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Malaysia Real Estate Report Q3 2011
Business Monitor International, June 2011, Pages: 61
The Malaysia Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's Real Estate industry.
The Malaysian economy registered stronger-than-expected growth of 7.2% in 2010. The real estate market expanded along with the economy, with the total value of transactions growing by 32.6% year-on-year (y-o-y) and increased volumes in all subsectors. This report believes that economic growth in 2011 and 2012 will moderate to 4.9% and 4.2% respectively, with private consumption and investments serving as key drivers for the economy.
Market Overview:
The major driver for change in the real estate market has been the oversupply of space – especially office space in Kuala Lumpur. As a result, the outlook for the office subsector in Kuala Lumpur will be weak for at least a few years. Rents, absorption and occupancy rates are expected to track sideways, as supply and vacancy rates increase. Office rental levels are expected to hold up better in Johor Bahru and Kota Kinabalu.
In the retail subsector, the signs are fairly positive and the industry is expected to grow by around 6% in 2011. Spending by consumers is growing – disposable income levels are rising, the unemployment rate is low (around 3.0%), and tourism is on the increase. On the downside, costs are rising too – causing profit margins to shrink.
In the industrial subsector, there is growing demand for space from small and medium enterprises (SMEs), leading to increased developments for this segment. Increasing industrial property developments will occur in new areas, both within and outside the Greater Kuala Lumpur area.
Key Trends:
The government launched the US$444bn Economic Transformation Programme (ETP) in September 2010, with a specific focus on driving private investment – 60% of the ETP investment is expected to come from the private sector – in key sectors such as infrastructure, over the next 10 years. In 2011, the largest major developments set to begin include: Menara Warisan – an extensive integrated development comprising a 100-storey tower; Kuala Lumpur International Financial District (KLIFD); and Mass Rapid Transit (MRT) in Greater Kuala Lumpur.
The general outlook for commercial real estate is for yields to move broadly sideways – with yields in Johor Bahru higher in all sub-sectors than are those in Kuala Lumpur and Kota Kinabalu. One of the responses of Malaysia’s property and construction companies to this somewhat flat outlook has been to announce plans for mergers and acquisitions.
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