High growth potential in office sector

By THE STAR

PETALING JAYA: Office development has the highest potential for growth in Kuala Lumpur at the moment, said Regroup Associates Sdn Bhd executive chairman Christopher Boyd.

Estimating that buyers outnumber sellers by as much as 15 to one in certain developments, Boyd set a target price of RM900 per sq ft within the next 12 months.

He was speaking yesterday at the Real Estate and Housing Developers’ Association Malaysia, Wilayah Persekutuan branch’s seminar on property trends and market outlook.

“Land prices for office or commercial plots in prime areas will also soon reach RM1,200 to RM2,000 per sq ft,” he said.

Christopher Boyd

He also saw a trend in the KL City Centre (KLCC) where land prices of RM1,200 per sq ft for residential development were “increasingly becoming the norm”.

Boyd suggested developers focused on office and commercial projects in decentralised areas outside of KLCC, pointing to successful examples as Kota Damansara, KL Sentral and parts of Petaling Jaya.

Research Inc (Asia) Sdn Bhd managing director Datin Adila Lim Lay Ying said Kuala Lumpur as a city was ranked higher for property investment than development in the Asia-Pacific.

“Singapore was ranked top investment city and Ho Chi Minh City top development destination,” she said, citing the Emerging Trends in Real Estate Asia Pacific 2007 survey.

The residential sector continued to dominate real estate activities in the country as well as in KL, she said.

The residential sector made up 65% of total transaction volume of 269,600 units at RM59.54bil in 2006 in the country as a whole and 83.3% of the volume in KL property market which chalked up 17,247 transactions worth RM9.41bil.

In terms of office sector, Lim said KL’s office vacancies at 16% were still high compared with pre-1996/97 crisis levels of 4% to 5%.

Nonetheless, the survey ranked KL a high seventh out of 19 on “buy strategy” while Singapore was the top city to buy office properties, she said.

As for the retail sector, Lim said: “Sell outweighs ‘buy’ or ‘hold’ for apartment properties in KL while India is tops for cities to buy apartments.”

On overall real estate prospects in KL, Research Inc has a “buy” on office properties, a “hold” on the retail sector, “buy/hold” on industrial properties, “sell” on apartment residential properties and “buy/hold” on hotels.

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