KUALA LUMPUR: JLL Malaysia expects good macroeconomic trends to support its optimistic view for commercial market activity this year.
Head of research and consulting Yulia Nikulicheva said JLL Malaysia observed intense interest of both domestic and foreign investors who are closely evaluating opportunities in every sectors.
According to her, in the start of 2023, investors had taken a cautious stance toward real estate.
However, near the end of the year, investment activity increased dramatically, exceeding the amounts and quantity of transactions observed the year before.
The selling of land for future development accounted for a sizable portion of transactions because there were few standing assets available for purchase. She noted that offices came in third at barely 8.0 per cent of the overall transaction value, with logistics and industrial assets accounting for nearly a quarter of that amount.
In more traditional market segments such as offices and retail, the company noticed only a few transactions, primarily involving Grade B assets, she said. Nikulicheva said one noteworthy transaction that took place towards the end of the year was the sale of Oxley office Tower. Oxley Holdings Ltd inked a deal with Alliance Bank Malaysia Bhd to acquire its Grade A office tower at Oxley Towers KLCC in Jalan Ampang for RM405.84 million.
Oxley Towers KLCC is spread across a 3.11-acre plot that Oxley purchased in 2014 for RM446.7 million.
The multi-billion ringgit development includes two hotel towers with residences, the office tower, and a two-storey retail podium that connects all three towers. It's right next to the famous Petronas Twin Towers.
According to Oxley's official website, the hotel towers with residences will be the world's first SO/ KL Residences, and Malaysia's first SO/ Sofitel, a French-style luxury hotel.
Alliance Bank is acquiring the office tower and four adjoining retail lots, which include two duplex units on the first floor and two units on the ground floor of the retail podium, for a total floor area of 9,569 square feet.
The bank said in a stock exchange filing in October 2023 that it planned to relocate its corporate office to the Oxley tower, which will improve its visibility and branding due to the properties' strategic location in KLCC's commercial centre.
The office tower is scheduled to be completed by the end of November 2024, which is also when the acquisition will be completed.
Nikulichev anticipates the potential occurrence of notable transactions in Malaysia in the first quarter of 2024. JLL's research and analysis show that in 4Q 2023, commercial real estate investment in Asia Pacific increased 3.0 per cent year-on-year to US$31.6 billion (RM151.1 billion), ending a seven-quarter trend of declining volumes.
The global real estate consulting firm said that the 4Q2023 uptick in volumes provides some upside after a challenging year that saw overall investment across the region decline by 17 per cent YoY to US$106.8 billion.
For the second straight quarter, China led the Asia Pacific investment recovery, with a 50 per cent YoY increase in volume to US$11.1 billion.
Pamela Ambler, JLL head of investor intelligence for Asia Pacific, said 2023 concluded with a reduction in dry powder levels, indicating that investors deployed capital into the Asia Pacific commercial real estate market and were willing to take a long-term view in light of current market challenges.
"In 2024, challenges will remain with interest rate movements playing a decisive factor in investment activity and selling pressure mounting in some of the region's bigger markets," she said.