HEALTHY: KL chalks up increases in some sectors despite the softening market outlook
Kuala Lumpur’s property market has remained resilient across all sectors despite global uncertainty and a slowing domestic economy, according to international property consultant DTZ. Going forward, given ample liquidity in the market, it is expected that the primary driver sustaining investment activity will be the anticipated REIT listings in the pipeline, including the upcoming IGB REIT initial public offer among others.
“Investment volume in H2 is forecast to be higher than the first half.
However, general investment sentiment could be dampened by political factors in view of the upcoming general election accompanied by heightened risk of policy changes which would weigh on decision-making in the short term, ” said Brian Koh, Executive Director of Consulting & Research of DTZ, which is part of UGL Services, a division of UGL Limited.
The office market remained generally stable in Q2 despite a spike in new supply of about 877,000 sq ft with the completion of two very prime offices, Menara Darusalam and Menara FELDA, both located within the KLCC area.
Prime office rental rates stayed stable and resilient averaging at RM6.23 per sq ft per month, while top-tier office space continues to command rates well above average at about RM7.90 per sq ft per month.
Average capital values in Kuala Lumpur increased 3.8 per cent quarter- on-quarter (q-o-q) to RM838 per sq ft. “To date, the office market appears to exhibit remarkable resilience despite the prospect of a softening.
It remains to be seen how long this can be sustained,” said Koh.
Unlike Q1 which received a boost from Chinese New Year, the retail sector was relatively quieter in Q2 for lack of major festive holidays. While there were instances of decline in sales, the food and beverage industry remained stable with some retailers registering sales growth of up to 20 per cent.
Setia City Mall in Shah Alam and The Paradigm Mall in Kelana Jaya, each with 700,000 sq ft of net lettable area, opened in May to overwhelming response with 99 per cent of the retail space in Setia City Mall leased out and about 91 per cent for The Paradigm Mall.
Notwithstanding government cooling measures and cautious homebuyer sentiment, Kuala Lumpur’s residential market stayed healthy. Going forward, however, the market is entering a period of slower growth as sentiment is clouded by both internal and external issues, including those of a political nature.