Tuesday, May 3, 2011

Kuala Lumpur Q1 2011-Economy slows but market remains steady

Kuala Lumpur Q1 2011-Economy slows but market remains steady

• Prime office rents moved upwards slightly in Q1 2011 but continue to be under pressure, with the anticipation of substantial developments in the supply pipeline (When office supply > demands, it may not good choice for investment....)

• There is approximately 13.24 million sq ft of new office space in the pipeline between 2011 and 2014, the majority of which is scheduled for completion in 2012

• The retail market continues to be active but the increase in inflation could dampen consumer spending. Nevertheless, the sector remains optimistic with forecast retail sales growth of 11% in Q1 2011. (Retails and shop lot investment is more attractive compare to office and residential ...)
• The residential sector saw optimism reflected in higher prices, but also caution due to declining affordability. With prices and affordability moving in different directions, the sector may enter into an uncertain patch before settling into a more discernible trend. (Hot area still ok, but those so so area buy selling KLCC price...better stay far far away...)

• With more completions of condominiums in the KLCC area, the situation is turning into a tenant’s market, especially for the larger units (smaller the unit, the better for investment). There is also ample supply of units available in the secondary market with owners now able to transact freely unlike when the projects are under construction. A recent survey of completed projects around the KLCC area revealed that occupancy ranged from a low of about 10% to a high of 80%, with an average of 56%, an issue that investors should be wary of.

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