News – A question of demand and supply

China have its own “Ghost City”. We don’t have that brand new whole city being build here. Instead, we have a scale down version i.e. mega development project (small city) being launch for the sake of propping up the GDP figure so that to maintain “growth” in the economy (although the growth depicted is merely an illusion). This is not about how to fill up those empty building that are being build (although current occupancy rate is only 50%), but this is about how you milk the government cow. But in the end, who finally going to pay for all these “growth”? Taxpayer!

 

Close to half of the TRX real estate project will comprise office buildings. The project comes along at a time when many other mammoth commercial projects such as the re-development of 926ha Rubber Research Institute (RRI) Malaysia land in Sungai Buloh and Permodalan Nasional Bhd’s proposed 100-storey Menara Warisan Merdeka are poised to take off.

Cause for Concern?

As it is now, there is already an oversupply of commercial properties in and around the city centre, according to Henry Butcher Malaysia director Lim Eng Chong.

And the figures seem to back that premise up.

International property consultant VPC director and chartered surveyor James Wong says the take-up rate for office buildings which are being built and will be completed this year stands at below 50%.

“This is for commercial properties in and around the city, but the same scenario exists further away from KL, such as in Cyberjaya; there is already an oversupply situation,” Wong says.

However, the market will tend to correct itself in time to come, he adds.

David Jarnell, senior vice-president and head of research at Malaysia’s Jones Lang Wootton writes in a recent report that this year alone, the prime office market in the city centre is expected to increase by 2.04 million sq ft with the delivery of several prime office buildings.

“The average occupancy rate in KL city centre declined from 84.9% in the fourth quarter 2011 to 81.3% in first quarter this year as the newly completed offices did not yet register any physical occupation,” he writes in his report from which an extract was published in StarBizWeek in June.

Jarnell further notes in his report that in the first quarter this year, the average net rental reduced marginally as many landlords were still maintaining the same rental rates.

 

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