KL office market undergoing a correction

Transcription

1 KL fice market undergog a correction Short Description: THE Kuala Lumpur fice market is correction sce Mistry Federal Terriries tightened approval for new such developments second quarter year face an oversupply. THE Kuala Lumpur fice market is correction sce Mistry Federal

2 Terriries tightened approval for new such developments second quarter year face an oversupply.?new fice buildgs, except those beg constructed for owner?s use, will not get green light from mistry,? says Knight Frank Malaysia managg direcr Sarkunan Subramaniam when presentg The Edge/Knight Frank Klang Valley Office Monir 2Q2016.?DBKL froze new fice buildgs more than 20 sreys Golden Triangle followg a huge surplus such space after 1997/98 Asian fancial crisis.?in short term, this move by government may help stabilise current fice market, allowg dem? take-up/absorption re? cch up with supply. In longer term, relevant authorities should review applicions for construction new fices on a case-by-case basis only approve those th are feasible terms locion, connectivity, synergy between project neighbourg developments, level busess commercial activities so on,? remarks Sarkunan.

3 ?Generally, it is a good thg th overall occupancy rents are stagnant despite prolonged low oil prices. Impacted by low oil prices, overall fice market is correctg elf, particularly KL City where most oil gas busesses are loced.? However, overall fice market is expected rema subdued comg quarters.?pressure is expected grow on occupancy level amid wideng gap between supply dem. The impendg supply is high while dem absorption re are lacklustre. The fice market is expected be more tenant-led with tractive leasg terms as llords existg newly completed buildgs compete reta tract new tenants respectively,? says Sarkunan.?In comg quarter, high supply fewer enquiries on fice space are anticiped crease vacancies. More fice space is expected be available for

4 sub-lease as tenants from O&G reled dustries contue reduce operional cost,? he adds. In next quarter, two fice wers are expected be completed KL City, namely Public Mutual Tower JKG Tower, while three are sled for completion KL Frge, namely Menara Hong Leong (Tower A Damansara City) Damansara Heights, UOA Corpore Tower Bangsar South(formerly Vertical 38) Signure Offices KL Eco City. Collectively, se wers are expected add three million ft existg sck. Second quarter review The Kuala Lumpur fice market remaed st with a notable drop net absorption 2Q2016.?Organisions selected secrs, particularly O&G-reled bankg, contue downsize [ terms reducg ir workforce /or freezg hirg] due challengg operg environment. This is happeng despite new take-ups from selected dustries, such as formion technology, pharmaceuticals, surance shared services,? says Sarkunan.?The limited expansion existg busesses new set-ups as well as leral movement tenants collectively led a notable drop net absorption.? This is reflected lower net absorption Kuala Lumpur (about 63,311 ft durg quarter), reflectg a sharp contraction 38.22% quarter on quarter 79.94% year on year.?the lack impetus for growth? terms dem? prevailg challengg economic, busess property market environment contued weigh on subsecr. The fice markets KL City, KL Frge Beyond KL (Selangor) were subdued durg review period,? says Sarkunan.?The challenge is entice tenants reloce newly completed buildgs.? In 2Q2016, cumulive supply fice space KL City, KL Frge Beyond KL (Selangor) sod 92.7 million ft followg completion Mercu Mustapha Kamal (Tower 2) with 179,800 ft net lettable area (NLA) based on monir. The only purpose-built fice buildg completed Neo Damansara, it has added space an existg supply 17.9 million ft Beyond KL (Selangor). With no completions KL City KL Frge durg review period, cumulive supply purpose-built fice space both regions remaed unchanged 51 million ft 23.8 million ft respectively. Total cumulive fice space under construction KL City, KL Frge Beyond KL sod million ft 2Q2016. Supply is projected crease 18% over next 2½ years? between 2H ? with bulk new completions KL Frge. The cumulive fice sck 2018 is estimed

5 million ft. Stable occupancy rents The overall occupancy re KL City was stable 82.8% (+0.2% from 1Q2016). Occupancy central busess district (CBD) remaed unchanged 88.1% while Golden Triangle recorded an crease 0.4% 82%.?The crease was due movements Menara Hap Seng 2,? comments Sarkunan. Over KL Frge, overall occupancy re remaed unchanged 90% while Damansara Heights KL Sentral, it dipped 0.8% 81.4% 0.6% 90% respectively. Mid Valley City/Bangsar/Pantai experienced a 1% quarter-on-quarter crease 94.7%. Sarkunan considers Damansara Heights an up--comg locion, thanks nearly completed Damansara City project by Guocol ongog redevelopment Pus Bar Damansara by Pavilion Group JV partner (Canada Pension Plan Investment Board). The presence Semantan Pus Bar Damansara mass rapid transit stions, which transles improved accessibility connectivity, also augurs well for fice market locion.

6 Source URL: KLftKL At?The Office Encorp Also Notable Mulia Eco In sourced Subang Menara Beyond Beyond Eco World average UOA Property City, Frge, rents 2Q2016, transactions by: City, 2.65 announcements Jaya, Shell KL, Development KL Busess 30,000 Tropicana sold million occupancy overall IJM Kuala (Selangor), rents Bayer Development Cha?s egred L block Jalan occupancy did Park Lumpur rents Co ftcorp ftwas not Tun re (Block Group (M) Hytera respectively, movements remaed development move Shah taken will Sambhan, Sdn remaed Sdn overall re P) Communicions disposed reveal, Alam, from up decled Petalg unchanged has fice occupancy steady RM4.16 Menara unveiled formerly next Kuala property Roche first wer Jaya suites 1.4% Dijaya despite commercial Lumpur, Hap Mid psf commercial re fers known Diagnostics unveiled RM5.72 arm Plaza while 72.9% Bukit Garden Seng Valley held downward column-free NLA as steady 2Btang Mulia psf. Kenchana development due Jalan City, Office Petalg district 2Q. Malaysian (M) There pressure. 557,053 Group, is Tun?Similarly, Sdn an City also floors recorded Jaya, was expansion Square, Encorp Razak Centre expected will fice also They with Subang Pantai ok ft 2Q2016 be with astr is no was mixed-use awere slight buildg Kenanga by aup typical Tower movement mixed-use Sentral several Jaya, transacted amui become while unchanged tal decle Kota floor Shah A Investment development. Park tenants & itsignure adamansara, development Co 41,000 rose ple Vertical Alam major Damansara 2Q RM640 while Bukit vacg 0.1% RM6.13 as Bank fice Tower several 34,000 Busess ftkerchi, The million Cyberjay Menara Selango compri 87.5% ir Height locio psf The group tena fo Tu sp S(R A f