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Wednesday, January 27, 2010

Property market to remain fairly stable

The world's biggest commercial property consultant, CB Richard Ellis (CBRE) expects Malaysia's property market to be fairly stable in terms of rental and capital value with increased foreign investments flowing into the property sector.

"We don't anticipate a major crash or upturn this year as we are not overbuild.

"Foreign funds drifted away with the financial crisis and now it's picking up slowly with the liberalisation measures creating new opportunities for investors," said the Executive Chairman of CBRE (M) Sdn Bhd Christopher Boyd at a press conference in Kuala Lumpur today.

He also said developers should trade cautiously for the next six to eight months as there is still no end to the problems in the West.
Boyd also said Malaysia's property market was transparent and this would be the key driver in attracting foreign investors.

"Besides, the healthy financial environment will also augur well in luring investors," he added.

Currently, he said good investments are hard to come by and investors are looking particularly at newly completed buildings in established areas of Klang Valley, Johor and Penang.

Boyd said CBRE expects at least 30 major transactions in commercial properties to take place this year, primarily in the Klang Valley.

"In the second-half of last year, 28 major transactions took place with a total value in excess of RM3.5 billion despite the global financial crisis. This year we expect perhaps 28 to 30 (transactions) or more.

"With the rules on foreign ownership becoming very clear, it has augured well for foreign interest as well as place Malaysia's commercial investment market on par with most countries in the region," he explained.

Speaking on rental rates, Boyd said: "There is quite a healthy supply of space coming on to the market. About 2.8 million to 3 million square feet will be available in the next three years as there isn't going to be a squeeze on rental," he said.

Elaborating further, he said office rentals in Kuala Lumpur are expected to stabilise in the first-half of 2010, barring any major economic setbacks.

"The combination of modern infrastructure, quality facilities and comparatively cheap rentals makes KL a highly attractive location for any prospective multinational considering a move," he added.

CBRE expects continued broad-based demand across a wide range of sectors including Islamic finance, the oil and gas industry, agribusiness and commodities.

Meanwhile, Boyd said the trend of stepped-up rate of completion of office development for the next three years was set to continue.

The company expects a further 2.40 million square feet of office space to be added this year, to existing supply, 2.82 million square feet next year and 3.93 million square feet in 2012.

He added despite weakening rentals and slightly higher yield expectations, office capital values were expected to remain steady throughout 2010 generally ranging between RM800 and RM1,200 per square feet.

Looking ahead, he said demand for green buildings in Malaysia would continue to rise as environmental awareness grows.

Multinationals would remain at the forefront of the trend, increasingly adopting a commitment to lease green office space, wherever possible.

By Bernama

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