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MarketBeat Kuala Lumpur, Malaysia Office Snapshot - Q1 2012
May 07, 2012
A Cushman & Wakefield Research Publication
KUALA LUMPUR, MALAYSIA
Due to the adverse external economic environment, the Malaysian economy expanded at a slower pace in 2011 to record 5.1% GDP growth as compared to 7.2% in 2010. The 5.1% growth was sustained by strong growth of domestic demand, as well as public expenditure. On the supply side, the services sector grew by 6.8% during the year, mainly supported by the growth momentum generated in the consumer-related sub-sectors. After the peak of 3.5% recorded in June 2011, inflation rate moderated in the second half of the year and registered an average of 3.2% in 2011 (2010: 1.7%). In early March 2012, Bank Negara Malaysia announced its decision to maintain Overnight Policy Rate at the accommodative level of 3.00% for the current economic environment.
The stability of rental rates and take-up space at new buildings which are expected to be completed over the next six months, will depend on the speed and quantum of demand for office space generated through the impact of ETP and stimulus package, the possibility of relocation exercise undertaken by corporate currently located in existing buildings, the improvement of global economy, as well as whether new organism growth will take place within an industry (such as the new establishment of shared service centers in the services sector). However, a rapid pace of new supply being absorbed is unlikely to happen within the short term. STATS ON THE GO
1Q12 Vacancy Grade A Overall Rents 18.7% RM7.46 Q-O-Q CHANGE -1.6% 3.5% Y-O-Y CHANGE 2.2% 19.4% 12 MONTH OUTLOOK
RENT AND VACANCY RATE
With slower completion of Menara Binjai and Menara Darussalam, the KL office market witnessed only one significant new office building, namely Menara 3 PETRONAS, standing high within the KLCC area during the first quarter of 2012. This new office building has recorded an overwhelmingly high occupancy rate of 99% as of end March. On the back of lesser new supply entering the market, rental rates of Grade A office buildings have been holding up well in maintaining its rental rates and vacancy rates at a stable level. In this quarter, average net effective gross rent in KL CBD edged up slightly to register growth at RM7.46 per square feet (/sf), as opposed to RM7.21/sf recorded in the previous quarter. Average vacancy rate was also lowered to 18.7% in the first quarter of 2012 compared to 20.3% in the fourth quarter of 2012. Overall, average net effective gross rate for selected Grade A buildings in the Klang Valley office market increased slightly to RM6.09/sf (fourth quarter of 2011: RM5.99/sf), while average vacancy rate declined marginally by 1.3% to register at 14.1% during the review period (fourth quarter of 2011: 15.4%).
Note: (1) For Kuala Lumpur CBD Office Market only (2) Based on new sampling of Grade A buildings (beginning 4Q2011)
The office market in KL is anticipated to embrace demand and supply forces arising from the risks of much slower economic growth in advanced economies, as well as the influx of 4.0 million new supply of office space over the next nine months. Meanwhile, the implementation of Economic Transformation Programme (ETP) and the Special Stimulus Package announced in the 2012 Budget are expected to provide an impetus in creating more economic activities in 2012.
Grade A Net Effective Rent (RMpsf)
KUALA LUMPUR MARKET STATISTICS
SUBMARKET INVENTORY OVERALL VACANCY RATE UNDER CONSTRUCTION YTD CONSTRUCTION COMPLETIONS 600,000 1,150,284 1,750,285 315,210 0 2,065,495 OVERALL DIRECT NET ABSORPTION 204,783 107,015 311,798 218,356 0 530,154 GRADE A AVERAGE NET (RM/SQFT/MTH) 4Q11 7.21 5.75 6.48 4.31 4.10 RM5.99 1Q12 7.46 5.79 6.66 4.31 4.10 RM6.09 US$ SF/YR 1Q12* $29.09 $22.58 $25.98 $16.82 $15.98 $23.75 EURO SF/YR 1Q12* 21.92 17.02 19.58 12.67 12.04 17.90
KL CBD KL FRINGE SUBTOTAL - KL SELANGOR CYBERJAYA & PUTRAJAYA TOTAL
*RENTAL RATES REFLECT ASKING $PSF/YEAR Source: yyps research (rental rates), napic report (fourth quarter 2011 for stock and vacancy rates)
SIGNIFICANT 1Q12 LEASE TRANSACTIONS BUILDING CapSquare Office Tower Wisma Genting GTower GTower Vista Tower @ Intermark Menara Prestige Puchong Financial Corporate Centre MARKET KL CBD KL CBD KL CBD KL CBD KL CBD KL CBD Decentralized Area TENANT Citigroup Pan Malaysian Pools Weatherford Transocean Petronas Nomad VADS AIA Shared Services Centre BUILDING CLASS A A A A A A A A SQUARE FEET 100,000 40,000 30,000 30,000 30,000 18,600 36,000 40,000
Wisma Mustapha Kamal (NeoCyber Office Tower 2) Cyberjaya SIGNIFICANT 1Q12 SALE TRANSACTIONS BUILDING MARKET -
PURCHASE PRICE (RM) -
SQUARE FEET -
SIGNIFICANT 1Q12 CONSTRUCTION COMPLETIONS BUILDING Menara 3 PETRONAS MARKET KL CBD MAJOR TENANTS SQUARE FEET 840,000 COMPLETION DATE 1Q2012
SIGNIFICANT1Q12 PROJECTS UNDER CONSTRUCTION BUILDING Integra Tower @ The Intermark Menara Darussalam Menara Binjai Menara Felda KL Sentral ş Lot A Point 92 Damansara Perdana 348 Sentral KL Sentral ş Lot G Office Tower 1 KL Sentral ş Lot G Office Tower 2 Jaya 33 Cybercentre ş Tower 4 Jaya 33 Cybercentre ş Tower 5 MARKET KL CBD KL CBD KL CBD KL CBD KL FRINGE DECENTRALIZED AREA KL FRINGE KL FRINCE KL FRINCE DECENTRALIZED AREA DECENTRALIZED AREA MAJOR TENANTS Felda CIMB Investment Bank Shell Malaysia SQUARE FEET 777,000 164,000 330,000 689,000 600,000 158,000 500,000 320,000 480,000 265,000 265,000 COMPLETION DATE 2Q2012 2Q2012 3Q2012 3Q2012 3Q2012 3Q2012 4Q2012 4Q2012 4Q2012 4Q2012 4Q2012
* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS
Lot 3A-I, Level 4, Wisma WIM 7 Jalan Abang Haji Openg Taman Tun Dr Ismail 60000 Kuala Lumpur, Malaysia Tel: +603 7728 8116 (Agency & Corporate Real Estate) Tel: +603 7728 4117 (Valuation & Consultancy) www.yypropertysolutions.com
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