Trends on Commercial Properties in

Transcription

1 Trends on Commercial Properties in Key Cities in 2017 What are possible solutions? May 2018

2 Greater KL Office Market

3 NLA (million sq ft) Office Sector Greater KL Office Supply vs Absorption 7.0 Absorption New Supply m sf 1 High supply, low take-up m sf 3.1m sf 4.1m sf 3.6m sf 3.3m sf 2.5m sf 3.9m sf 2.9m sf 3.6m sf 5.5m sf 4.8m sf OVERSUPPLY 3.8m sf m sf 1.9m sf 1.9m sf 1.9m sf m sf e 2019e 2020e Source: Savills Research & Consultancy

4 RM per sq ft / month Office Sector Gross asking rents in Greater KL Prime offices in KL City Golden Triangle CBD 2 Declining Rental KL Suburban Selangor Source: Savills Research & Consultancy

5 SOLUTION Review of MSC incentives Launched in 1998, MSC Malaysia (formerly Multimedia Super Corridor) is a dedicated corridor, stretching from the Petronas Twin Towers to Kuala Lumpur International Airport, and encompassing Cyberjaya, the technology core, and Putrajaya, the administrative capital of Malaysia. MSC Malaysia Status is awarded to both local and foreign companies that develop or use multimedia technologies to produce or enhance their products and services, and for process development. Companies under MSC Malaysia Status enjoy a host of privileges that entail world class services and infrastructure as well as financial incentives: - MSC Malaysia 10 Point Bill of Guarantees (BoG) - Financial Incentives - Cutting edge communication infrastructure - Comprehensive regulatory framework of intellectual property protection and cyberlaws - Non-financial incentives - Support provided by MDEC as a one-stop agency 5

6 SOLUTION TRX incentives Developer(s) Tenants Given to developer(s) who meet stringent development criteria that will include a strong green ethos and sustainability: 70% tax exemption on income from the sale or rental of properties in TRX for a period of 5 assessment years, cutting the effective tax rate from 25% to 7.5%. TRX INCENTIVES Incentives offered to TRX Marquee Status companies: Industrial building allowances on the purchase or construction of property in TRX for use in their business (of providing financial services) at 10% per annum. Accelerated capital allowances of 100% over 2 years on prescribed renovation costs Deduction for prescribed relocation costs in relation to setting up or moving into TRX Additional 50% tax deduction on rental expenses of TRX premises for 10 years. Stamp duty exemptions on the rental/purchase of a TRX building as well as related property loan & services agreements 6

7 SOLUTION Decent specifications 7

8 Office Sector 3 Overly Decentralised Existing supply Future supply (UC) Note: Bubble/Square size corresponds to building size Region Existing Supply KL City 46.1 mil sf (38%) KL Sub 37.1 mil sf (31%) Outer KL 37.5 mil sf (31%) Source: Savills Research & Consultancy

9 SOLUTION Feasibility study before construction 9

10 Office Sector 4 Emergence co-working space >10 centres >100 centres >10 centres

11 SOLUTION Embrace the trend 11

12 Greater KL Retail Market

13 Retail Space (mil sq ft) Retail Sector 5 Diluted market share Existing Mall Neighbourhood (<250,000 sq ft) Neighbourhood (250, ,999 sq ft) Regional (500, ,999 sq ft) Megamall (>1,000,000 sq ft) Cumulative Retail Supply in Greater KL Source: Savills Research & Consultancy

14 SOLUTION Stop overbuilding 14

15 Retail Sector 8.0% 7.0% 7.2% Average Revenue CAGR of REIT Malls 6.8% 6 Key malls dominate and outperform, after long gestation period 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 5.2% 6.0% 5.0% 3.7% 2.8% 0.6% 0.0% Suria KLCC Pavilion KL Sunway Pyramid The Gardens Mall Mid Valley Megamall The Mines Shopping Fair ( ) The Curve ( ) Subang Parade ( ) Megamalls ( ) Regional & Neighborhood Malls Source: Savills Research & Consultancy

16 SOLUTION Open for non-retail uses 16

17 Retail Sector Trade Mix of New Malls (based on number of brands) 7 F&B emerges as key trade in malls IT / Telecommunications / Household 10% Healthy & Beauty 15% Others 9% Food & Beverage 34% Fashion 32% Source: Savills Research & Consultancy

18 SOLUTION Boutique food retail park creates USP for developments 18

19 Johor Bahru and Penang Office & Retail Market

20 Millions sq ft Millions sq ft Johor Bahru Market Cumulative Supply of Privately Owned Purpose Built Office Quite a few major retail mall completions Major office completions: 2018e Almas Office Suites D'Pristine Office Tower Medini 9 Medini 10 Volt Corporate Park Menara JLand 2019e Bank Rakyat Johor Tower MPJB Tower Major retail completions: 2017 Paradigm Mall JB IKEA Tebrau AEON Mall Bandar Dato Onn 2018e Mid Valley Southkey Megamall Capital e Ikano Tebrau Shopping Centre e 2019e 2020e Cumulative Supply of Retail Space (Mall & Hypermarket) e 2019e 2020e Source: Savills Research & Consultancy

21 Millions sq ft Millions sq ft Penang Market Cumulative Supply of Privately Owned Purpose Built Office Limited supply growth e 2019e 2020e Major retail completions: 2019e IKEA Batu Kawan 2020e Penang Times Square (Phase 3 & Phase 4) PENANG ISLAND SEBERANG PERAI TOTAL Cumulative Supply of Retail Space (Mall & Hypermarket) e 2019e 2020e Source: NAPIC, Savills Research & Consultancy

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