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Transcript of Rental KL

Pelan Struktur Kuala Lumpur 2020

office rental rate at the UOA building in Jalan Pinang was recently transacted at RM3.80 per sq ft StarMonday July 30, 2007

Kuala Lumpur Office demand in the CBD and Suburban areas like Petaling Jaya, Damansara Heights, KL Sentral saw dramatic growth, thus resulting a surge in rentals during 3Q 2007. A number of second-tier office buildings including Menara Hap Seng and Plaza See Hoy Chan, have been refurbished by landlord to meet the current booming demand for offices in 3Q 2007. Office demand continued to be underpinned by oil and gas companies and the financial sector. Meanwhile, the Government continues to encourage foreign companies to invest in its Southern and Northern Corridor which is going to be the new ICT Hub in Malaysia.

Kuala Lumpur The quality office buildings in Kuala Lumpur are located in the central business district (CBD). Rents are commonly quoted in Ringgit per sq ft per month on net floor area basis, which are inclusive of service charges but exclusive of government taxes. Capital values are quoted in Ringgit per sq ft.

COLLIERS INTERNATIONAL | REGIONAL RESEARCH

ASIA PACIFIC OFFICE MARKET OVERVIEW | OCTOBER | 2007

there was a lack of Grade A office buildings in the city with most quality buildings recording tenancy in excess of 90% while rental rates have also climbed to between RM6 and RM9 per sq ft.

Most quality buildings in Kuala Lumpur are recording tenancy in excess of 90% while rental rates have climbed to between RM6 and RM9 per sq ft

Regroup's latest survey revealed that Grade A office buildings in KL were now 94.5% occupied with very little space available to accommodate large companies. Rental rates are also approaching record levels with the better buildings commanding over RM7 per sq ft. New office supply may not meet demand over the next three years and rents are likely to continue to rise. If this scenario does not improve, Malaysia is in danger of losing its competitive edge to other regional cities, he cautioned. The service sector is growing at 9.7% a year, and 200,000 new graduates emerge annually to find employment. It would be ironic if Malaysia lost out in attracting multinational regional operations simply through having insufficient quality office space, he added. Quah said there was a lot of excitement in the market with a growing foreign and local interest in the local office market. The driving forces for the office market include the country's strong economic growth of 6.3% last year, robust growth of the services sector and a growing demand for prime office space

by companies in the oil and gas sector, financial institutions and information technology companies. The City Hall head of urban planning department Mahadi Ngah said the City Hall had since 2005 relaxed the ruling that the development of new office building would only be allowed if it was meant for own occupancy and now allow up to 50% of the space to be sold or leased out to other parties. There is no blanket freeze on new office buildings now but we look at the application on a case by case basis. Quality projects that are located in areas zoned for office buildings and have pent up demand will be allowed.

StarMonday April 21, 2008

Higher demand for prime office buildings Traditionally, yield rates for office space in the Klang Valley are between 6.5% and 6.7%. But in 4Q2007, we saw yield compression rates at 5.05%, says Sarkunan, referring to the sale of Menara Commerce on Jalan Raja Laut. The reason for this is simply because investors are willing to take lower returns on their property. Lower yield compression means the rental is not moving as fast as the capital value but the current rate of between 5% and 6% is a natural phenomenon in the Klang Valley office space sector, according to Sarkunan. While the outlook and prospects are positive this year, the lack of premium office space contributes to various movements in selling price and rental rates, he says. More corporate expansions and the countrys strong economic fundamentals are expected to drive the demand for office space the next couple of years, setting the stage for an exciting period, once several new developments, which are currently under construction, are completed. Glomac Bhd first set the benchmark price of RM1,120 psf late last year when it sold off en bloc its Glomac Tower on Jalan P Ramlee to Prestige Scale Sdn Bhd, a company linked to Kuwait Finance House (KFH), for RM577 million. A few days later, Mah Sing Bhds East Wing of The Icon on Jalan Tun Razak was sold en bloc to KFH-linked Prompt Symphony Sdn Bhd, for RM237 million, or RM899 psf. Then in early January this year, YNH Property Bhd set the highest benchmark price of RM1,230 psf for the sale of its Menara YNH on Jalan Perak, to KFH for RM920 million. The 45-storey office building will have a net lettable area (NLA) of 741,935 sq ft. A local developer, TTDI Development Sdn Bhd, launched and sold en bloc its first tower in the prestigious Platinum Park project in KLCC for RM640.7 million to the Federal

Land Development Authority, at RM930 psf. The 50-storey building will have a NLA of 689,000 sq ft when completed within the next five years. After the ground-breaking ceremony on Jan 22, Deputy Prime Minister Datuk Seri Najib Tun Razak disclosed at a press conference that there were offers for the tower at RM1,250 psf. That itself shows the direction of price movement for prime office space and we can only guess how much TTDI Development is going to lock in for two other Grade A office towers in its development parcel, says Sarkunan. TTDI Development group managing director Datuk Johan Ariffin disclosed recently that they are having strategic talks with a few parties on en bloc sales for the office towers. While the KLCC is a preferred choice, there are other sought-after addresses and more competitive locations, says Sarkunan. These include Damansara Heights, Mid Valley Centre and KL Sentral. These alternatives are close enough to the city and are by no means secondary choices. Newer buildings, better locations with a lesser degree of congestion, and the establishment of supporting infrastructures are some of their attractions. For example, KL Sentral is desirable because its a transportation hub. Based on the data sampled, Sarkunan says the overall supply of office space in KL city stood at 39.9 million sq ft while decentralised KL had 10.9 million sq ft. Newly-completed UOA Damansara II in Damansara Heights has 400,000 sq ft. Average occupancy rate (AOR) is generally increasing with office space in the central business district (CBD) recording the highest growth rate of 11%, jumping to 88% from 77% within a period of one year, q-o-q. Golden Triangle properties saw an increase of 8%, up 96% from 88%, while office space in Damansara Heights recorded a 7% jump to 96% from 89% q-o-q. Overall, AOR for all Prime A offices in the data sampled rose 8% to an average of 93% from 85% q-o-q. In terms of average rental rate psf, prime office space in Damansara Heights recorded a jump of 23.4% q-o-q. From the data, average rental is RM5 psf, a 95 sen increase, in Damansara Heights. Second highest was Prime A offices in Golden Triangle which saw rates increasing 14.2% or 71 sen over a period of one year. Offices in CBD rose 12.9% or 50 sen while Prime A+ offices went up 12.3% or 95 sen qo-q. While rental rates have consistently gone up, they moved rather slowly compared to capital values, says Sarkunan.

Among the buildings in the data sampled in the Golden Triangle (Prime A+) were Menara Citibank, Menara Maxis and Petronas Twin Towers, while Menara IMC, Kenanga International, Kompleks Antarabangsa and Menara Standard Chartered came under the Prime A category. In CBD, the buildings were Menara Multipurpose, TH Perdana, and Wisma HamzahKwong Hing, while Prime A buildings in Damansara Heights include UOA Damansara II and HP Tower, and Setia One and Wisma Chase Perdana for secondary grade. Sarkunan says secondary office spaces AOR improved steadily quarterly from 83% to 91% (Golden Triangle), 66% to 80% (CBD), and 86% to 92% over the period of one year. He adds that rental rates for secondary office spaces are also on an upward pressure. Investment demand will continue to drive the increased interest for prime office buildings in KL city and decentralised KL, says Sarkunan. Yield will be compressed as investors compete for good quality investment grade offices.This entry was posted on Monday, March 10th, 2008 at 9:37 pm

1. on 07 Apr 2008 at 15: 32.19 kansai To All Those Concerned, It was really surprising to note that there are such ignorant people living in Malaysia who thinks that they are so well versed in Islam. Islam by itself is a very tolerant and diverse religion. I have been living in the Arab Emirates for the past 2 years and was really surprise to reveal that the Muslims here are more libereal than most in Malaysia. For example, there was one occassion when I was dining at a Japanese Restaurant in Abu Dhabi. When I was browsing through the menu I was shocked to see Pork in its menu. So I rudely asked the Arab guys sitting next to me; Is it ok for you guys to eat here? reason being, they serve pork on its menu. To my surprise, they answered; yes. why not. they serve pork but I am not eating pork. So I rebuted and said; but its cooked and cut along with the same utensils. And they reconfirmed that it is ok as long as they are not eating it. I hope the Muslims in Malaysia are not trying to imply that they are better Muslims than those in the Arabs.

Lets not play up such issues and be more focus in rebuilding this wrecked nation. YAB Teresa, I urge you to ignore such comments by shallow minded individuals. Once again, congratulations to your victory in the GE 2008 and all the best in your endeavour.

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