq ft 614 – 1,831 sq ft 1,364 - 1,859 sq ft 1,379 – 4,115 sq ft
(Min - Max)
RM1,839 - RM2,107 RM3,262 - RM3,464 From RM1,700 From RM800 From RM640
Selling Price
per sq ft per sq ft per sq ft per sq ft per sq ft
Source: Knight Frank Research
OUTLOOK are unlikely to have significant impact further assist first time homebuyers.
on the high-end condominium sector Although lauded, it is imperative that the
Market sentiments have improved although the acquisition and disposal innovative financing platform is governed
since the formation of Malaysia’s costs in property transactions may be by stringent guidelines across the entire
new government in 2Q2018. In Kuala higher. ecosystem to avoid potential sub-prime
Lumpur’s prime housing market, prices mortgage crisis moving forward.
are generally holding firm. Looking In contrast, the exemptions and
ahead, the widening gap between supply initiatives, in particular the waiver of The recent gazetting of the long awaited
and demand coupled with rising financing stamp duty on the instrument of transfer Kuala Lumpur City Plan (KLCP) 2020 is
cost will continue to impinge on price and loan agreement for residential positive and will provide more clarity to
growth as the market finds its equilibrium. homes valued up to RM300,000 for a developers and investors alike.
However, with property developers 2-year period and the 6-month waiver of
With improved transparency and
generally more optimistic about the stamp duty charges for properties priced
accountability in the new government,
market outlook, we expect to see more from RM300,001 to RM1.0 million, are
the outlook for the Kuala Lumpur high-
launches moving into 2019 and beyond. expected to kick-start the housing market
end condominium market remains one
moving into 2019 and beyond.
The slight upward revision in the rates of of cautious optimism with window of
real property gains tax (RPGT) and stamp The introduction of alternative financing opportunities for recovery in the mid to
duty as announced under Budget 2019 through ‘Property Crowdfunding’ will longer term.
TABLE 3
Average Asking Prices and Rentals of Existing High End Condominiums 2H2018
Ampang Hilir / Damansara
KL City* U-Thant** Heights*** Kenny Hills Bangsar Mont' Kiara****
2.20 - 5.20 2.00 - 3.50 2.20 - 4.00 2.00 - 3.00 2.40 - 4.00 1.80 - 3.50
700 - 1,700 550 - 1,200 550 - 1,000 550 - 900 700 - 1,300 500 - 850
Asking Gross Rental Average Asking Price (RM per sq ft) Decrease Stagnant
* Excludes Pavilion Banyan Tree Signatures *** Excludes DC Residency and 10 Semantan
** Excludes Damai 88 **** Excludes Icon Residence, The Signature and Verve Suites
Source: Knight Frank Research
4
REAL ESTATE HIGHLIGHTS MALAYSIA
HIGHLIGHTS KLANG VALLEY OFFICE MARKET
The overall occupancy recorded MARKET INDICATIONS
marginal decline during
the review period following Despite recording positive net
completion of more new office absorption, the Klang Valley office market
space while the average rental remained lacklustre during the review
continued to hold steady as period as new completion continues to
new buildings command higher outstrip demand.
rentals.
SUPPLY AND DEMAND
The cumulative supply of purpose-
Co-working / shared services
built office space in Kuala Lumpur and
trend continues to gain
Selangor totalled circa 103.17 million sq
momentum.
ft as of 2H2018 following the completion
of six buildings with combined space of
Dated office buildings in the approximately 1.84 million sq ft.
city are expected to undergo
The recent completion of Menara Khuan
repositioning / upgrading
Choo and Equatorial Plaza increased
works to cater to the needs of
the cumulative supply of KL City to
occupiers. 52.35 million sq ft while in KL Fringe, the
completion of Menara Etiqa and Menara
Malaysia is ranked at 15th spot in Southpoint, brought its cumulative supply
the World Bank Doing Business to 29.50 million sq ft.
2019 Report, second after In Selangor, the cumulative supply
Singapore in the ASEAN region. increased to 21.32 million sq ft following
completion of Nucleus Tower and Tower Menara Etiqa
Source: Etiqa Life Insurance Berhad
6 of Sky Park.
Equatorial Plaza is a mixed commercial park and four levels of basement carpark.
development that is located at the former Sandwiched between the podium car park
Hotel Equatorial site on Jalan Sultan Ismail and serviced apartment component, is
The 50-storey development houses 23 500,000 sq ft of office space with typical
levels of Grade A offices and 22 levels of floor plate size of circa 20,000 sq ft.
luxury hotel with excellent accessibility
Nucleus Tower is a newly completed
via dual frontages on Jalan Sultan Ismail
Grade A office tower in Mutiara
and Jalan Perak. The office component
Damansara. The 25-storey tower offers
provides net lettable area (NLA) of
circa 238,000 sq ft of column free office
approximately 460,000 sq ft, where 45%
space with typical floor plate ranging
of the space have been committed as of
from 9,300 sq ft to 11,000 sq ft.
December 2018.
Office buildings slated for completion
Menara Etiqa is a new corporate office
in the next review period of 1H2019
tower that has Green Building Index
include The Exchange 106 and Menara
(GBI) Gold certification and is GreenRE
Prudential in KL City; and Menara Star 2,
Platinum rated. Located in Bangsar,
1Powerhouse and Symphony Square in
opposite the LRT Station, the 38-storey
Selangor.
tower offers 379,000 sq ft of office space
with typical floor plate measuring 13,000 During the review period, the overall
sq ft to 14,000 sq ft. occupancy rate for KL City hovered
The newly completed Menara Southpoint around 78.7% (1H2018: 79.0%). While
is the final component of the Mid there were several tenant movements
Valley City development. The 59-storey from Menara Citibank, Menara Dion
integrated tower is made up of a grand and Rohas Purecircle, there were also
double volume lobby, 27 levels of office new take-up at ILHAM Tower, Menara
space, 22 levels of serviced apartments, a Worldwide and G Tower.
grand ballroom, eight levels of podium car The overall occupancy rate for
5
decentralised office locations in KL Fringe tower atop a four-storey podium car park 23-storey Wisma MCA in Jalan Ampang,
declined marginally to record at 82.2% and a three-storey basement car park Kuala Lumpur and build a 70-storey
in 2H2018 (1H2018: 83.8%). Newly with 605 bays, will have gross floor area skyscraper with estimated gross
completed buildings such as Menara (GFA) of approximately 825,000 sq ft. It is development value (GDV) of up to a RM1
Etiqa and Menara Southpoint have yet to scheduled to be completed by end 2020. billion. The new plans for an eight-storey
achieve significant occupancy levels. basement car park, 27 floors of offices, a
As for the 118-storey skyscraper of
328-room hotel on 24 floors and a two-
As for the Selangor office market, the Merdeka PNB118 which offers a large
storey sky lounge and restaurant on the
overall occupancy rate for 2H2018 was floor plate measuring approximately
68th and 69th floors were approved by
also slightly lower at 78.3% (1H2018: 20,000 sq ft, it is expected to appeal to
Dewan Bandaraya Kuala Lumpur (DBKL)
79.2%). Similar to KL Fringe, newly larger corporations who wish to take up
on 2nd August 2018.
completed buildings, namely Nucleus the whole floor or several floors, while
Tower in Mutiara Damansara and Tower for smaller occupiers, it will be possible Over in KL Fringe, WCT Berhad, a wholly-
6 of Sky Park in Cyberjaya, have yet to to sub-divide the space into quadrants. owned subsidiary of WCT Holdings Bhd
achieve significant occupancy levels. Permodalan Nasional Bhd, the parent has secured a construction contract
company of PNB Merdeka Ventures Sdn worth RM1.77 billion from Impian
Meanwhile, notable work progressions
Bhd will be taking up about half of the Ekspresi Sdn Bhd for the execution and
and office related announcements in
83 floors of space in the building. The completion of nine blocks of office towers
2H2018 are summarised below.
3-phase project is expected to be fully and three blocks of serviced apartments
In KL City, construction of the RM500 completed by 2024. on a podium block comprising retail
million 27-storey office tower of Menara space, mezzanine floors and works to
Prudential at Tun Razak Exchange (TRX) Meanwhile, Pesona Metro Holdings lower ground floor and basement car
is 93% completed and is on track to be Bhd has secured a contract valued at park within the mixed-use commercial
ready by 2019. The Prudential Group RM218.22 million from Pembinaan Kery development of Pavilion Damansara
is expected to move in by 1H2019. Sdn Bhd, a wholly-owned subsidiary Heights. Construction is expected to be
Committed occupancy is estimated at of Melati Ehsan Holdings Bhd, to build completed by end of 2021.
approximately 85%. an office tower in Jalan Conlay. The
41-storey commercial tower will house State utility giant TNB is unlocking its
On the other hand, IJM Corp Bhd has assets by undertaking three development
32 levels of office suites, one level of
secured a RM505 million contract from projects fronting the main road of Jalan
facilities, five levels of elevated car
Affin Bank Bhd for the construction and Bangsar with a combined GDV exceeding
park, and three levels of basement car
completion of the superstructure works RM2 billion. Earth-clearing and piling
park. Construction is expected to be
of its headquarters on a 1.25-acre site works for all the three projects have
completed by end 2020.
at TRX. The 47-storey Grade A office started. The first project involves the
tower, made up of a 43-storey office There are also plans to demolish the development of 3.76 acres at the corner
FIGURE 2
Occupancy and Rental Trends in Kuala Lumpur 1H2013 – 2H2018(P)
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
1H2013 2H2013 1H2014 2H2014 1H2015 2H2015 1H2016 2H2016 1H2017 2H2017 1H2018 2H2018(p) Year
Occupancy (%) Rental (RM per sq ft / month)
Note: (p) = Projected
Source: Knight Frank Research
6
REAL ESTATE HIGHLIGHTS MALAYSIA
of Jalan Bangsar and Jalan Pantai Baru, The group is also spending RM180 million single digit growth in rentals of selected
facing the New Pantai Expressway. The on its elevated dispersal link, to connect good grade office buildings during
second project, comprising four office 1Powerhouse to the old and new wings tenancy renewals.
blocks with shared facilities and the Balai of 1 Utama Shopping Centre as well as
The average achieved rental in KL City,
Islam Centre, is within the compound of exits to Dataran Bandar Utama. This is to
the existing TNB headquarters while the however, remained flat at RM7.15 per
ease congested traffic flow in and around
third project involves the development the popular shopping centre. The mixed sq ft as owners / landlords of newer
of a complex for building generation on development is expected to be fully office buildings offer competitive rental
about 14.0 acres, also in the locality of completed by 2H2019. and attractive tenancy terms to improve
Jalan Pantai Baru. take-up.
PRICES AND RENTALS
See Hoy Chan Holdings Group has In Kuala Lumpur, well located Grade
launched its RM1 billion 1Powerhouse During the review period, the average A office space continued to command
project that will comprise some 450,000 achieved rentals for both KL Fringe and higher asking rents, ranging from RM6.00
sq ft of office space in a 31-storey tower, Selangor inched up marginally to record per sq ft to RM11.00 per sq ft per month
4-star Avante Hotel housing 640 rooms at RM5.75 per sq ft (1H2018: RM5.72 while in Selangor, the asking rents are
and circa 500 parking bays to increase per sq ft) and RM4.22 per sq ft (1H2018: more competitive, ranging from RM4.50
the MRT station’s park and ride capacity. RM4.20 per sq ft) respectively following per sq ft to RM6.00 per sq ft per month.
Investment activities for office buildings
TABLE 4
will continue to remain subdued moving
Selected Grade A Office Asking Rentals 2H2018
into 2019.
Asking Gross Rental
Building Name (RM per sq ft / month) Fund managers / REITs are more cautious
KL CITY in new office investments due to the
Integra Tower 11.00 current oversupply situation. There are,
however, investors who continue to seek
Menara Maxis 10.50
pockets of opportunities in strategically
Vista Tower 7.50 - 8.50
located prime office buildings.
G Tower 7.50
A few notable office buildings were put up
Menara Darussalam 10.50
for sale during the review period.
Menara Binjai 8.80
Ahead of the completion of its new RM1
Menara Hap Seng 2 7.00
billion headquarters in the Tun Razak
KL FRINGE
Exchange (TRX), HSBC Bank Malaysia
Menara Etiqa 7.00 - 7.50
Bhd has placed Menara HSBC South
Mercu 2 / Mercu 3 6.00 - 6.50 Tower (which currently houses its main
Axiata Tower 7.50 office) in Leboh Ampang up for sale. With
1 Sentrum 8.50 GFA of 238,000 sq ft and NLA of 173,000
sq ft, the 20-storey building may fetch
Menara LGB 6.50 - 7.50
about RM120 million (RM693 per sq ft).
The Gardens North & South Towers 7.50
Should a deal be completed speedily,
Vertical Corporate Tower B 6.00 it will come with an initial guaranteed
Menara BRDB 7.10 rental for the first couple of years,
SELANGOR pending completion of the bank’s new
1 First Avenue 6.00 headquarters and relocation to TRX.
Surian Tower 5.50 Felcra Bhd is looking for potential
The Ascent @ Paradigm 5.50 buyers for its Menara Felcra project
Puchong Financial Corporate Centre (Towers 4 & 5) 4.50 at Jalan Sultan Yahya Petra which is
The Pinnacle 5.50
50% complete. Felcra has already held
discussions with several interested
Wisma Mustapha Kamal 4.80
parties. Under the original development
Quill 18 (Block B) 5.00 plan, Felcra as the landowner was not
obligated to bear any of the costs for
the project, but after the change in the
contract with the original developer, WZR
Source: Knight Frank Research Property Sdn Bhd, Felcra would have
7to bear the full construction cost. The
construction was subsequently taken TABLE 5
over by Felcra Properties Sdn Bhd due to Selected Notable Tenant Movements 2H2018
difficulties in obtaining financing for the Building Name Approx. Space (sq ft) Remarks
project.
KL CITY
OUTLOOK Menara Standard ~29,300 Moving in
The office market is expected to remain Chartered • Compass Offices
vibrant in the KL Fringe area moving into JKG Tower ~14,000 Moving in
2019. • Sime Darby Lockton Insurance
ILHAM Tower ~40,800 Moving in
Due to the influx of new buildings,
• Coway Malaysia
particularly in TRX, occupancy rate in KL
City is expected to decline marginally. KL FRINGE
However, rental rates will continue to Menara ~80,000 Moving in
hold steady as newer buildings tend to Southpoint • Garena Malaysia
command higher rental rates. • Shopee Malaysia
Mercu 3 ~135,000 • Moving in
The trend of co-working and shared
• Zurich Malaysia
services is a sweet spot in the challenging
• F-Secure Corporation (M) Sdn Bhd
office market environment. Labelled
“space as a service”, the rising popularity Mercu 2 ~46,600 Moving in
of this market segment is demand driven • Gibraltar BSN Life Berhad
by freelancers, start-ups and small and Menara KEN TTDI ~ 26,000 Moving in
medium sized entrepreneurs (SMEs). • DKSH Global Corporate Services
We will continue to see active take-up SELANGOR
by co-working, shared services and IT UOA Business ~22,500 Moving in
related industries. Park • WorQ Co-Working Space
Dated but well located office buildings Source: Knight Frank Research
such as Menara Weld, Menara Standard
Chartered, Menara Maxis and Menara
Milenium will reportedly be undergoing TABLE 6
repositioning / upgrading works to Selected Office Investment Sale 2H2018
improve their market competitiveness in
Building Name Location Approx. Lettable Consideration
terms of rental and occupancy levels. Area (sq ft) (RM per sq ft)
The new government’s concerted
Fujitsu Building1 Cyber 5, Cyberjaya 52,473 549
efforts to implement numerous
regulatory reforms augur well for the
Note:
business operating environment and
(1) Michaelian Holdings Sdn Bhd has disposed Fujitsu Building, a three-storey office building with two levels
this is expected to be positive for the of basement car park for a total consideration of RM28.8 million. The freehold building is the first MSC status-
country’s economic and property market granted standalone building in Cyberjaya.
performance over the longer term. The deal was concluded by Knight Frank Malaysia
Malaysia moved up nine places to rank Source: Knight Frank Research
number 15 in the World Bank Doing
Business 2019 Report. Among the ASEAN
countries, Malaysia is ranked second with
80.60 points after Singapore with 85.24
points.
8Source: Knight Frank Research
REAL ESTATE HIGHLIGHTS MALAYSIA
HIGHLIGHTS KLANG VALLEY RETAIL MARKET
The MIER Consumer Sentiment
Index (CSI) remained above the
MARKET INDICATIONS with circa 75% occupancy.
optimism threshold of 107.5 The MIER Consumer Sentiment Index GM Bukit Bintang (GMBB) is part of a
points in 3Q2018 dropping from (CSI) slipped 24.5 points to 107.5 points mixed development in Kuala Lumpur
a 21-year high of 132.9 points in in 3Q2018, from a 21-year high of 132.9 City with 100,000 sq ft retail space. Soft
2Q2018. points in 2Q2018. It, however, remained launched in October, its tenants include
above the demarcation level of 100 points Jamaica Blue Fine Coffees, myNews.com
threshold of optimism as consumers and 7-Eleven.
Projected retail sales of 6.1%
continue to be positive on their income KL Eco City Retail Podium with circa
and 4.3% for 3Q2018 and
levels and employment outlook. 250,000 sq ft NLA made its debut
4Q2018 respectively boosted
by the 3-month tax holiday and The 3-month tax holiday and in September. Targeting the greater
reintroduction of Sales and reintroduction of Sales and Services communities of Bangsar – Seputeh as
Services Tax (SST) superseding Tax (SST) superseding the Goods and well KL - PJ, the five-storey retail podium
the Goods and Services Tax Services Tax (GST) has boosted the retail is home to the biggest Jaya Grocer store
(GST). industry with projected retail sales of dubbed Bangsar Market, spanning 50,000
6.1% and 4.3% for 3Q2018 and 4Q2018 sq ft.
respectively. The Malaysia Retailer
Recent completion of circa 1.40 Eko Cheras Mall is an integrated
Association (MRA) has revised its full year
million sq ft NLA of retail space development consisting retail, residential,
2018 retail sales forecast to 4.1%, an
brings Klang Valley’s cumulative office and hotel components. Located
optimistic figure compared to the 2.0%
supply to 58.97 million sq ft in approximately 300 metres away from the
growth for year 2017.
2H2018. Taman Mutiara MRT Station, the 4-storey
SUPPLY & DEMAND lifestyle mall offers 625,000 sq ft of retail
space.
More malls are embarking on Over the review period, five shopping
asset enhancement initiatives centres with combined NLA of
(AEIs) and creating new approximately 1.40 million sq ft were
experiences to stay relevant in the completed, bringing the cumulative
competitive retail market. supply of retail space in Klang Valley to
circa 58.97 million sq ft.
Grocery stores are offering wider The new completions are The Linc, GM
selection of premium goods while Bukit Bintang, KL Eco City Retail Podium,
incorporating food experiences. Eko Cheras Mall and Kiara 163.
The Linc, a retail centre with about
The review period saw more 127,000 sq ft NLA, opened in November Eko Cheras Mall
creative ideas and trends
embracing technological
innovation. An unmanned CHART 1
restaurant and a selfie museum Existing Cumulative Supply of Retail Space (Net Lettable Area) 2H2018
have made their debut, creating
another level of experience in the
local retail scene.
KL CITY
10.52mil sq ft
17.9%
SELANGOR
30.57mil sq ft
KL FRINGE
17.88mil sq ft
51.8%
30.3%
Source: Knight Frank Research
9Opened in December, Kiara 163 is a entertainment space with a brand-new PRICES AND RENTALS
lifestyle mall with NLA of 300,000 sq ft. attitude. The retail space is expected to
launch in 1H2019. The monthly gross rentals of prime
Amid growing competition in the retail shopping centres in Klang Valley
market, more owners and operators The zero-rated Goods and Services Tax remained resilient.
of shopping centres are embarking on (GST) has created a positive lift in the
asset enhancement initiatives (AEIs) and retail segment. Prime and established regional and
refreshing their trade and tenant mix to neighbourhood shopping centres with
cater to changes in shopping trends as proven track record of high visitation
well as to attract higher footfalls. remain as the preferred choice for
retailers, both local and international,
In September, the Lower Ground Level even at high rentals as there are potential
at Midvalley Megamall underwent a to achieve better sales.
layout repositioning; whereby partial
space previously occupied by AEON Big Pavilion Kuala Lumpur and Suria KLCC
was subdivided into smaller retail lots. continued to command higher average
The layout repositioning and tenant mix monthly rentals, averaging at about
stimulation saw the entry of new tenants RM26.00 per sq ft and RM37.00 per sq ft
such as Ah Cheng Laksa, San Francisco
Lush first outlet opens in Pavilion respectively.
Coffee Express, Spa Ceylon Luxury The review period continued to mark the As for the other popular retail
Ayurveda, and Marks & Spencer Food. entrants and expansions of international destinations such as Sunway Pyramid
and local brands. Notable openings and Mid Valley Megamall, the gross
During the same month, the Lower
include Lush, Jacob & Co, Dean & rentals range from RM14.00 per sq ft to
Ground Level of The Gardens Mall also
DeLuca, Blancpain, Steve Madden and RM17.00 per sq ft per month on average.
completed its AEI on an underutilised area
Victoria Secret’s flagship store.
that connects to the parking lifts at the Newly completed / operational shopping
north section of the mall. The 14,000 sq There were also closures of outlets / exit centres which have yet to achieve high
ft extension is now home to 12 tenants in of brands due to falling sales and changes precommitted take-up are offering longer
in retail trends. rent free period and competitive rates to
Lifestyle bakery and bistro, The Loaf, boost occupancy levels amid challenges
closed all its 12 outlets in the country after in the retail market.
12 years in business while the Harrods OUTLOOK
Café in Suria KLCC closed its doors in
June 2018. Another six new shopping centres /
supporting retail components within
In August 2018, Aeon Malaysia which integrated developments, offering
owns 49% of Thai-headquartered combined retail space of 4.04 million sq
The Gardens Mall Extension
Index Living Mall business in Malaysia ft, are expected to come onstream by
announced the closure of its Index 1H2019.
the F&B and lifestyle segments with new Living furniture outlets in the country.
tenants such as Yu by Yuri, The Morning The affected outlets in Klang Valley are Retailers continue to be spoilt for choice.
After, Mr Tuk Tuk, Jinjja Chicken and located at Aeon Shah Alam and IOI City Developers of new and less prominent
Wendy’s. Mall in Putrajaya. The leading retailer will, shopping centres are offering attractive
however, continue to refurbish selected incentives, partnership and short-term
Paradigm Mall in Petaling Jaya has tenancies to pop-up retailers to improve
stores and employ appropriate marketing
completed its first AEI in October with occupancy levels.
and pricing strategies for its retail
new eateries and a food court on level LG.
business. As for its property management Moving forward, we will see the
Despite the closure of Parkson’s 107,000 services, it expects occupancy and rental downsizing of hypermarkets as their
sq ft outlet in Sungei Wang Plaza, levels to remain stable and sustainable. owners respond to current consumer
Capitaland Malaysia Mall Trust (CMMT), preference for smaller stores as well as
The remaining outlet of Rock Corner
which owns 62% of the strata-titled the closure of non-profitable outlets due
at The Gardens Mall closed down in
shopping mall, continues to undertake to changes in domestic retail trends.
September after 28 years in business.
AEI to transform the former iconic
shopping destination, the third major Meanwhile, the closure of MPH Bookstore Tesco Stores (M) Sdn Bhd is reportedly
refurbishment and reconfiguration since in 1 Utama Shopping Centre leaves the looking to venture into property
2013. There will be a new zone, JUMPA, development to monetise its assets by
chain with less than 30 outlets across
redeveloping its larger stores in selected
in its 5-storey annexe block. JUMPA will the country. Brick and mortar bookstores
localities in Klang Valley.
cater to modern retail needs, offering face competition from online options like
specialty retail, F&B, athleisure and family ebooks and online bookstores. Premium neighbourhood grocers such
10REAL ESTATE HIGHLIGHTS MALAYSIA
which operates unmanned convenience
TABLE 7 stores using technology in artificial
Incoming Retail Supply 2H2018 - 1H2019 intelligence, image recognition, facial
recognition and theft prevention system,
Name of Shopping Mall Location Estimated Net Lettable Area has tied up with Scientific Retail, a local
2H2018 - New Completion/ Opening company.
The Linc KL City 127,000 sq ft The country’s very first Selfie Museum
opened in Fahrenheit 88 in August 2018.
GM Bukit Bintang KL Fringe 100,000 sq ft This latest attraction spans over 7,000 sq
ft and features nine different themes for
KL Eco City Retail Podium KL Fringe 250,000 sq ft
photo fantasies, creating a multi-sensorial
Kiara 163 KL Fringe 300,000 sq ft experience to match the contemporary
“Insta-worthy’ trend.
EKO Cheras Mall KL Fringe 625,000 sq ft
In conclusion, with supply continuing to
1H2019 - Expected Completion/ Opening
outstrip demand, lesser established and
TRX Financial Quarter KL City 126,000 sq ft new shopping centres without high pre-
(Mulia 106 Exchange) committed take-up will continue to face
Star Boulevard KL City 126,000 sq ft challenges in the diluted retail market.
Rentals will continue to be under
Queensville KL Fringe 412,000 sq ft
pressure as operating costs rise although
Pinnacle Selangor 140,000 sq ft the new increase in minimum wage is not
expected to have a major impact on the
Central i-City Shopping Centre Selangor 940,000 sq ft
retail industry.
(Central Plaza @ i-City)
Owners and operators of existing
Empire City Damansara Mall Selangor 2,300,000 sq ft
shopping centres need to continuously
refresh and reinvent their assets and
offerings by embarking on AEIs while
retailers need to ensure that their stores
remain relevant to cater to current
shopping habits. In terms of investment
Source: Knight Frank Research
and revaluation, the market value holds
steady with some of the prime shopping
centres reporting an average increase
TABLE 8
Retail Investment Sales 2H2018 of between 1.0% and 4.5%. The short
term outlook for the retail sector is one of
Building Name Location Approx. Lettable Consideration caution amid a slowdown in the country’s
Area (sq ft) (RM per sq ft)
economy.
SStwo Mall(1) Petaling Jaya 460,000 RM180.0 million
(RM391 per sq ft)
Setapak Central Mall(2) Setapak 494,000 -
Notes:
(1) The Puchong-based DK Group of Companies has completed the deal at the end of July. The deal is done
between AsiaMalls Sdn Bhd and DK Group of Companies.
(2) The Singapore-based ARA Asset Management Ltd has entered the deal with AsiaMalls Sdn Bhd.
Source: Knight Frank Research
as Jaya Grocer, Village Grocer and Ben’s Restaurant “grEAT” in 1 Utama Shopping
Independent Grocer have successfully Centre is the first automated restaurant
incorporated food experiences within without any waiters, where all orders are
their selected outlets that span 20,000 sq just one tap away.
ft to 25,000 sq ft on average.
China’s BingoBox has hit Malaysian
Retailers are also embracing technology shores with stores at Bukit Ceylon and
to innovate in-store experiences. Shell Jalan Tun Razak. The company
11HIGHLIGHTS KLANG VALLEY INDUSTRIAL MARKET
The construction of state-of- MARKET INDICATIONS SUPPLY & DEMAND
the-art, multi-storey warehouses
Malaysia’s industrial production index LYL Group completed two build-to-suit
that are sizeable in scale,
(IPI) was higher by 4.2% year-on-year warehouses measuring 118,000 sq ft
continues to garner momentum
(y-o-y) in October 2018. Growth in the IPI and 154,000 sq ft respectively in August
as manufacturers and logistics
was supported by higher output in the 2018. The new facilities which are located
operators seek to mitigate high
manufacturing and electricity sectors. in the 65-acre LYL Logistics Park in
land costs and centralise their
Section U10 of Shah Alam are to be
operations. Selangor, the gateway to the Asean
occupied by logistics firm, DB Schenker
market given its strategic location with
as part of its business expansion.
well-developed infrastructure and pool
The country’s aerospace industry
of skilled labour, had the highest number The first phase of Axis Mega Distribution
is poised for further growth as
of approved manufacturing projects (83) Centre (AMDC) was recently completed.
Khazanah will lead and develop
for the January to June 2018 period. The Located in Taman Industri Sijangkang
an 80-acre site in Subang and
state was ranked in 3rd position in terms Utama in Telok Panglima Garang, the
transform it into an aerospace
of proposed capital investment with facility by Axis Real Estate Investment
hub. By 2020, the government
RM3.10 billion. Trust (Axis REIT) comes equipped with
targets to develop 30 more small
In the aerospace sector, the government high specifications that include high-end
and medium enterprise (SME)
is looking to develop 30 more new SMEs sprinkler system, LED lighting and
players operating in the sector.
by 2020. The “3S” aerospace belt of rainwater harvesting system. It is the new
Selangor, namely Subang, Serendah and distribution centre for Nestle Products
The proposed free trade zone Sdn Bhd.
Sepang, is poised for growth moving
(FTZ) on 380 acres of land in into 2019 and 2020. Khazanah Nasional Alpha Galaxy Group of Companies is
Pulau Indah will serve as a Berhad together with agencies such as currently developing the Galaxy Logistics
catalyst to spur more shipping Majlis Amanah Rakyat (Mara) will revive Hub on a 60-acre plot of land in Kuala
and logistics activities in Port the 80-acre aerospace hub in Subang, a Selangor. It will consist of two warehouse
Klang. project first mooted in 1997. blocks with total built-up area of 1.5
Meanwhile, to spur trading activities, the million sq ft that come equipped with
The on-going trade war between government will convert 380 acres of land firefighting system in compliance with FM
China and the United States in Pulau Indah into a free trade zone (FTZ) standard. More than half of the
may serve as a window of to support and increase shipping and warehouse space, measuring 850,000 sq
opportunity for Malaysia to logistics activities in Port Klang.
attract manufacturers from both
economic superpowers to set up
FIGURE 3
their production facilities here.
Malaysia is not susceptible to
Cumulative Supply of Terraced, Semi-Detached and Detached Factories
2013 - 1H2018
tariffs which are imposed by the
countries due to the trade war. 35,000
30,000
Cumulative Supply (Total No. of Units)
25,000
20,000
15,000
10,000
5,000
0
2013 2014 2015 2016 2017 1H2018 Year
Detached Semi-detached Terraced
- Existing - Existing - Existing
Source: NAPIC
12REAL ESTATE HIGHLIGHTS MALAYSIA
ft, will be anchored by Continental Tyres of the facility to other firms and upon its
PJ Malaysia as its national distribution opening, it is expected to achieve close
centre. The facility is expected to be to full occupancy.
ready by 1Q2019.
Sizeable industrial facilities with higher
In the industrial zone of Section 21, specifications such as generous clear
Shah Alam, Nippon Express (Malaysia) height exceeding 40 ft, automated
Sdn Bhd will be constructing a new loading platforms, high standard sprinkler
warehouse on the former site of Silverbird system and automated racking systems
Complex. The new double-storey facility are also gaining popularity.
on the 14.7-acre site will feature wide Mapletree Logistics Hub
Mapletree Logistics Hub Shah Alam is a
ramp up and offer a total built-up area
multi-tenanted facility that comes with properties with high specifications.
of 682,658 sq ft. Groundworks are in
wide multi-storey ramp up which are
progress with construction slated for There are several notable incoming
feasible for larger trailer trucks (for 40ft
completion by December 2019. industrial developments within Klang
containers) to manoeuvre, top-notch
At Bandar Bukit Raja in Klang, the sprinkler system, automated loading Valley that share common features -
upcoming headquarters for CJ Logistics platforms and LED high beam lighting. gated and guarded concept with higher
consists of a 3-storey warehouse with The first phase was fully completed in specifications that include high-speed
a 3-storey office building annexe that November 2017 while the subsequent fibre optic broadband and, separate
comes with wide multi-storey ramp up. phase commenced operations in April heavy vehicle entry and exit gates.
The facility comes with a total built-up 2018. As of December 2018, the entire Located in Section 23 of Shah Alam,
area of 525,949 sq ft. Construction is facility has an overall occupancy rate Hap Seng Industrial Hub spans more
at 65% with full completion slated by of circa 89%, a testament that strong than 20 acres and is the first in Malaysia
2Q2019. CJ Logistics will rent out part latent demand is present for industrial that comes with a dedicated basement
TABLE 9
New Industrial Facilities with High Specifications
EXISTING DEVELOPMENTS
Name/ Description Location Estimated Status
of Building Built-up
Axis Mega Taman Industri 515,000 sq ft Phase 1: Completed January 2018
Distribution Centre Sijangkang Utama Subsequent phases to be launched
Mapletree Logistics Hub Section 22, 2,294,115 sq ft Second phase opened on April 2018
- Shah Alam Shah Alam First phase opened on November 2017
INCOMING DEVELOPMENTS
Headquarters for Bandar Bukit Raja, 470,000 sq ft Under construction,
Century Logistics Klang expected completion 2Q2019
Warehouse for Section 22, 682,658 sq ft Under Construction,
Nippon Express Shah Alam expected completion December 2019
Area Logistics Ulu Kelang 1,200,000 sq ft Under Construction,
@ Ampang Free Trade Zone expected completion 3Q2019
Galaxy Logistics Hub Kuala Selangor 1,500,000 sq ft Under Construction,
expected completion 1Q2019
Notes:
(1) Mapletree Logistics Hub – Shah Alam is professionally managed by Knight Frank Malaysia
(2) Both Mapletree Logistics Hub- Shah Alam and Axis Mega Distribution Hub were completed in 1H2018. At the time of writing, Mapletree Logistics Hub - Shah Alam
was still in the process of securing tenants while Axis REIT was actively seeking opportunities for its Phase 2 development.
Source: Knight Frank Research
13car park offering over 900 bays. The
development comprises a 6-storey
flatted warehouse; 12 units of 5-storey
semi-detached factories and 4 units of
3-storey detached factories as well as
a 5-storey retail cum office component
with combined NLA of 59,809 sq ft. The
project is currently at piling stage and is
expected to be completed by 2020. AREA Ampang
Eco Business Park V is an on-going
gated and guarded industrial park on 518 three-level warehouse in the Ulu Kelang its surrounding fringe areas.
acres of land in Bandar Puncak Alam. Free Trade Zone. The warehouse, which
During the review period, AREA acquired
To date, launched components include is currently at 55% completion stage,
a parcel of industrial land measuring
cluster, service, semi-detached and is targeting to obtain its certificate of 212 acres at Kota Seri Langat in Banting
detached factories, with estimated sales completion and compliance (CCC) by for RM320 million. Unveiled as THE
rate of circa 89% as of December 2018. 3Q2019. Located approximately 6.8km COMPASS @ Kota Seri Langat, the gated
The rise of e-commerce activities has from KLCC, this inner city distribution hub and guarded industrial park will feature
breathed a new life to the city’s industrial is targeted at tenants / occupiers in the ready built detached factories (built-
property market. Area Management Sdn e-commerce / logistics sector who strive ups of 12,000 sq ft to 75,000 sq ft) and
Bhd (AREA), a real estate private equity to provide same-day delivery services to customised build-to-lease units sized from
firm, is constructing a 1.2 million sq ft their customers within the capital city and 200,000 sq ft.
TABLE 10
Selected Developments: Existing and Future Supply
Name of Development Location Developer Status Remarks
LYL Logistics Park U10 Shah Alam LYL Group On-going • Within a 65-acre existing logistics park
• 2 units of built-to-lease warehouses with built-ups of
118,000 sq ft and 154,000 sq ft respectively
• To be occupied by DB Schenker
Hap Seng Industrial Hub Section 23, Hap Seng Land Upcoming • New industrial hub spanning more than 20 acres
Shah Alam • Components include the following:
No. of Approx. Built-up
Type Units per unit
6-storey 1 525,091 sq ft
flatted warehouse (mezzanine 16,881 sq ft)
5-storey semi- 12 42,052 sq ft
detached factory
3-storey 4 35,565 –
detached factory 62,760 sq ft
5-storey 1 59,809 sq ft
retail & office
• Dedicated basement car park with over 900 bays
Eco Business Park V Bandar Puncak Jointly developed Upcoming • Gated and guarded industrial park spanning 518 acres.
Alam by Eco World • Products launched to date include:
Development • 92 units of cluster factories
Berhad and • 64 units of service factories
KWSP • 28 units of semi-detached factories
• 12 units of detached factories
THE COMPASS Kota Seri AIDF Under Components:
@ Kota Seri Langat Langat Industrial Park Planning • Ready built detached factories measuring between
Sdn Bhd (1) 12,000 sq ft and 75,000 sq ft.
• Build-to-lease detached factories measuring at 200,000 sq ft
and above
Note:
(1) AIDF Industrial Park Sdn Bhd is a special purpose vehicle of AREA Group of Companies
Source: Knight Frank Research
14REAL ESTATE HIGHLIGHTS MALAYSIA
Similarly, Mapletree Dextra Pte Ltd had and Klang, rental rates hover between from RM40.4 billion during the same
entered into an agreement to purchase RM1.30 per sq ft and RM1.80 per sq ft period in 2017, with the manufacturing
38.80 acres of industrial land in Section per month. sector accounting for RM49.8 billion, or
15, Shah Alam, from UMW Holdings Bhd circa 80.8% of investments approved.
Industrial cum warehouse space that
for a consideration of RM287.7 million. Among the total investments approved,
come with state-of-the-art facilities and
UMW will in turn rent part of the land FDI stood at RM43.8 billion (71.1%) as
higher specifications (build-to-suit / build-
from Mapletree for at least 3 years at a opposed to RM24.4 billion (60.4%) in the
to-lease) are able to command significant
yearly rental totalling RM12.6 million. corresponding period.
premium in rental rates.
PRICES & RENTALS Build-to-suit Axis Mega Distribution
We will continue to see more global
companies making Malaysia their
Established and mature industrial areas Hub, which is located at Taman Industri
hub, following in the footsteps of IKEA
in selected localities within Klang Valley Sijangkang Utama, command high rental
Regional Distribution Centre in Pulau
continue to undergo transformation over rate of circa RM3.11 per sq ft per month
Indah and Lazada e-Commerce Regional
the years. Due to rapid developments while the asking rental at Mapletree
Distribution Centre in Sepang.
in the surrounding areas and rising Logistics Hub in Shah Alam is in the
land prices, many of these industrial region of RM2.00 per sq ft per month. In the mid-term, the on-going US-Sino
premises sit on lands which are ripe for trade conflict is expected to benefit
Meanwhile, we were given to understand
redevelopment. Malaysia, particularly in the electronic
that monthly asking rentals at the on-
integrated circuits, liquefied natural gas
In Kuala Lumpur, the industrial hotspots going Hap Seng Industrial Hub which
and communication apparatus segments.
of Chan Sow Lin and Segambut continue is available for lease only range from
to witness redevelopments in the form RM1.80 per sq ft to RM2.50 per sq ft per
of higher density projects which can month.
generate higher gross development
OUTLOOK
values (GDVs). Similar trend can also
be observed in industrial areas such as The prospects for Klang Valley’s
Section 13 of Petaling Jaya in Selangor. industrial and logistics property market
remain positive as more clarity in the
In contrast, new industrial parks on
policies of the newly elected government
greenfield sites are coming up in areas
unfolds.
supported by transport infrastructure
developments and offer large tracts Several measures announced under the
of land for development at lower and recently tabled Budget 2019 will support
attractive land costs. growth of the industrial sector, especially
high-technology industries. The National
Notable on-going and upcoming Policy on Industry 4.0 or Industry4WRD,
industrial parks that are looking to strives to catalyse growth of key sectors
capitalise on improved connectivity, for in the realm of electrical & electronics,
example via the RM6 billion West Coast machinery & equipment, chemicals,
Expressway (WCE) project include THE aerospace and medical devices. It will
COMPASS @ Kota Seri Langat and Eco pave the way for enhanced productivity,
Business Park V. job creation and high skilled talent pool in
The on-going WCE project which is over the manufacturing sector.
50% complete will connect the main Malaysia remains a competitive
coastal towns such as Klang, Kuala investment location for foreign investors
Selangor, Teluk Intan, Setiawan, Manjung despite rising competition and a
and Hutan Melintang. Spanning some challenging external environment. The
233km with 21 interchanges, of which, country was ranked 25th out of 140
10 are in Selangor and 11 in Perak, it countries in the World Economic Forum’s
will also be linked to existing highways (WEF) 2018 Global Competitiveness
including the North-South Expressway, Report (GCR). Within Asia-Pacific,
South Klang Valley Expressway, North Malaysia was ranked eighth most
Klang Valley Expressway and Shah Alam competitive behind Singapore, Japan,
Expressway. Hong Kong, Taiwan, Australia, South
Korea and New Zealand.
The average asking rentals for detached
factories in areas such as Chan Sow Lin From January to August 2018, Malaysia
and Segambut have exceeded RM2.50 approved RM61.6 billion in both
per sq ft per month. In Shah Alam domestic and foreign investments, up
15HIGHLIGHTS PENANG PROPERTY MARKET
New residential launches on the RM800 per sq ft (11, Gurney Drive) to
island comprised mostly serviced MARKET INDICATIONS RM1,063 per sq ft (Gurney Paragon).
suites, mid-range residential During 1H2018, Penang State saw Units sized from 1,137 sq ft to 2,828 sq
developments and affordable increases in both volume and value ft in Quayside Condo in Seri Tanjung
homes whilst on the mainland, of transactions of 5.3% and 5.5% Pinang were resold at prices ranging
developers generally focus on respectively when compared to the from RM810 per sq ft to RM1,094 per
landed housing schemes with corresponding half of 2017 (Source: sq ft whilst larger sized condominiums
some flatted developments. NAPIC). Meanwhile, the residential with built-up areas of 3,400 sq ft to 6,000
sub-sector accounted for a 72.3% sq ft in the popular locality of Tanjung
share of the total volume of transactions Bungah were sold at prices ranging from
Purpose-built office space
numbering 8,303 units and is worth RM471 per sq ft (The Cove) to RM892
continues to enjoy stable rents
RM2.458 billion or 57.3% of the total per sq ft (One Tanjong). Located at the
and high occupancies. Newer
value for all sectors. south-eastern portion of the island, units
buildings command higher asking
sized from 1,367 sq ft to 1,528 sq ft
rents compared to older buildings. Tourist arrivals into Penang is set to rise at Light Collection I & II were resold at
if the planned low-cost carrier terminal prices ranging from RM752 per sq ft to
The expected entry of new retail (LCCT) by Air Asia takes off ground and RM883 per sq ft as against RM1,219 per
space in March 2019 from Ikea is completed by 2022. The LCCT, to be sq ft for studio units sized 517 sq ft at
Batu Kawan will pose more constructed on the site of MAS Cargo The Light Collection II.
challenges for the existing malls. Complex, will accommodate the increase
of planes from the current five to sixteen Asking rents are noted to be similar to
and is targeted to bring eight million those during 1H2018. For larger sized
The industrial sector is staying units in Tanjong Bungah, asking rents
passengers per annum to Penang.
strong with good demand for are still generally between RM1.20 per
industrial premises, both for sale Additionally, the expansion of the sq ft and RM2.10 per sq ft per month
and rental. Swettenham Cruise Terminal Pier from with the upper band asking from RM1.80
400 metres to 700 metres, which will per sq ft to RM2.56 per sq ft per month.
accommodate two mega cruise vessels For similar sized units in Gurney Drive,
Phase 1 of the Penang Transport
simultaneously, will also bring in more asking rents vary from RM1.70 per sq ft
Master Plan (PTMP) will proceed.
tourists. to RM2.60 per sq ft per month whilst for
All required studies will be
conducted before implementation The first phase of Penang Sentral, the smaller sized units in Tanjong Tokong
of the projects (including the integrated transportation hub for land, and Gurney Drive, it ranges from RM2.24
Social Impact Assessment (SIA)). sea and rail located in Butterworth, per sq ft to RM3.08 per sq ft per month.
The SIA for Phase 1, comprising has opened in December 2018. To be It is noted that some landlords are still
the Pan Island Link 1 highway, developed over seven phases, three asking higher rents of more than RM3.50
the Bayan Lepas light rail transit phases currently under construction and per sq ft per month.
(LRT) system as well as several comprising retail mall, office tower and
business hotel are expected to complete
OFFICE
major roads are understood to
have already been conducted and by 2030. Future phases are understood The existing supply of office space
submitted to the relevant technical to include SOHO units, commercial (buildings of 10-storey and above) on
departments for approval. development and serviced apartments. Penang Island remains at 1H2018’s
level of 5.71 million sq ft. There was no
HIGH-END CONDOMINIUM incoming supply for 2H2018.
Similar to 1H2018, condominiums The occupancy rates for the four prime
and apartments form the main bulk of office buildings monitored in Georgetown
launches in Penang during the review average at about 92.0%, dipping slightly
period. There were no launches of high from 1H2018’s level of 94.5%. The newer
end condominiums in 2H2018. buildings located out of Georgetown,
namely One Precinct, Suntech and
There are lesser recorded transactions of
Menara IJM Land also collectively
high-end condominiums in the secondary
recorded a slight drop in occupancy to
market in 2018. Subsale transactions
98.0% compared to 99.6% for 1H2018.
in early 2018 for condominiums sized
2,000 sq ft to 3,500 sq ft in the Gurney It is noted that the older buildings in
Drive vicinity were at prices ranging from George Town have lower asking rents
16REAL ESTATE HIGHLIGHTS MALAYSIA
averaging RM2.80 per sq ft to RM3.10 status accreditation in 1H2018, asking VOS Lifestyle Suites is a proposed
per sq ft compared to newer buildings rents at Albukhary Building (Wawasan 32-storey office block located at Bukit
at RM3.60 per sq ft to RM4.50 per sq ft, Open University) in George Town, jumped Dumbar. Built on SOHO concept,
especially for buildings with MSC status from RM2.80 per sq ft to RM3.60 per sq construction works will start in January
accreditation. Following its Tier 1 MSC ft per month. 2019. Expected to complete by 2022, this
development will have 439 units sized
from 364 sq ft to 521 sq ft for sale on
TABLE 11
Asking Gross Rentals of Selected Purpose-Built Office Space in Penang strata basis and at prices ranging from
RM1,225 per sq ft to RM1,300 per sq ft.
Project/ Developer Location Asking Gross Rental Recently soft launched with 40% of the
(RM per sq ft / month)
units sold, this development offers club
Hunza Tower Georgetown 3.80 (passing rents)* facilities featuring function hall, swimming
Menara Boustead Penang Georgetown 2.80 - 3.10*
pool, sky bistro, gym and enhanced 24-
hour security. The individual units come
Menara KWSP Georgetown 2.80 - 3.00*
with private washrooms and high-quality
MWE Plaza Georgetown 2.80 (fixed rent)* finishing.
Menara IJM Land Jelutong 3.15 - 3.60 (passing rents) RETAIL
SunTech @ Penang Cybercity Bayan Baru 4.80 (last unit sized 6,800 sq ft and fitted out) The existing supply of purpose-built
One Precinct Bayan Baru 4.00 shopping space on Penang Island
remained unchanged at 1H2018’s level of
*Denotes rental inclusive of centralised air-conditioning
6.99 million sq ft. No new purpose-built
Source: NAPIC / Knight Frank Research (as at November 2018) shopping malls were completed on the
TABLE 12
Future Supply of Office Space in Penang
Project / Location Net Lettable Scheduled Remarks
Developer Area (sq ft) Completion
STATUS: UNDER CONSTRUCTION
VOS Lifestyle Suites Bukit Dumbar 215,000 2022 Construction to start January 2019;
sale on strata basis
Siuwah Bandar Baru Not available 2022 18-storey
Corporation Bhd Air Itam
STATUS: PLANNED
GBS@The Sea Bayan Lepas 410,000 Beyond 2020 Proposal on hold for now
The Light City Light 370,000 Beyond 2020 28-storey
Waterfront
Hunza Group’s PICC Bayan Baru - Beyond 2020 54-storey commercial building (office & hotel)
as Phase 2A of a 3-phase project
with scheduled completion in 2026.
Sunway Group Paya Terubong 410,000 Beyond 2020 9-storey office block / integrated development
Source: NAPIC / Knight Frank Research (as at November 2018)
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