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Asia Property Report

Daily, Bangkok
Up-to-date news and coverage of industry trends and innovations from Asia with an in-depth special focus on real estate hot spots, as well as key interviews with important industry figures.

Challenging start for Kuala Lumpur in Q1

Apr 24, 2012
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View of downtown Kuala Lumpur in Bukit Bintang. Photo: Khalil Adis

Investment activities in Kuala Lumpur experienced a slow start to the year with volume in the first quarter dropping to about RM427.5 (US$139.3) million but are expected to gain momentum in the later part of the year with the new proposed REIT listing, according to DTZ Research.

Despite the slowdown, DTZ said it does not reflect the waning interest among investors as the dismal market conditions in Europe has “diverted attention to Malaysia and the region, leading to an increase in enquiries.”

The largest transaction recorded in the quarter was IGB Bhd's purchase of 50 per cent of the shares in the holding company of Renaissance Hotel.

Other major transactions included Mappletree Logistic Trust's purchase of two industrial warehouses in Johor, KrisAssets Holding Bhd planned injection of MidValley Megamall and The Gardens into a REIT this year as well as major shareholder of Dijaya Bhd's intention to inject personal assets in the listed Dijaya Bhd.

The firm said funding for good projects and borrowers are still available as liquidity remains ample.

Moving forward, DTZ expects investment activities to pick up in the later part of the year but this is subject to the availability of assets in the market, “as more foreign funds have new mandates for the country.”

Quiet residential market

The residential market also experienced a quiet quarter with no new completion recorded and no launches due to the seasonal effects of the various public holidays.

The luxury condominium market saw its average capital value increasing marginally by 0.5 per cent quarter-on-quarter to RM634 (S$206) per sq ft.

Meanwhile, the average rental value rose to 3.1 per cent quarter-on-quarter to RM3.62 (S$1.18) per sq ft per month.

DTZ said stricter guidelines on personal loans is anticipated to cool the residential market to some extent.

The residential market has seen prices going up substantially in the last few years.

This has led developers to look elsewhere.

“Developers are now focusing on smaller and more affordable units, and at the same time leveraging on the Developer Interest-Bearing Scheme (DIBS) to attract buyers,” said Eddy Wong, DTZ Malaysia’s executive director and head of residential marketing.