KL118 awarded, RM3.4 billion deal to Samsung-UEM

I wrote about this earlier. I love KL118 and I think it’s another catalyst for all the surrounding areas as well. Read here:

KL118 to be built by Samsung-UEM – RM2.12 billion

  Reported in many media officially, the Samsung-UEM partnership has won the contract to build KL118 from Permodalan Nasional Bhd (PNB). As per announced, the contract is worth about RM3.4bil. They won after beating all other bidders including IJM Corp-Norwest Holdings Sdn Bhd-Shimizu Corp, Malaysian Resources Corp Bhd-China State Construction Engineering Corp, WCT Bhd-Arabtec Construction LLC, TSR Capital Bhd-Daewoo Group and Seacera Group Bhd-Spaz Sdn Bhd-China’s Sinohydro Corp-Shanghai Construction Group.

KL118 will be taller than Petronas Twin Towers but I think I prefer Petronas Twin Towers because it remains the tallest twin tower in the world and based on all the taller towers being built, it will be tallest for a very long time still. The overall gross development value expected from KL118 is expected to be more than RM6bil over five years. This will have spillover effects to Kuala Lumpur. The net lettable area for office space is about 150,000 sq m. This excludes the hotel portion. The tower will also be connected to a MRT station. The hotel would occupy 20 floors and will be operated by an international luxury hotel group.

Actually, until today I still have friends who said that KL118 is a wastage, why not build other more useful buildings instead. Truth is, when Petronas Twin Towers were built, it was also said to be a wastage of funds. Look at the area today and the many new FDIs from the foreign MNCs operating there. Today, no one visits Malaysia without knowing about our twin towers and no one in the right frame of mind would want to miss it too. My little wish? Make sure the winner completes the building on time. As per reported, it’s 2019. That’s just 4 years away. Hopefully it will open at a time when our economy is much better than today. Happy waiting.

written on 25 Nov 2015

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KL118? Make it happen, please.

KL118. This is my first article about this sort of controversial tower after such a long time that it was announced. GDV is up to RM6 Billion over a period of 10 years. Anyway, nothing was announced after that until recently. It was reported by a local English daily that 6 groups including a UEM Group Bhd-led consortium have been shortlisted for the superstructure contract. I think this means the shell, right. The 6 are all well known names (either the local partner or the foreign partner) and there’s a reason for it. They are as follows:

1) UEM Group is with South Korea’s Samsung

2) IJM Corp Bhd is with Norwest Holdings Sdn Bhd and Japan’s Shimizu Corp.

3) MRCB-led consortium comprises China State Construction Engineering Corp

4) WCT’s partner is Arabtec Construction LLC.

5) TSR is partnering with South Korea’s Daewoo group

6) Seacera has formed a consortium with Spaz Sdn Bhd and China’s Sinohydro Corp and Shanghai Construction Group.

Some say, why build another one when we already have the Petronas Twin Towers. Some say this will add to the glut in office space in Kuala Lumpur. My personal opinion is this. If it adds to the commercial space and some of the older and not well maintained ones have to be pushed out, so be it. Commercial buildings should be built because they are able to cater to the latest needs. have you ever been to office buildings where there are just insufficient car parks no matter how and where you look? I am not sure why are these not yet torn down and rebuilt? If no cars are allowed, then somehow build a tunnel so that the LRTs or the Monorails or even the MRT would pass through. If none can be done, apologies, perhaps the time is up for the building. More importantly, the glut is said to be happening today. If so, why are the rental for some offices continue to go up?

Some say, why not put the investment to some better use instead. Some say, it is not going to be financially viable. Actually, everyone has opinions about this. Let me add mine today. I am looking forward to KL118 as long as it is built by a good developer and is not stranded halfway or even completed but half-baked. Whatever which has been revealed thus far, for example the 400,000 square metres of residential, hotel and commercial functions should all do what it does; to function. It should also complete on time or earlier than the stated 2019 as well as the link to a metro station. Of course, the more links, the better it would be. It is said that it would be 500 metres and it will surpass the Petronas Twin Towers at 452-metres. I do not really mind this because to me Petronas Twin Towers would always be the tallest Twin Towers in the world.

The two national heritage buildings of Stadium Merdeka and Stadium Negara should be well maintained and if it is not the developer of KL118 should be the one to look for. You promised, you should deliver. I am aware that some are now giving me a cynical smile. It’s okay, it’s always like that in Malaysia. Haha. What I wanted to say here is that I want KL118 to be successful as per what has been planned and I do not care which developer is chosen. Just choose one which can do the job, that’s all. I have now added my personal views about KL118.

written on 15 Dec 2014

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KL118 to be built by Samsung and UEM – RM2.12 Billion.

I like KL118. Regardless of what the comments may be, I still like KL118. It’s like those who debated so much about Petronas Twin Towers’s disadvantages and yet today, Petronas Twin Towers is already an icon of Malaysia. Thus, I was waiting for more news about it and today I read in The Star that someone has won the tender to build it! The consortium of South Korea-listed Samsung C&T Corp and its local partner UEM Group Bhd is said to have won the RM2.12 billion (US$505 million) construction job. As usual, the news article mentioned that KL has a glut in office space and a soft property market. Seriously, should this be built only during boom times? So that when it completes, it will be duing a slow period? Haha.

According to the article, there were initially six parties bidding for the construction portion of the skyscraper including Samsung-UEM. These other bidders include familiar local names together with their partners. They include IJM Corp-Norwest Holdings Sdn Bhd-Shimizu Corp, Malaysian Resources Corp Bhd-China State Construction Engineering Corp, WCT Bhd-Arabtec Construction LLC, TSR Capital Bhd-Daewoo Group and Seacera Group Bhd-Spaz Sdn Bhd-China’s Sinohydro Corp-Shanghai Construction Group. By the time its completed in 2019, KL118 would be Malaysia’s tallest building at over 500 metres tall. It’s taller than the Petronas Tin Towers too but it is okay, our twin tower would remain tallest TWIN TOWERS for a very long time more to come.

The whole development would have a gross development value of over RM6 billion and will be owned by Permodalan Nasional Berhad. Total net lettable area for office space alone is 150,000 sq m. This excludes the hotel portion. As expected for any major development these days, it will be conncted to a MRT station. The 20 floors allocated for a 250-room hotel would be operated by an international luxury hotel group. The winner Samsung C&T has past experience with the construction of skyscrapers, which include the Petronas Twin Towers and the Burj Khalifa in Dubai which at a height of 828 metres is the tallest building in the world.

Seriously I think those with landbanks nearby KL118 have better keep it for a while. Those properties with a great view of the future KL118 may also want to start renovating their homes and continue staying there. There is little need to look too far, just look at the examples from Petronas Twin Towers and how KLCC as an area has changed many developments beside, around and overlooking it. More offices does not mean glut of office. More office space simply meant the not good enough ones just have to change or be changed. In fact the only sign that I would accept for the argument of an office glut is an ever reducing office rental rates. If rental rates remain the same or even increasing for some office buildings, it’s a very funny situation. There’s a glut and offices refuse to move and is willing to pay more year after year? Happy reading.

written on 28 Oct 2015

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Klang – KL for work on a weekday via bus, just 40 minutes

Everyone knows MRT does not link Kuala Lumpur to Klang. Many would also think Klang is a bit out of the way if their working place is in Kuala Lumpur. Truth is, I have many friends who comes from Klang on a daily basis. While they also agree that it’s far but I think if we are talking about those in Kelana Jaya or Cheras on a weekday during rush hour, the duration is no huge difference. My GM stays in Cheras and he does not drive. He takes public transport instead. In other words, the choice is there for many areas but it depends on whether you would want the inconvenience of walking to the stop etc.

Klang however does not have a proper public transport to Kuala Lumpur. There’s a proposed LRT but that’s due for completion only by 2020, if it starts on time. Well, there is one upcoming in the form of Bus Rapid Transit (BRT). It will link Kuala Lumpur to Klang and will be ready by 2018. It will be built in the middle of the Federal Highway with the roads being widened and the BRT construction starting at the same time. Well as they say, the inconvenience of today is for the convenience for the future. About 80% of the Klang – KL BRT line will be connected to the LRT (Light Rail Transit) and KTM Commuter rail lines, with all stops linked to other bus services. Instead of Prasarana alone, it will be run by a consortium. Actually, I would prefer one company instead of a consortium which makes decision making and cost savings harder.

It has been reported earlier that ridership may be up to 600,000 while the project cost may op RM1 billion. This will benefit some 1.5 million people in the Klang Valley. Perhaps it may include me too. Let’s wait for more details before deciding. According to SPAD, the journey from KL to Klang takes 70 minutes today but with the BRT, it will be reduced to only about 40 minutes. Today, around 212,800 people take buses from KL to Klang everyday. I actually cannot imagine myself taking a bus for 70 minutes to reach my office. 40 minutes, yes, this is quite normal already. No announcement has been made on the fares yet.

In terms of journey to office, I do not think there are that many who can reach their office within 40 minutes. This is especially during rush hour. Thus, I seriously do think all these new public transports such as MRTs, new LRT extensions and today Klang – KL BRT would allow the number of areas to grow. The top areas are already too expensive. If your area is nearby MRTs and it’s considered okay, I think soon it will be appreciating. Except for those who needed to visit clients, I think majority should be able to take the MRT. This is because every developer is telling people that their project is nearby MRT, next to MRT, 5 minutes from MRT and more. For those who bought a new property because of such promises, enjoy the potential new lifestyle in the future. As at now, I still do not see myself taking the MRT. I have taken the MRTs in Singapore many times. There are reasons why I would prefer to drive. Then again, we shall see.

written on 6 Sept 2015

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“We prefer the Klang Valley and Penang over Iskandar”

The recent comments from Maybank Investment Bank’s research unit was heavily quoted in no less than 5 articles that I read online. It said “We prefer the Klang Valley and Penang over Iskandar.” Reasons stated? Oversupply due to huge incoming supply in a crowded development space and aggressive land banking activities by Chinese developers. All are valid reasons and if I have money to invest in one (1) property today, I can safely say that my first preference is also Klang Valley. It is however not for primary properties. I am more inclined towards secondary ones with aim solely for rental, even if the rental is only enough to breakeven with my mortgage.

The reason why I prefer Klang Valley over Iskandar is simple. Klang Valley remains the biggest contributor to Malaysian economy and this is unlikely to change anytime soon. Yes, many people said that there are lots of Malaysians working in Singapore but let me assure you that while this may be true, the number is nothing near to the migration to Klang Valley. I have worked for 15 years in Penang and even I have decided to make KL my home for the second half of my working life. Hopefully not until the retirement age. I would love for my family to be based in Ipoh instead. Staying with my parents would be my next goal.

Iskandar meanwhile is full of promise but without better connections between both countries as per my earlier writings, it will not be able to attract enough Singaporeans to relocate to Iskandar even if it’s a comparison between the clean HDB flats versus the comfortable condos in Iskandar. To those who kept harping on the new Vehicle Entry Fees, please get real. It is not likely that if I am a Malaysian or even a middle income Singaporean, I would be driving my car to and fro everyday. In fact, majority of middle income Singaporean does not own a car anyway. Now do you understand why I say connection is vital? Not just the High Speed Rail but also the extension of Singapore’s transportation connectivities into Iskandar.

So, perhaps it is true, for now I would stand on the side of Maybank Investment Bank until a much clearer connectivity plan is presented and acted upon. Yes, even if there are announcements, I think that tipping point would be the year that the connectivity opens. In other words, as soon as people could see how easy it is to travel between both sides, we would see a boom in demand. Okay, I have to admit, I am just a simple Malaysian. Perhaps my view is different from Singaporeans who has faster broadband connections and thus may read more than me. Happy deciding.

written on 18 Apr 2015

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Klang Valley – Retail Space Over Supply

I do not believe average income is a good measure when it comes to the ability to purchase property. No developer would be building based on this average too. Most probably, they would take the median income instead if they indeed do their research before building. This is the same reason why retail space should also not be just an average number which is the same for all retail space.  Do you think a mall built by developer A who is very famous and always attracts great brands to go along with them is equal to another mall built by a first timer developer who would have to struggle to get tenants for the mall? Assuming both are 1 million sf mall, I would only calculate the one built by the more famous developer and give a big discount to the retail space offered by the more inferior mall.

If this is the case, why are all the projections always based on the overall forecast increase, the overall forecast demand, the overall forecasted demand? Let’s be real, how many malls do we really frequent in one whole year? Five? Ten? Ten should be the max and there are malls which after you have gone once, it will be your last and you will also help to promote its ‘unattractiveness’ to all your friends, making the mall even worse in terms of number of visitors. There are malls which started with free car parks and once it reaches a critical mass, they would start charging. There are also newer malls which has never made it to become hugely successful, merely able to open, operate and try to sustain. Be reminded, malls are successful if it is operated by the right people and this does not necessarily mean the developer themselves. Many times, even the developer themselves have no such connections to potential tenants and anchor tenant too.

Let’s now look at what’s the projection as per a report in an online article. It said that retail space in Klang Valley will grow from current 55 million sq ft to 80 million sq ft by 2017. Many of these are integrated ones which means that it would normally consists of both the commercial as well as the residential element. This is so that both would support one another. Some includes hotels too. According to the new supply numbers, it should mean cheaper rental rates, right? Well, I just learnt from my car sales agent that he used to rent a small corner in Sg. Wang for RM13,500 per month and that was many years ago. I think the rental itself pretty much sums up the state of demand vs supply for the retail space. Oversupply? Well, many of these popular malls are said to have waiting lists. I know of one in Penang which has increased its rental over a year ago and for those who could not afford to pay, they would have to move out (other malls) or move up (cheaper) and resize (smaller, mostly). Some like Suria KLCC’s are US$10,500 per sq m per annum and yet it’s tenancy rate is 99%. (I seldom visit Suria KLCC, the brands are a little overwhelming for me.)

Conclusion? If we do not think average is the best number, please look at the whole demand and supply equation again. Not all malls are built equal and the supply is certainly not as strong as the numbers may suggest because if it is, rental rates can’t be going up every year even as more malls are being built.    Oh yeah, the year 2017 was mentioned as a year where huge numbers would be coming into the picture. Actually, it’s just 2 years away. For those intending to rent at those popular malls, I wish you all the best. Perhaps, rental rates may just come down? 🙂

written on 26 Jan 2015

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Klang Valley office supply is still considered ok – C H Williams Talhar & Wong

Not too long ago, my colleague who bought a commercial property said that she has managed to secure a tenant for her unit in a new departmental store in Damansara. She said many people has told her that buying commercial properties are dangerous today. There’s huge over supply. I happen to know a few years ago one company paid RM4.50 psf for an office in Bangsar South. Most recently, it has to pay RM5.50 psf for a bigger office in the same building. Question is, if the supply far exceeds demand, why is the rental still going up? I could only think perhaps the supply is based on all the new supply coming in while demand is not sufficient to take up everything that is offered.

I have no answer but today in The Star (19th March) , a real property guru has the following comments: Property consultancy
C H Williams
 Talhar & Wong said the supply of Klang Valley office space for this year may not be as daunting as earlier thought “due to control by developers and owners” He said that while it is very true that in terms of planning, we have oversupply but the developer or owner can actually control the situation. They can either slow down or even pause the construction. For example, in 2013, there were a total of 92.7 mil sq ft of office space in the Klang Valley last year. New office space added was 3.3 mil sq ft and take up was 3.1 million sq ft. Thus, a balance of 200,000 sq ft was “not frightening”, Foo said. However, he expects a total of 6.75 million sq ft to be completed in 2014 and 1.45 million sq ft in 2015, a total of 8.21 million sq ft. With assumption of a constant take up rate of 3 million sq ft for each year, that leaves a balance of about 2 million sq ft, or four buildings. (An office building has an average space of about 500,000 sq ft.). Thus his conclusion was that he was not as negative as most (property consultants).

I have always believed that the market should be determined by demand versus supply. Too little demand, oversupply happens and the rental comes down. This is when the better building management would be the deal breaker because if they are managed well, a little difference would not cause their tenants to move. However, for buildings which are not well managed, their tenants would move and this is where demand vs supply will move all the building owners to be more efficient. I believe this is much better for the market compared to having too much demand but not enough supply which pushed the rental rates up and the cost of doing business goes up as well. Please bear in mind that new office space cannot suddenly appear. It takes years to build. If rents are too high, in the long run, less companies would want to set up because when they compare the fixed cost of setting up in Malaysia versus the region, they will choose somewhere else. As for those new supply coming online, they better have certain competitive advantages over the existing office supply. There are really more supply than there are of demand today based on whatever statistics available in the market.

written on 17 march 2014

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Klang Valley warehouse rental market is attractive when compared to neighbouring cities

Press Release by Knight Frank:
Klang Valley warehouse rental market remains attractive amongst neighbouring Key Cities

24 September 2020, Malaysia
– Knight Frank, the independent global property consultancy, released its Asia-Pacific Warehouse Review which tracked prime warehouse rents across 17 key cities, registering an average change of -0.02% half-on-half despite COVID-19. Going forward, Knight Frank expects average rental growth between 3% and 5% by the end of 2020.

Highlights:

Market conditions for 16 of the 17 cities tracked are expected to remain stable or improve over the next 12 months. The positive outlook for growth in the second half of 2020 is due to higher space appetite from e-commerce players and essential commodities.
Tokyo recorded the highest half-on half rental growth at 4.2%, due to healthy take up rates and the lack of available prime assets within the city.
Shanghai warehouse market recorded the healthiest rental growth compared to Beijing and Guangzhou, at 3% half-on-half, led in part by a pickup in storage demand from cold chain operators.

Tim Armstrong, head of occupier services & commercial agency, Asia Pacific at Knight Frank said:
 “The outlook for industrial markets remains resilient due to robust demand from the e-commerce and essential goods sectors, as well as additional requirements for inventory storage to mitigate supply chain disconnects.”

Asia-Pacific Prime Warehouse Rents:

City
USD/sq m/month
6-month % change (H2 2019 – H1 2020)
Forecast next 12 months
Brisbane
                    6.5
-0.4%
Stable
Melbourne
                    5.8
0.0%
Stable
Sydney
                    7.0
0.0%
Stable
Tokyo*
                  12.8
4.2%
Stable
Beijing
                    8.3
-2.5%
Stable
Guangzhou
                    5.4
-1.8%
Stable
Shanghai
                    6.8
3.0%
Increase
Hong Kong
                  26.2
-3.4%
Decrease
Taipei
                  11.8
0.9%
Increase
Bengaluru
                    2.8
0.0%
Increase
Mumbai
                    3.4
0.0%
Increase
NCR
                    3.4
0.0%
Increase
Jakarta
                    4.5
0.0%
Stable
Kuala Lumpur
                    4.8
0.0%
Stable
Singapore
                  13.8
-0.6%
Stable
Bangkok
                    5.1
0.2%
Stable
Manila
                    4.7
0.0%
Stable

Source: Knight Frank Research / *Sanko Estate

Allan Sim, Executive Director of Capital Markets, Knight Frank Malaysia
, commented: “In the ASEAN context, Klang Valley remains attractive in terms of warehouse rental competitiveness. Combined with our integrated ecosystem of accessible skilled labour and talent as well as investor-friendly policies with favourable tax structures and attractive government incentives, this helps to put Malaysia at a competitive advantage amongst its neighbours in attracting multinational businesses that are diversifying their global supply chain and manufacturing operations to the region.”

COVID-19 Gives Rise to Acceleration of “China Plus One” Strategy Adoption

“Multinational corporations (MNCs) have been looking to diversify their supply chains out of China over the past few years due to growing trade tensions between the US and China as well as rising labour cost in China.

“More recently, the unprecedented disruptions arising from the COVID-19 pandemic, further highlighted the risk of being over-reliant in managing and operating supply chain out of a single country – China. For many MNCs, the pandemic has become the deciding factor to adopt the “China plus One” approach to supply chain management – by diversifying portions of the supply chain to other regional countries whilst maintaining higher value manufacturing operations in China with adoption of digital transformation and automation. ASEAN countries are the immediate beneficiaries of this supply chain redesign”,
Sim
 added.

Malaysia As Preferred Investment Destination Amongst ASEAN Countries

Sim
 comments, “The various incentives unveiled under the RM35 billion short-term Economic Recovery Plan (PENJANA) will help encourage more foreign direct investment (FDIs) flows. There is a generous tax holiday period of up to 15 years for foreign companies making new investments in the manufacturing sector with capital investments of RM500 million and above. This coupled with the fast track approval mechanism for manufacturing licences and tax incentives with the establishment of Project Acceleration and Coordination (PACU) in the Malaysian Investment Development Authority (MIDA), will help to raise the country’s attractiveness in the eyes of foreign investors.

“With these timely incentives combined our competitive real estate and labour costs, Malaysia will be positioned as one of the main beneficiaries amongst our ASEAN counterparts, in capturing the shoring of manufacturing and supply chain operations amidst the on-going restructuring of global supply chains.

“We will also likely to witness a positive spill-over effect in other segments of the industrial property market predominantly in larger purpose-built factories / large tracts of industrial lands, with the potential entry / relocation of new global industrial players”,
Sim
 concluded.

Here’s that report in full for download.

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Must stay in KLCC area? Don’t wait. Buy now!

In an analysis by theedgeproperty in their portal, the cheapest property in terms of price per sf in KLCC is The Orion. It’s in Jalan Tun Razak near Istana Budaya. In fact, the price per sf should surprise those who has never considered KLCC because of price. The Orion is less than RM500 psf. Intending to know what the latest price trend for The Orion, I used an easily available property portal. This time, my reference is iproperty.com.my  Please refer below.  We can see that the prices being advertised ranges from RM533 – RM666 psf. Thus the lower end is not too far away from what was reported in theedgeproperty.

Now you may wonder why is the official numbers lower than the advertised numbers? Well, most of the time, the price can range quite a lot because of the condition of the unit, whether is it furnished or not, the size and even the view. If condition is bad, the buyer would have to spend a lot to renovate. If it is furnished, less money is needed to renovate and if the view is really nice, then there would be a slight premium. Of course the smaller the unit, the higher the price per sf and vice-versa. I would choose to believe more of what is the actual value transacted and not the advertisement. After all these days during a slow period, some desperate buyers would sell at prices which are below the usual.

So, if you believe KLCC is a good area and perhaps a growing one in terms of attractiveness and pricing, now is a good time to negotiate and find bargains. Of course The Orion is not the only one mentioned. There are a few others. For example, meaner Avenue, Crown Regency, 2 Hampshire, Due Residency. Please take note that price per sf is normally lower than usual because the size may be smaller. Do use these to further your search and finding the home sweet home that you are looking for in KLCC area. Happy reading.

written on 26 May 2015

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KLCP 2020 public consultation, Taman Rimba Kiara and corruption

I have been to Taman Rimba Kiara a few times with my family. My kids love it. Perhaps the only issue is that it’s not easy to find parking during the peak periods when people are there for their morning exercise. I always wish we continue to have more green lungs instead of lesser. Thus, it is important for the authorities to always act with this in their mind; preservation of green lungs are important if we need continuous developments to accommodate more people due to urbanisation. There are definitely places where density could be increased and rezoning could be done but this is NOT applicable to every public space or neighbourhoods.

There was a meeting between the stakeholders in the Taman Rimba Kiara issue recently. The gazetting of the Kuala Lumpur City Plan 2020 (KLCP 2020) was done without public consultation. Federal Territories Minister Khalid Samad explained, “There is no point debating or consulting, because it is historical.” He explained, “Even though I have gazetted the KLCP 2020, it does not make everything stop. It does not make illegal things legal. The gazetting only shows the situation as it is. If there are any changes done, and if corruption is proven, they will still be detained and charged. Even, if the plan has already been gazetted.” He explained that without the plan being gazetted the previous government could do as they liked. Here’s a long article about this in
FreeMalaysiaToday.

Khalid also explained that when the plan is not gazetted, there are ways in which corruption in DBKL and the ministry could happen. He shared, “They see a nice plot of land, and they want to build something. They see an open space, the developer offers money to take it up and rezone. The second way, is to change the plot ratio. That is another area. By gazetting, you put an end to this. Things can still happen, but it has to go through a very meticulous process. That is why I decided to gazette, even though it was (only updated until) 2015, and now is already 2018. We put a stop to this. What is still there, is still there. It won’t be changed.”
Here’s the article in FreeMalaysiaToday for reference.

There is now a proposal for a joint committee to come to a solution for Taman RImba Kiara. The joint working committee would comprise representatives from the FT Ministry, DBKL, YWP, the TTDI Residents Association, Bukit Kiara Longhouse residents and Segambut MP Hannah Yeoh.
 Here’s that article.
 Perhaps this is another alternative instead of ‘fighting’ in the courts because when that ends, only one party will win.
Here’s a very good article about Taman Rimba Kiara in mySinChew.com by Tay Tian Yan Worth reading.
 Happy following.

written on 25 Nov 2018

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KLCP2020 – Fresh approvals for above permissible plot ratios

I love it when developments are guided by a longer term vision. One such example would be the Kuala Lumpur City Plan 2020. (KLCP2020). Let’s face it, there are no cities which could become Most Liveable in the world but developments are done haphazardly or based on whims and fancies of the authority in charge every other year. As it is
KL is only ranked at 98th in Asia for Most Liveable city in Asia for Asian expats.
By the way, this ranking meant that it is even below Georgetown Penang at 97th. 😛 Okay, let’s beat Georgetown next year. One of the most important factor would be infrastructure and this actually determines liveability because it is impossible to support ever higher number of cars every year! Around
600,000 vehicles were sold within 2018 itself! (click here for source)

Reported in Edgeprop.my
  Property projects needed to acquire fresh approval from the Kuala Lumpur City hall (DBKL) to go through with their plans. Property projects which are already granted the development order are not affected and ones that are given the development order but haven’t commenced yet are required to apply for an extension. According to DBKL’s city planning department director Nurazizi Mokhtar, the property developers need to submit a full report to the mayor for a review which includes the impacts of the amendment. If it is approved, DBKL will then gather the public’s views before the final approval. As of now, many development projects are given plot ratio of more than what is permissible under KLCP2020. Due to this, developers and investors were willing to pay higher price for land in the city. A lower plot ratio is not so desirable since fewer units could be built resulting in lower profits for the developers. Government statutory bodies do not need to resubmit reports for approval if the parcels bought are granted plot ratio of more than 10 in the approval in principle.
For reference, article in Edgeprop.my here

This is exactly why KLCP2020 was needed way before development approvals were given. Now there will be many renegotiations and some may feel that it’s unfair if some gets the special approval while others did not. What is good however is that moving forward, all these approval in principle etc could be avoided and it becomes very transparent and no developer or even investors need to pay a premium simply because of some ‘special’ approval above what is stated in KLCP2020. it will also discourage speculation which is extremely important or else, the issue of affordability will always haunt Malaysian households for a very long time to come. Happy following.

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News article summarised by Dina Batrisyia. Article written and edited by Charles.

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KLGCC is top three best championship course in Asia Pacific. Cool!

Press Release: THE KUALA LUMPUR GOLF & COUNTRY CLUB IS RECOGNISED FOR ITS CHAMPIONSHIP COURSES AT THE ASIAN GOLF AWARDS 2022

KUALA LUMPUR, 15 NOVEMBER 2022 – The iconic Kuala Lumpur Golf & Country Club (“KLGCC”) is proud of its recognition as one of the top three best championship courses in Asia Pacific, receiving the Best Championship Course in Asia Pacific – Bronze category at the recent Asian Golf Awards 2022 in Vietnam. The award is bestowed to championship-ready golf courses that offer demanding and challenging play, as well as is a nod to KLGCC’s well-established turf management.

“We are honoured to be recognised for our excellent golf courses which reflect the team’s dedication to deliver ultimate golf and leisure experience to our members and guests. KLGCCadheres to a strong set of values including hospitality, integrity and passion, all of which empower us to continuously exceed all expectations through the excellence of our service and facilities,” said Sime Darby Property’s Group Managing Director, Dato’ Azmir Merican.

Owned and managed by Sime Darby Property Berhad (“Sime Darby Property”), KLGCC is a world-class golf destination strategically located in the prestigious KLGCC Resort township which leverages on the premium value of its location. With KLGCC as its crown jewel, the KLGCC Resort township offers exclusive lifestyle that encompasses high-end developments and prestigious properties, such as the East Residence, Senada Residences and Jendela Residences, as well as the Sime Darby Convention Centre, making it one of the most sought-after addresses in the city.

KLGCC is an embodiment of private and holistic leisure with a 250,000 sq ft Spanish-style clubhouse amid surrounding landscape and aesthetic view. Members and patrons have access to well-curated and attractive amenities including renowned gastronomic experiences, world-class golfing facilities, leisure activities and more.

“There is more to KLGCC than just golf – it is a lifestyle destination. We are introducing more family-oriented features to elevate the experience for its members and strive to create a community that thrives in the haven we have introduced within the township,” said Dato’ Azmir.

Since its inception, KLGCC has been the proud recipient of various prestigious awards and accolades. In March 2022, KLGCC retained its status in the prestigious ‘Top 100 Platinum Golf & Country Clubs of the World 2022-2023’, ranking 77th and was the sole club in Malaysia to be given the invaluable recognition. Through its inclusion in the list, KLGCC was also recognised in the ‘Top 50 Platinum Clubs in the Asia Pacific’ category, where it was crowned with the ‘5-Star
Platinum Club’ status.

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KLIA and LIA, world’s best airports… in own categories

I have not been to an airport for over two years. I used to go to KL International Airport at least once per month on average. I used to go to the Langkawi International Airport at least once every two years. I do hope to fly again very soon. The number of cases do look scary even if it’s on a downtrend currently.

Both my kids have received their first dose of vaccination and I belong to the group who supports endemic status. So, I do look forward to some flying in the very near future. 1st April 2022 onwards would be the day
Malaysia reopens as well. Here’s that latest article.
 Here is one piece of good news. Two of our airports received the best airport award in their categories.

Article in nst.com.my
  The Kuala Lumpur International Airport (KLIA) and Langkawi International Airport (LIA) have been named among the world’s best airports in their respective categories for 2021 in a global Airport Service Quality (ASQ) survey by Airports Council International (ACI).

KLIA and LIA achieved a perfect score of 5.00 in the airport categories serving over 40 million passengers per annum (mppa) and two to five mppa respectively, Malaysia Airports Holdings Bhd (MAHB) said in a statement.

ASQ benchmarks the world’s best airports in terms of overall passenger satisfaction for terminal safety, facilities, services, and cleanliness. Please do read the full
Article in nst.com.my

Best in category is still best yeah

I know, some will say that there are better international airports versus KLIA and LIA. By the way, I do agree and I seriously think Singapore Changi Airport is still the very best airport which I have been thus far. In fact if there are levels in any rating, they are several levels ahead of even other world-class airports. Yes, I rate it better than Hong Kong and even Tokyo’s Narita. However, best in category is still best in that category yeah.

Unless of course someone wants to point out that there’s just one airport in the whole category? Well, if you do have such information, please feel free to share yeah. Else, congratulations to KLIA and LIA for being the best airport… in their class. I will see both of you very soon.

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KLIA: Increasing passengers? Still world’s best airport for Q3 2022?

My own travelling right after lockdowns are lifted

From July 2022 till end October 2022, I have been to KLIA nearly every few weeks. I flew to Nashville (USA), Singapore, the Philippines, Thailand, Indonesia and even Hong Kong. It was zero flights for nearly 2 years and I flew more than enough to replace those 2 years. I was also one of the earliest ones to visit Hong Kong under their latest 0+3 arrangement. This means there are no quarantine hotels needed. However, there are still some requirements. If you are going to Hong Kong, you can read it here.
Travelling to Hong Kong: Tips to be ahead of 0+3

KLIA is certainly considered a busy airport today

From all the travels, I can safely tell you that our Kuala Lumpur International Airport (KLIA) has become busier every time I was there. The queue to get my baggage checked in has also gotten longer too. I think this is a very good sign. This is similar to all other airports in ASEAN. I could not say the same for Hong Kong. I could also not say the same for Narita airport in Japan which I was there for transit two times. Let’s hope the world will become smaller again as everyone starts their travelling again.

KLIA and Langkawi International Airport is still the world’s best airports

Article in themalaysianreserve.com
  KL International Airport (KLIA) and Langkawi International Airport (LGK) retained their positions as the world’s best airports by achieving perfect scores of 5.00 respectively in the Airport Service Quality (ASQ) survey in the third quarter (Q3 2022).

MAHB in a statement said, “For Q3, KLIA shared the achievement in the over 40 million passengers per annum (mppa) category alongside eight other airports. LGK was the only airport in its category of 2–5 mppa to score full points in the survey.”

According to MAHB managing director Datuk Iskandar Mizal Mahmood, air travel is experiencing a more rapid recovery in the second half of the year.

“With increasing passengers coming through the airport, we wish to remove any unnecessary stress from travelling by ensuring efficient procedures, well-functioning facilities and hospitable airport staff,” he said.

MAHB also witnessed the reinstatements of the Manila–Kota Kinabalu route by Cebu Pacific and the Penang–Denpasar route by AirAsia in Malaysia. Do read the full article here:
Article in themalaysianreserve.com

KLIA is comfortable, I am going LGK soon

I used to fly to Langkawi once every other year. In December 2022, I will be fling to Langkawi again for the very first time in 3 years. I wonder what has changed. I am certainly going to enjoy the relaxing trip and will not be rushing to many places. By the way, Langkawi has white sandy beaches yeah and the sand is fine. This is NOT the case even for some more famous beaches in some countries. Haha. In the mean time, just enjoy flying to anywhere you like and I wish our airports would continue to maintain good standards for all travellers.

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Airport within a mall, Mitsui Outlet and Aeropolis

The first time I took a flight was in Subang Airport nearly twenty years ago. It was from KL to London, via Amsterdam. Subangg airport looked pretty normal to me. I arrived in Amsterdam and there was a huge difference between their airport and ours. Then, I arrived in Heathrow and well again it looked better and bigger than our Subang airport then. Fast forward to the first time I was in KLIA followed by frequent flights from LCCT and today, the opening of KLIA2. KLIA to me has been improving slowly in terms of its retail offering but KLIA2 is by far better in everything retail. A friend even asked if KLIA2 is actually a shopping centre instead of an airport? Personally, I think this is a very positive statement.

What’s wrong with shopping at the airport anyway? Especially if the airport is just part of a huge plan to turn the huge lands nearby and around the airport into a thriving little city? Yes, they call it aeropolis. According to an article in a local English daily, it quoted International Air Transport Association (IATA) as saying that global air travel will grow significantly this year and much of the growth is happening within South East Asia! I think you can see that this will benefit the country with the largest base for low cost airlines; Malaysia. The number of flights from KLIA as well as KLIA2 is still growing very fast and as all of us know, the LCCT was then bursting at its seams. I could not even find a place for my parents to sit when we were waiting for the flight. Today, the situation is way better in KLIA2.

What’s next? Well, I may be shopping nearby KLIA soon. MAHB is opening the Mistui Outlet Park just a few km away from KLIA. I loved the one in Iskandar and I was made to understand this one by Mitsui would offer some brands not available in the Johor Premium Outlet. As for what are the future plans, well I am awaiting for more news about the Aeropolis which is supposed to be centred on the growth story for KLIA and KLIA2. Acropolis would represent another opportunity for property investment though we would really have to see the overall master plan before taking the plunge. No one wants to jump into a ‘mining pool,’ right? Happy shopping and visiting KLIA and KLIA2 and perhaps we can latte at Mitsui Outlet Park one day.

written on 24 Mar 2015

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KLIA is back to 70 pct for passengers in 2022 versus 2019. Happy or not?

KLIA used to handle 35 million passengers every year in 2019

This meant that close to 3 million passengers use KLIA every month on average before Covid-19 arrived. Well, we are on the right track. We are only at the start of the recovery in 2022 but in 2022, KLIA has handled 25 million passengers.  This is a super huge thing for the local economy yeah. Just imagine everyone spending just RM1,000 in their trip here or to any other local destinations. Then we use an economic multiplier effect of 4 and now we know why we need the tourism industry to prosper yeah.

Here’s that latest news.
Article in straitstimes.com
   Malaysia’s main airport, the Kuala Lumpur International Airport (KLIA), is getting a major revamp to tackle operational snags and upgrade its facilities, with hopes of climbing back to the top 10 of Skytrax’s world airport rankings by 2028. Its Skytrax ranking has been dropping since 2013, and slipped another five spots to No. 67 this year.

The airport makeover will include self-baggage drop-offs, a redesign of the check-in counters, new aerotrain and baggage handling systems, and new lounges and food and beverage (F&B) outlets, said Datuk Iskandar Mizal Mahmood, managing director of airport operator Malaysia Airports Holdings Berhad (MAHB).

The airport, which opened in 1998, had been ranked among the top 10 airports in the world on four occasions – in 2001, 2010, 2011 and 2012. But since then, it has seen a steady decline in rankings, falling to 14th place in 2013 and 44th in 2018. Do read the full article here:
Article in straitstimes.com

How far is Changi Airport in terms of experience versus other airports? (not just KLIA by the way)

Last year, these are all the international airports I went to. Chicago’s O’Hare International Airport, Denver International Airport, Nashville International Airport, Narita International Airport, Hong Kong International Airport, Soekarno-Hatta International Airport, Thailand’s Suvarnabhumi Airport, Ninoy-Aquino International Airport and many local airports in Malaysia. I want to confidently say this. Changi Airport beats all of the airports I listed above easily. Just the image below already tells you how far ahead they are: (Yes, the below is inside an airport!)

Image source: pexels.com

Stay focused on KLIA and we will be good enough

The aerotrain MUST be back as soon as possible. By the way, I have never needed to wait for 30 minutes for my luggage in KLIA but I would hope that it is below 15 minutes instead. Let’s focus on this. I have never needed to queue at the immigration because I use the automatic lane. However, I do not wish to see ANY international tourist wait for more than 30 minutes.

I waited for more than 30 minutes in many of the international airports listed above and in TWO particular airports, I waited for over 2 hours!! So, KLIA is nowhere near the worst but stay focused and correct all these necessary things and we should be fine. Let’s be real, the last time I was in two international airports in Australia, I also waited for more than 30 minutes.

There are now more choices of food and beverage in KLIA but it’s just too sporadic and the choices are just too few and unimaginative. At least, we need the F&B choices at the KLIA2 level. As for comparison, just leave Changi alone and just be proud that this is an ASEAN international airport which is on top of everyone in the world. I am very proud by the way. I want to be proud of KLIA again when compared to most if not all the airports I will travel to in the future. Malaysia has many airports and it’s not possible to just put all the money into just KLIA alone.

Happy travelling.

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Klia2, Airasia, airport towns

Yesterday, LCCT closes and KLIA2 grew suddenly. From a few hundred passengers per day since 2nd May, it will now handle maybe 25 Million passengers this year of 2014 or more, hopefully. I always love it when all these largest meets largest. Largest low cost terminal meets largest low cost airline. The result would only be good for the airport, the airline and everything related to it. LCCT tried its best until it was overwhelmed two years ago and this year, if you happen to visit LCCT, finding even a place to sit would be tough. I had to use 45 minutes to park my car when I had to pick up my wife from LCCT few months ago! Let’s now see how far KLIA2 would take the growth of passengers since it was built for up to 45 million passengers per year.

Next we look at what Air Asia CEO of Malaysia, Aireen Omar said when asked if Air Asia will increase its manpower since KLIA2 means much higher potential increase in number of passengers. ‘We would look at the increase in productivity, employees would need to be multi-tasking and working even smarter in order to maximise their efficiency.’ Many would said, this means overworking the employees but to me, this meant that the strategising and planning in Air Asia pretty much sums up to tell us that cost efficiency is everything in the airline business. Many traditional airlines are struggling to compete due to this. Every additional staff adds to the fixed operating costs and during slowdown, it exposes the airlines to immediate losses with the lower passenger volume.

Last we look at MAHB which hopes to build cities around the Kuala Lumpur International Airport (KLIA). This is because it is the way forward for many airport operators around the world and also the latest concept. It has around 10,050 ha in Sepang which has the KLIA, LCCT, Sama-sama hotel, airline cargo area and the latest KLIA2. A lot of the land were palm oil plantation which has given the airport satisfactory yearly profits. Now, with the maturing of the surrounding areas, commercial development would allow MAHB to grow its revenues further. First venture was the Gateway@klia2 at klia2, which is a 70:30 joint venture between MAHB and WCT Holdings Bhd. Read it here:
Gateway@KLIA2

If we look at these three new developments, we can see that their successes are all inter-related. Some would say planning could have been better but the truth is, no matter how successful you were or how bad you failed, everything can only be better for those who look back. I certainly hope that KLIA2 would grow so fast that in 5 years time, KLIA3 is needed. I also like the efficiency model of Air Asia and I hope more Malaysian companies think of this cost efficiency model and not just largest, highest, tallest, biggest or whatsoever. As for airport cities, there are already examples around the world to learn from. Do it right and make it count MAHB. All the best.

written on 10 May 2014

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KLIA’s new mall, the Mitsui Outlet Park.

Yes, this is the Mitsui Outlet Park KLIA Sepang which is opening on May 30. I have been to Johor Premium Outlet a few times and I love the shopping because I could get brands I love for less. Johor Premium Outlet is more American as the partner is a very established American outlet store. Mitsui Outlet is more Japanese, in terms of origin. Yes, when it comes to these outlet stores, it tells you that the goods there would most probably be one season behind or more. I do not really care, sorry. I think majority of Malaysians or Singaporeans do not really care. Perhaps Singaporeans care a bit more BUT the number of Singaporean cars in JPO every weekend is huge…..The brand is important, the season can be ignored.

In Hong Kong or America, up-to-date with the season is important. Thus, you will get off-season items at very cheap prices. If you are still wearing last season’s stock while all your colleagues are already wearing the latest one, you will feel very bad. Shopping in Hong Kong is best because the retailers have NOWHERE to keep old stuffs. When new stuffs come, the older ones MUST go. Now you know why shopping in some of these countries are so awesome? I have bought a full set of coat and long pants in Hong Kong during its off-season sale for just RM220. Yes, its branded and it’s just RM220.

Coming back to this Mitsui Outlet. This is a must-visit store even if you have no intention to buy anything branded and you prefer the very mass and very affordable ones. My favourite? Shoes. Take a look: (taken from
Mitsui Outlet KLIA’s website
)

Pretty good right? These brands are just for shoes alone. I think I have to quickly wear more of my leather shoes so that I may need to buy new ones. Only one issue, I have 7 working pairs of which 2 pairs which I have worn just once. Okay, perhaps I would buy another pair of hiking shoe then. My current pair is a little worn out after it accompanied me up Mount Kinabalu a few years ago. See you all there after its opening on 30th may 2015. Need more information? Here:
https://www.mitsuioutletparkklia.com.my/shopping.php

written on 30 Apr 2015

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KLites… pay up the rental you owe. Especially the one owing RM17,000!

How many months would you wait before taking any action if your tenant stop paying you the rental for staying in one of your properties? Depending on the action, it should be within the same month. Reminder Whatsapps, call and give a gentle reminder and even dropping by the unit itself. Who knows, this has happened:
Why we should occasionally visit our tenants?
  What if someone were to owe rentals to DBKL then? Would anything happen to them? Well, it seems that DBKL is trying to be more pro-active now.

Article in thestar.com.my

  Kuala Lumpur City Hall (DBKL) Community Development and Urban Wellbeing Department director Anwar Mohd Zain said a red notice would be served if the tenants fail to comply with the eviction notice. He said, “The red notice is the final notice and tenants must move out within seven days. However, if they pay up within the notice period, the eviction notice will be retracted.”

As for how much of the arrears which the tenant must pay, it is at least 50% of the amlount owed. Anwar said the tenants could go to Menara DBKL 3 in Jalan Raja Abdullah to settle the outstanding rental. The errant tenants have racked up thousands of ringgit in arrears and one has an outstanding amount of RM17,000!   PPR and public housing (PA) tenants in the city are required to pay a monthly rental of RM124 to DBKL. Please do refer to the detailed
Article in thestar.com.my

Sometimes, I really do wonder why are we not like some advanced countries where tougher actions are taken against these people instead of allowing the amount to accumulate to thousands of ringgit? Is it because we are more caring? Well, truth is, there are a lot more people who need these units and definitely would be willing to pay RM124 for it versus their rental of many extra hundreds today.

If we could evict these, then we could accommodate those who would be good tenant and pay on time instead? Hopefully someone from DBKL will take note of the need to be firm so that everyone will then toe the line. Tell me, if we know someone who is owning many thousands of ringgit are still allowed to stay in these rented units, how likely is it that we will go and pay up? Happy understanding yeah.

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Bandar Seri Coalfields with a new private school for its residents

These days, when we look at any integrated developments, it should come with education institutions. Attractions include those with a
SJK (C), private universities,

international branch campuses of top universities
 and perhaps even international schools. With the current demographics for Malaysia, I think this is a clever move. Yes, my next home would be as near as possible to my daughter’s primary school. Hopefully, I could send her to school and fetch her too. We shall see in a few years’ time.

KLK LAND has just announced that it will be building a private school within its Bandar Seri Coalfields (BSC) development. It said that this will benefit its residents. KLK Land which is the property arm of Kuala Lumpur Kepong Berhad (“KLK”), a publicly listed company on the Main Board of Bursa Malaysia Securities Berhad has signed a Memorandum of Understanding (“MOU”) with Wesley Methodist School (“WMS”), for the building and the running of a private school at its Bandar Seri Coalfields (“BSC”) Township. Phase 1 of the development will see the setting up of a kindergarten and primary school. There is also a proposal for Phase 2 Secondary School with international syllabus.

Tan Sri Lee Oi Hian, the CEO of KLK commented, “We have and always believe in the power of distinguish education to transform communities and contribute to the nation building process. WMS was selected because not only has it demonstrated a good track record in providing quality education (with WMS Kuala Lumpur achieving top results in the Sijil Pelajaran Malaysia Examination for 2014 and 2015 respectively) but more importantly, the school is geared towards character building which resonates well with our organisation.”

Rev Dr. Ong Hwai Teik, who is the Bishop of Methodist Church in Malaysia said, “We are very pleased to partner KLK Land for this project. I believe in the quotation that ‘children are the living messages we send to a time we will not see.” It is also the stated ethos of the Methodist Church that with education as a cornerstone every child, regardless of race, religion or creed can succeed if placed in the right school environment.

To date, over 1,500 units have been completed and handed-over in BSC. Its latest offering, Ixora Residences consist of 2-storey terrace homes, has seen a take up rate of 85%. It is targeted to be completed by the first quarter of 2017. Ixora Residences comprises of 226 units of landed homes.

The masterplan of Bandar Seri Coalfields is a 1,000-acre FREEHOLD integrated township development comprising mixed commercial and residential properties, such as shop offices, commercial complexes, bungalows, semi-detached homes, superlink homes and terrace houses. It boasts a very low density equipped with public amenities including primary and secondary schools, kindergarten, hypermarket, petrol station, police station and a private clubhouse.

In the heart of this masterplan township development is a 50-acre Central Park with lush landscaping, a full-size football pitch, jogging track, cycling path and other court games. In the pipeline is a clubhouse adjacent to the central park, schools and a commercial district.

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Knight Frank: 2019 will be a good year for property

Statistically speaking, when I write negative stuffs, the number of clicks are higher. So, this article may get fewer clicks.  🙂 Knight Frank Malaysia says that the sentiment in Malaysia’s property market will improve in 2019. The reason is due to the many policies outlined in budget 2019 which will strengthen demand, especially from first-time homebuyers. In a statement, it said, “The property market in Malaysia experienced a pick-up in activities during the second half of 2018, as pockets of opportunities can be discovered in different areas across the region, barring any external shocks such as a global economic slowdown.” Full article here in
TheMalayMail.com

While the residential sector seems to be rebounding, it’s not the case for the office and retail markets. Knight Frank said that these two will be challenging because of elevated supply levels. It also expects a higher level of land banking activities among industrial property developers. Moving forward, Knight Frank Malaysia says that Malaysia will see a new large-scale industrial developments taking shape in strategic locations due to robust demand for warehouses. For example, the proposed Free Trade Zone (FTZ) in Pulau Indah is expected to generate interest from manufacturers and logistics operators alike. “All in all, Malaysia’s industrial property sector, which has been the silver lining for Malaysia’s subdued property market in recent years, is set to continue its resilience.”  Please refer to the full article in
TheMalayMail.com

I continue to believe that the current issue in the market is all about sentiment instead of people losing their jobs and thus unable to afford their mortgages. With a median age of just 29, Malaysia is a very attractive property market for investors. The demand is definitely far higher than the current supply but let’s be savvy to the fact that the supply must also meet what the people actually demand. It’s about building the right homes; quality with affordability. Those days when people thought the market could rise forever is many years ago. Buy objectively, then everything’s gonna be just fine.

written on 11 Jan 2019

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Knight Frank: Asia-Pacific region will remain world’s fastest growing region

News Release

Asia-Pacific pivots away from the global economic downturn, poised to weather challenges through 2023

December 1, Singapore –
The Asia-Pacific region is set to remain the world’s fastest-growing region, despite ongoing stressors exacerbated by the Russia-Ukraine conflict and global financial volatility. Even as growth momentum continues to normalise across much of the region, domestic-oriented economies such as emerging Southeast Asia and India are forecast to remain supportive of overall regional growth in the upcoming year, according to Knight Frank’s latest report,
Asia-Pacific Outlook Report 2023: Pivoting Towards Opportunities
.

“With much of the known risks largely priced in and likely to have overshot on current negativity, there remains scope for fundamentals to surprise on the upside, underpinned by the marginal easing of zero-COVID strategy and the lower than expected terminal interest rates. As of late, Chinese authorities have lowered the duration of quarantine for inbound travellers, a step in the right direction that could set the tone for more calibration and an eventual exit in 2023/2024. We can afford to be sanguine given that nascent signs of inflation peaking have crept into the Fed’s data watch,” said
Christine Li, head of research, Asia-Pacific.

“While it remains to be seen if these can be sustained, the prevailing macroeconomic and policy uncertainties, once rolled back, will narrow bid-ask gaps and pave the way for higher investment activity.”

At a sector level, the report predicts that the market conditions in 2023 will continue to favour tenants as highly amenities office buildings with sustainable credits are being completed and ready for occupancy. Rents in the logistics sector are forecast to increase by 5.5%, while office rents will rise by 2% across the region.

Overall, real estate offers good diversification benefits with a relatively low correlation to equities and bonds. Therefore, risk adjusted returns for direct real estate are unlikely to re-price to the same extent as indirect.

“While the Asia-Pacific economy will face significant headwinds in 2023, it will remain a bright spot amid the shadows cast by the slowing global economy. Economies in the region will once again dominate growth worldwide, which will have implications for its real estate markets. That underlying growth will continue to underpin its attraction to occupiers, while its economic diversity offers ample opportunities for investors to target a range of asset classes to position their portfolios for the post-pandemic landscape,”
Kevin Coppel, managing director, Asia-Pacific
added.

“The global macroeconomic headwinds will impact upon Malaysian markets. However, we are still hopeful that the newly elected unity government will be able to outline clear and consistent policies in driving economic investments into our country,  and encourage all direct measures to revitalise and sustain the growth of the property sector. Malaysia needs to bring back  investors’ trust and faith in our economic growth, in order to see recovery across all sectors,”
Sarkunan Subramaniam,  Group Managing Director, Knight Frank Malaysia
shared his comments on the challenge and opportunity that might affect  economic growth in Malaysia.

“
We hope for the government to introduce “green incentives” to property buyers, landlords and developers who are aligned  with the nation’s target of becoming a “net zero” nation by 2050. We encourage an extension of existing incentives to  incorporate tax reliefs/grants to industry players who include green features into their developments, especially renewable  energy like solar panels and water harvesting, as well as sustainably-built properties from timber and low-carbon cement in  place of high-emission materials. It’d be wonderful to see these incentives being extended to property buyers who purchase  “green homes” with “green features” – thereby addressing the high capital outlay that is required in order to ensure a  sustainable future,”
Keith Ooi, Deputy Managing Director of Knight Frank Malaysia
also highlighted the key initiative on  his wish list in driving the property sector forward.

Keith Ooi, Deputy Managing Director of Knight Frank Malaysia

SECTOR OUTLOOK

Office

• Growth in office rent will moderate from 3% to 2% as occupiers add flexibility to their portfolios to generate savings.

• Vacancies are forecast to rise from the current 14.6% to 16% as corporates turn more cautious with expansion.

• Many occupiers are anticipated to move swiftly to an office at first stance – emboldened by increased rates of return to the office driven by job insecurity.

• Co-working footprint in the CBDs is expected to expand in line with the shift in preference for flexibility by space users.

Logistics

• Normalising e-commerce growth and supply chains are expected to alleviate some pressure on demand and rent for logistics spaces.

• Structural demand from “China Plus One” strategies and new economy sectors in the healthcare and life sciences is expected to remain resilient.

• Market fundamentals will render a balanced logistics market. Rental growth is set to moderate as compared to the past two years.

Capital Markets

• Volatility will hold up transactions in the short term as investors seek price discovery in various markets. Activity is expected to pick up in the latter part of 2023 as the macroeconomic picture stabilises.

• Investors will gravitate towards core, liquid assets in prime locations with attractive yields relative to the cost of debt as defensive options.

• Private wealth investors from the region, with a lower reliance on debt and a tendency to hold assets for the long term, are expected to turn active.

Residential

• Cross-border residential investments from APAC high-net-worth individuals are expected to climb due to demand for prime properties in global safe-haven markets.

• Singapore remains highly sought after by Greater China buyers due to its reputation as a safe haven and a growing hub for business and finance.

— end of press release —

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Knight Frank: Improving sentiment due to stamp-duty waiver.

I guess everyone who’s involved in the real estate industry knows that the market is slow. Somehow people are taking a longer time to decide what to buy. There’s good news ahead according to Knight Frank Asia Pacific Forecast 2019 that was released yesterday. Knight Frank shared that market sentiments are projected to improve as a result of the stamp-duty waiver on the instrument of transfer for first-time homebuyers that was announced in Budget 2019. As for the slight upward revision in stamp duty and real property gains tax rates, it is not likely to impact the market significantly. Here’s the
Article in TheMalaysianReserve.com

Knight Frank also shared that more residential property launches could be expected in Kuala Lumpur (KL) next year but price wise, it will not be moving up too much because of the growing mismatch in supply and demand. As for the office sector, Knight Frank is predicting a tenant-led moving into 2019 as there is no immediate catalyst to boost demand. It says that landlords will continue to offer attractive leasing options due to competition to attract new occupiers and retain existing tenant. As for what we could focus, Knight Frank said non-traditional real estate investment sectors such as student accommodation, retirement living and build-to-rent in established mature markets will outperform the wider market.
Article in TheMalaysianReserve.com

I continue to believe that the current market slowdown is more sentiment driven. (For those who could buy) This is because there are no widespread unemployment and every time I pass by cafes, I wonder why are there so many people who could continue afford a RM12 cup of coffee if the market’s truly as bad as what some people are saying. 12 x 31 days = RM372. This is over 12% the salary of the
B40 household median income in Malaysia
 Happy following and hopefully what Knight Frank is predicting comes true in 2019.

written on 20 Dec 2018

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Knight Frank: Investors’ Confidence anchored by Logistics and Healthcare  Sectors

Press Release:
Investors’ Confidence anchored by Logistics and Healthcare  Sectors

• Thriving logistics and growing healthcare sectors amid the COVID-19 pandemic  • Penang looks at medical tourism revival with vaccine passports

• Malaysia’s growing silver hair market sees senior living / retirement home emerging  as a popular alternative investment choice

7 July 2021, Malaysia
– More than a year into Malaysia’s first lockdown on 18 March 2020, the country  continues its uphill battle to contain the spread of novel coronavirus (COVID-19) despite the kick-off of  the National Immunisation Programme since end-February, 2021. The resurgence of COVID-19 cases  has led to the country being placed under several movement control orders this year, with the latest  being the full lockdown (FMCO), re-imposed on 1 June 2021.

Effective 3 July 2021, several localities in Kuala Lumpur and sub-districts in Selangor are under a 2- week enhanced movement control order (EMCO) due to the high number of daily infections in Klang  Valley.

The prolonged strict containment measures continue to adversely impact economic and business  activities, as well as daily lives. On 28 June 2021, the Prime Minister, Tan Sri Muhyiddin Yassin unveiled  the National People’s Well-Being and Economic Recovery Package (PEMULIH) worth RM150 billion  with a direct fiscal injection of RM10 billion. This is in addition to several earlier financial aid packages  totalling some RM380 billion to protect the people’s welfare and support businesses amid the  unprecedented crisis.

Sarkunan Subramaniam, Managing Director of Knight Frank Malaysia
raises concern about the  survival of non-essential services which continue to bear the brunt of the lockdowns.

The hospitality industry continues to bleed due to international travel bans, restrictions in interstate  travel and cancellation of major events amongst other reasons. Similarly, the retail industry has also  been badly impacted due to various phases of lockdowns and subdued consumer sentiment.

As more businesses close down and hotels cease operations, the country’s unemployment rate is  expected to rise.

Sarkunan
hopes that the vaccination programme will continue to be ramped up as the country’s  economic recovery hinges on its success to reduce the number of daily new infections and contain  further outbreak.

Key players in the commercial property industry are optimistic on the logistics and healthcare sectors  but remain cautious on the traditional retail and office segments as well as on the hotel / leisure industry.

The severe disruptions to supply chains globally which revolutionised e-commerce services, continues  to drive the logistics sector whilst the critical need for good medical and healthcare support amid the  pandemic coupled with attractive tax incentives is expected to see growth in the healthcare sector.

Keith Ooi, Deputy Managing Director of Knight Frank Malaysia
, said, “It is no surprise that logistics  was the clear winner as the preferred sector to continue to do well in 2H2021. The logistics industry in  Malaysia has been growing steadily in recent years due to higher e-commerce penetration rate. This,  coupled with the structural shift towards omnichannel retailing, has led to an increase in demand for  modern warehousing space to meet the surge in last mile delivery.

Prime logistics asset values are expected to rise further over the near term underpinned by strong  growth in the e-commerce market and again, with interest rate staying low in the foreseeable future,  yields are expected to remain at low levels,
Keith
added.

Investment Plan by Sub-Sector

Source: Knight Frank CREISS 2021

Industrial / Logistics

The survey respondents have strong convictions on the industrial / logistics sector which they opined  should continue to perform well under current economic climate.

Allan Sim, Executive Director of Capital Markets, Knight Frank Malaysia
, commented: “It is  understandable that the industrial and logistics sectors are favoured by the respondents as they remain  the few resilient property classes that are still up and running during this volatile time. Appropriately,  these very same sectors are being voted by respondents to be leaders charting the journey of recovery  for the commercial property market.”

“On this note, the survey also highlighted that the ecosystem for industrial and logistics is in unison as  developers and fund / REIT managers’ appetite for investments into the industrial / logistics sector are  harmoniously complemented by lenders whom are also expressing higher interest in funding these  projects / assets”,
Sim
added.

Sim
also commented: “When examining further, we noted that the market is perceiving the impact of  MCOs to be more severe for manufacturers that are reliant on human workforce, as compared to  logistics that are deemed to encounter less downside risks amidst lockdowns and may even flourish by  way of e-commerce substituting general retail. However, attention has to be accorded to the facet of  logistics that are serving the manufacturing sector, of which demand will be subject to the disruption of  supply chains on a global scale.”

Source: Knight Frank CREISS 2021

“All in all, we concur with the respondents’ anticipation for an increase in rental and occupancy rates  for the logistics sector. This will act as a strong support for the potential of increase in capital values of  logistics assets and further reinforcing the standing of logistic assets class as a darling amongst the  investors, fund managers and developers”
Sim
concluded.

Source: Knight Frank CREISS 2021

More than 50% of respondents expect to see a spike in the capital values of healthcare (60%) and  logistics (58%) assets.

In the office and retail sub-sectors, about half of the respondents expect the capital values to hold while  in industrial and institutional segments, the percentages of respondents are higher at 67% and 70%  respectively.

In the hotel / leisure sub-sector, 78% of respondents expect capital values to fall.

Healthcare

The survey revealed that the healthcare segment, particularly in Penang has captured the interest of  developers and investors. As Malaysia is currently ranked among the world’s top health tourism  destinations due to its affordable and high-quality medical treatment, Penang is one of the most  preferred destinations for the majority of health tourists.

Source: Knight Frank CREISS 2021

Mark Saw, Executive Director of Knight Frank Penang,
said:
“
Medical tourism, previously being one  of the major contributors to the Penang economy, has been badly affected due to the on-going  pandemic and travel ban.

In January this year, the Penang State Government unveiled the joint-venture project between Penang  Development Corporation (PDC) and iHeal Health Sdn Bhd to develop the Penang Medical and Digital  Technology Hub on 295 acres of land at Bandar Cassia in Batu Kawan. This project will help to promote  Penang as the Asean hub for international standard medical and digital technology.

In addition, other notable upcoming healthcare institutions scheduled to make their debut in the state  include the likes of Columbia Asia, Sunway Medical Centre, Penang Islamic Hospital, Georgetown  Specialist Hospital and they are expected to boost Penang’s medical tourism sector by offering quality  healthcare services”, he added.

“With the resurgence of COVID-19 cases and reimplementation of MCOs in recent months, we believe  the overall interest in other sectors are expected to continue to remain soft until the health crisis is  brought fully under control”, said
Keith
.

This latest survey findings revealed that there are more factors negatively impacting investment in the  commercial property sector in year 2021. The top three non-favourable factors (> 70% of respondents) were the third-wave of the novel coronavirus outbreak, the current state of economy / government  policies and cancellation of the HSR project. The other unfavourable factors were compression of yield  & lower returns and slow COVID-19 vaccine redeployment.

The Covid19 vaccination progress is critical to our economic recovery and requires much greater focus  and as such there is a need to increase daily vaccinations and the number of people registering for the  vaccine to get to herd immunity as quickly as possible”,
Keith
concluded
.

— end of press release —

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Press Release: Knight Frank- Port Infrastructure, a factor for the growth of logistics industry

16 February 2021, Malaysia
– Knight Frank, the independent global property consultancy, has  launched its
New Frontiers – Regions of Opportunities: Infrastructure Impact on Industrial
and
E Commerce and Supply Chain Evolution’s Impact on Industrial real estate,
highlighting the  opportunities for industrial real estate in Asia Pacific.

The COVID-19 Pandemic will leave a lasting impression on the commercial real estate sector across  Asia-Pacific. While it brought more pain to the already battered retail sector, it put more wind in the sails  of the industrial sector via the flourishing e-commerce industry, as many business-to-consumer (B2C)  firms were forced to adapt quickly as lockdowns and movement restrictions in many markets prompted  a huge shift to online retail activity. Much of this activity will remain permanent going forward and result  in higher online retail sales growth and penetration across the region, regardless of market maturity.

Market
Estimated end-2020

online retail penetration

(%)
Estimated

online retail growth in 2020

(% YoY)
Chinese Mainland
33%
12%
South Korea
30%
20%
Australia
15%
13%
Japan
12%
20%
Singapore
10%
11%
Vietnam
8%
8%
Indonesia
6%
13%
India
5%
8%
Malaysia
5%
17%
Thailand
4%
11%
Philippines
2%
17%
Average

14%

Sources: Knight Frank Research

Allan Sim, Executive Director of Capital Markets, Knight Frank Malaysia
, says, “The pandemic has  accelerated the adoption of online retailing across selected key markets in Asia-Pacific, with the  average online penetration growth estimated at 14% in 2020. Malaysia’s online retail growth of 17%  during the year, the third highest among the countries reviewed only translates to a country online  penetration of 5%. Hence, there is much potential for further growth.

“We observed notable MNCs choosing Malaysia as the location for their Regional Distribution Centres (RDC) in the likes of IKEA Asean RDC, Zalora Regional E-Fulfilment Hub, Lazada E-commerce RDC,  Nestle DC, BMW Regional Parts DC, VW Regional Aftersales & Parts DC, Bosch RDC and Broadcom  Global DC.

“A well-developed infrastructure includes road and rail networks, port facility, readiness of utility – water,  electricity and internet connection are important for e-commerce activities. With concerted efforts by the  government and various stakeholders in maintaining the competitiveness of Port Klang, the largest port  in the country as a platform for supply chain, Klang is in the radar of many developers, manufacturers  and investors.”

Malaysia tops the ASEAN region with c.US$250 million spent on transport infrastructure investments  per million capita over the past two decades. One key driver behind Malaysia’s lead is the East Coast  Rail Link (ECRL) project, which will connect the main port of Klang on the Straits of Melaka to Kota  Bharu in the north east of the peninsular. Malaysia has attracted over 78% of the top 50 global logistics  players to set their footprint in the country.

Earlier, the Knight Frank Malaysia’s Real Estate Highlights 2H2020 had reported that during the review  period, Majlis Perbandaran Klang received a surge in applications for development planning of industrial  projects. Circa 38.9% of the applications were for new standalone factories on pockets of land, followed  by 29.9% of applications for legalisation of unlicensed factories under Program Pemutihan, 26.0% for  extension or amendment to existing premises and the remaining 5.2% for new built-to-sell factories.

A few logistics providers in Klang such as AS Transit Warehouse Sdn Bhd, Bersatu Integrated Logistics  Sdn Bhd, Eminent JV Group Sdn Bhd, GD Fit International (M) Sdn Bhd and Reefer Logistics Sdn Bhd  are leveraging on the opportunities for business expansion.

Similar to Klang Valley, Johor has also benefited from the rapid growth of e-commerce. With import and  export activities between countries becoming more significant, Johor Port recently announced a  breakthrough of over 1 million twenty-foot equivalent units (TEUs) for year 2020 and remains optimistic  of its future prospects.

Debbie Choy, Director of Knight Frank Johor,
says, “Johor is also observed to be the choice of  automakers in housing their regional distribution centres. BMW has set up their RDC on over 58 acres  of land in the Free Industrial Zone of Senai International Airport while Volkswagen has set up a 538,196 sq ft facilities in the Port of Tanjung Pelepas.

“Johor is often referred to as a strong competitor to Singapore given the more economical prices and  friendlier exchange rates. However, response time along with transparency in requirements are often a  concern for investors and operators, thus, on-going efforts by relevant stakeholders in improving and  streamlining processes in these aspects will prove to show better result in the coming years. Johor is  well poised to ride the wave of this trend being supported with three seaports and an airport  complemented with free trade zones nearby.”

In 2020, Penang industrial property market saw active activities compared to others. Penang remains  on track in attracting investment from both local and foreign companies. The setting up of US-based  Dexcom Inc and Ultra Clean Holdings Inc (UCT)’s first facilities in Penang are proof that the state has  a strong industrial eco-system.

Mark Saw, Executive Director of Knight Frank Penang
, says, “We are excited to see the North  Butterworth Container Terminal (NBCT) being gazetted as a free trade zone starting February 2021.  Such move will elevate Penang from being the manufacturing base for electrical & electronics (E&E)  industry as the NBCT will be able to cater to warehousing and logistics needs of local and global players.”

Keith Ooi, Deputy Managing Director of Knight Frank Malaysia,
concludes, “The industrial market  in Malaysia has seen steady growth in recent years largely due to higher e-commerce penetration rate resulting in additional warehousing space requirements to meet the surge in last mile delivery as well  as the structural shift towards omnichannel retailing. We anticipate the momentum gained this past year  to continue into 2021 as the demand remains resilient despite challenging economic conditions.

“Going forward, prime industrial asset values are expected to rise over the near term, particularly in well  planned secondary industrial locations such as Klang due to the rapid growth and spill over demand for  prime grade industrial space from its neighbouring locality of Shah Alam, where land and property prices  are predominantly higher compared to secondary industrial locations. Again, with the low interest rate  environment, yields are expected to remain at low levels. Typically, prime grade industrial assets with  strong tenant covenants coupled with good accessibility will better weather future headwinds.”

—
End of Press Release —

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Press Release: Knight Frank Prime London Sales and Lettings Review

Press Release: Knight Frank Prime London Sales & Lettings Review

17 February 2021, Malaysia – Prime London Sales & Lettings Index are based on the valuation of a comprehensive basket of properties throughout the central and outer London.

Prime London Lettings Report: January 2021

Average rents in prime central London fell 13% in the year to January as supply levels remained high during the third UK national lockdown.
A high number of properties switching from the short-let market has been a feature of the lettings market in the capital since the pandemic

The annual price decline in prime central London (PCL) stayed at 4.3% for the third consecutive month in January, indicating a holding pattern while international travel restrictions remain in place
While prices are broadly flat, the number of transactions in PCL was 12% higher in January than the same month last year, highlighting how the release of pent-up demand after the market re-opened last May is translating into exchanges

Prime London Lettings Report: January 2021

Average rents in prime central London fell 13% in the year to January as supply levels remained high during the third UK national lockdown. A high number of properties switching from the short-let market has been a feature of the lettings market in the capital since the pandemic, which has been exacerbated during moments of tighter lockdown restrictions.

Dominic Heaton-Watson, Associate Director, International Residential Project Marketing, Knight Frank Malaysia

Dominic Heaton-Watson, Associate Director, International Residential Project Marketing, Knight Frank Malaysia says: “The trend was less marked in prime outer London, where rents fell by 10.7% in the year to January. The declines have been smaller in some leafier parts of London, where the supply of lettings property has been kept in check by a relatively buoyant sales market.”
In Wimbledon the annual decline was 2.5%, while it was 4.3% in Hampstead and 6.3% in Belsize Park.

The number of market valuation appraisals for the lettings market rose by 63% versus the five-year average in January, highlighting how supply levels continue to rise.

Heaton-Watson says: “The number of tenancies started in January was 19% ahead of the five-year average in London, underlining how activity levels remain strong despite falling rents. In many cases tenants are taking advantage of falling rents to relocate to new parts of the capital. It was a trend we analysed taking place in Canary Wharf.”

The growth in supply continues to put pressure on asking rents said David Mumby, Head of Prime Central London lettings at Knight Frank. “Prime London rents have undergone a fundamental reset,” said David. “Rents are falling and I think the trend will continue until the airports re-open and we see the return of international travel. We are not being inundated with new stock at the same rate as last year, but supply levels are still high.”

The last time annual rental declines were as big was in 2009 during the global financial crisis. Average rents in PCL fell 17.8% in the year to September 2009.

Prime London Sales Report: January 2021

The annual price decline in prime central London stayed at 4.3% for the third consecutive month in January, indicating a holding pattern while international travel restrictions remain in place.

Dominic Heaton-Watson, Associate Director, International Residential Project Marketing, Knight Frank Malaysia says: “While prices are broadly flat, the number of transactions in PCL was 12% higher in January than the same month last year, highlighting how the release of pent-up demand after the market re-opened last May is translating into exchanges.”

The impact of international travel restrictions can be seen when comparing price changes in PCL and the wider London market. The spread between the annual price growth in Greater London (9.6%) and PCL (-4.3%) in November was 13.9 percentage points, underlining the extent to which domestic demand has sprung back in the capital, accelerated by a stamp duty holiday commented Heaton-Watson.

Heaton-Watson also notes: “The last time annual price growth in the mainstream London market was this far ahead of prime central London was in September 2003, a time when stock markets were in recovery mode after the dotcom crash and the Gulf War was affecting investor sentiment. PCL prices were down 6.2% in the year to September 2003 compared to a rise of 8.1% in Greater London.”

This relatively weaker performance in PCL comes ahead of a 2% stamp duty surcharge for overseas buyers in April and may limit any downwards pressure on prices when the hike is introduced. “The absence of international travellers means we are in the unique situation of having a stamp duty surcharge that is largely baked into the price before it is introduced,” said Tom Bill, Head of UK residential research at Knight Frank.

Meanwhile, in prime outer London, average prices fell 2.9% in the year to January, which was the smallest decline since the first national lockdown last March. Suburban London markets have  benefitted from the hunt for more space since the pandemic struck and annual growth was recorded in markets including Dulwich (2.9%) and Wandsworth (1.7%).

There is an emerging supply/demand imbalance in prime London markets that is keeping upwards pressure on prices. The number of new prospective buyers was 14% higher than the five-year average in January. Meanwhile, the number of market appraisal valuations was 27% below the five-year average as more sellers than buyers hesitate during the third national lockdown.

Heaton-Watson says: “Analysis of transactions over the whole of 2020 shows the impact of stronger domestic demand. The £5 million to £10 million price bracket in PCL experienced the biggest jump in the number of sales, rising 16.1% from 2019, the largest such increase since 2013. Exchanges fell 10% across all price brackets in PCL.”

Demand between £5 million and £10 million is typically skewed towards houses and UK-based owner-occupiers, who have been more active since the pandemic.

— End Of Press Release —

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