The outlook for the office sector in Kuala Lumpur is expected to remain soft in favour of tenants over the next few years, with 13.2 million sq ft of new office space in the pipeline between 2011 and 2013, according to real estate consultancy DTZ Nawawi Tie Leung Sdn Bhd.
The overall occupancy rate of office buildings in Kuala Lumpur experienced a slight decrease from 87.1% in 3Q2010 to 86.4% in 4Q2010 due to weaker demand, it said in a statement on Jan 13 following the release of its Kuala Lumpur Property Times 4Q2010 report.
"Talks of an early General Election may cause some uncertainties amongst investors in the short term and delay major decisions on expansions until the political outcome and its impact on the business environment is clearer," DTZ executive director of consulting and research Brian Koh said.
Meanwhile, with the Malaysian Retailers Association revising the sales growth for the whole year from 5.5% to 6.1% due to stronger growth in 1H2010, the retail sector remains positive. Three new shopping centres were completed in 4Q2010 adding 758,000 sq ft to the total stock. The new centres include Aeon Mahkota Cheras and the refurbished The Intermark in Kuala Lumpur.
According to the report, there are about 20.97 million sq ft of retail space within Kuala Lumpur and around 20.66 million sq ft outside of Kuala Lumpur.
The residential sector has remained active with positive buying sentiments (encouraging take-ups) for newly launched prime condominiums by developers focusing on smaller units such as M-Suites, Vipod and Quartro.
The report says the average price of high-end condominiums in Kuala Lumpur was generally stable as it experienced only a marginal decline of around 0.17% q-o-q to RM500 psf while average rents declined by 2% from 3Q2010 to RM3.58 psf per month in 4Q2010.
DTZ's head of residential marketing Eddy Wong said the new measure implemented by Bank Negara Malaysia in November, which reduces the loan to value for the third residential property purchase to 70% may see a short term pullback from investors. "However, the prospects for 2011 remain positive as the economy is expected to grow sustainably," he added.