Recently, there has been plenty of writeups and articles, as well as remarks and opinions from various industry players with regards to the Klang Valley office markets.
To me, I believe that the Klang Valley office markets is expected to remain stable, and in fact, considerably quite bullish, at least until the 1st half of next year. My views has been influenced by the strong economic indicators recently such as the ETP, of which the Government has identified over 130 Entry Point Projects (EPP) to generate business, investments as well as job opportunities.
One project that has been generating a lot of resistance from the mass public is the 100 storey Warisan Merdeka. This, although it was announced by the PM Datuk Seri Najib Tun Razak in the Budget 2011, is not a budget allocated project - instead it will be undertaken by the Permodalan Nasional Berhad (PNB). It is expected to start in 2011, and to be completed by 2015, with about 2,200,000 sf of nett lettable space to offer.
While many have objected this project, I for one think that this project will further transform that part of Kuala Lumpur into an established financial and business hub, making Kuala Lumpur a much more attractive location to invest in.
The Petronas Twin Towers - still fetching the country's highest rental and occupancy rates for offices.
Looking at various tables and statistics, I believe that Kuala Lumpur's average occupancy rates are at very good and encouraging figures; I see that all areas, including the Prime Grade A+ offices, Grade A offices, as well as the secondary offices in areas such as the Golden Triangle, the rest of Kuala Lumpur's business district, Damansara Heights etc are all registering more than 92% average occupancy rate.
Rental rates meanwhile shows pretty impressive rates too.
In the Golden Triangle, the Prime A+ office buildings, namely the Petronas Twin Towers and its other counterparts in the same area are fetching an average of above RM9psf! The Grade A offices are doing a good RM6psf, with the secondary offices fetching about RM4.50psf averagely. At the outer locations, the offices are fetching averagely between RM3.80-RM4.70psf, which I believe is an encouraging figure.
Menara Wakaf at Jalan Perak - fully leased out to Bank Islam, MAIWP and Tabung Haji.
While rentals have been good, the sales market have seen some interesting transactions. Aseana Properties Ltd sold their jewel in Mont Kiara, the 1Mont Kiara (1MK) to a real estate fund related to Li Ka-shing's Cheung Kong Group in Hong Kong for a whopping RM333million. A Singaporean investor bought a chunk of the Crest Worldwide offices for about RM80million.
On top of that, the REITs also have been assisting and pushing the office/commercial markets.
Recently listed Sunway REIT worths about RM3.8billion worth of assets; and early this month, announced that it is shopping around for new assets and buildings, worth at least RM500million apiece to acquire in order to expand its asset size. It has set a target to double its assets base within the next 5 years. Pretty interesting isnt it?
So, in my opinion, the next time someone tells you that the office markets in Kuala Lumpur are hitting a bubble, reply him this - perhaps you dont think so, and why not sit back and let him be proven wrong. =P