RESEARCH

REAL ESTATE HIGHLIGHTS 2ND HALF 2017

KUALA LUMPUR BAHRU HIGHLIGHTS HIGH END CONDOMINIUM MARKET Secondary market pricing and rental remained flat during the review period. ECONOMIC AND MARKET bank loan approval for the purchase of INDICATORS residential property was RM75.6 billion, a 15.9% increase compared to the Despite the weak market The Malaysian economy continued its corresponding period (Jan to Sep 2016: sentiment, sequels to selected strong growth momentum, expanding RM65.2 billion). Despite the increase in projects were launched at higher 6.2% in the third quarter of 2017 (2Q2017: the value of loan approval, the approval pricing but with more discounts. 5.8%), its fastest growth since 3Q2014. to application ratio continued to remain Domestic demand grew 6.6% (2Q2017: below 45%, a trend since 2016. More developers diversifying their 5.7%), driven by the private sector while target market to other overseas on the supply side, the manufacturing and SUPPLY & DEMAND countries / territories such as services sectors continued to be the main drivers of growth. For 2017, the country’s In Wilayah Persekutuan Kuala Lumpur, , Indonesia, Hong Kong GDP is expected to be higher between the condominium / apartment segment and Taiwan following China’s 5.2% and 5.7%. remains the most transacted type of capital control. property. In 3Q2017, a total of 1,310 Headline inflation moderated to 3.8% units valued at RM1.07 billion changed as of 3Q2017 (2Q2017: 4.0%), mainly The high-end condominium / hands. The figures reflect a 16.9% and attributed to lower transport cost. serviced apartment market 12.4% increase in volume and value is expected to self-correct In the labour market, the unemployment of transactions over the preceding following the recent freeze on rate remained unchanged at 3.4% in quarter (2Q2017: 1,121 units valued at approvals for development of 3Q2017. RM954.75 million) respectively. luxury condominium / serviced During the review period, Bank Negara The cumulative supply of high-end apartment priced above RM1 (BNM) maintained the Overnight condominiums / residences stood at million, providing a breather to Policy Rate (OPR) at 3.0% although a 49,678 units following the completion of the oversupplied market. hike is foreseeable following the uptick in 2,298 units in the second half of 2017. economy. KL City has the highest number of The 50% tax exemption on For the first nine months of 2017, the completions with 1,243 units (54.1%) rental income amounting up to RM2,000 a month as announced under Budget 2018, may improve demand for this category of FIGURE 1 investment properties. Projection of Cumulative Supply for High End Condominiums / Residences 2013 - 1H2018(f)

Note: (1) (F) = Forecast (2) The locality of includes Bangsar, , KL Sentral, KL Eco City and Pantai Sentral Park Source: Knight Frank Research

2 REAL ESTATE HIGHLIGHTS MALAYSIA

from schemes such as The Mews Kiara, UEM Sunrise launched Residensi expected to be fully completed by 2025. (256 units), The Manhattan (129 units), Solaris Parq, the third instalment of the A 300-metre pedestrian link to a mass Tribeca (318 units), Dorsett Solaris development series after Solaris rapid transit (MRT) station at Merdeka Residences Bukit Bintang (252 units) and Mont’ Kiara and Solaris Dutamas. PNB 118 will be built for seamless The Ritz-Carlton Residences (288 units). connectivity. Alpine Return Sdn Bhd, a joint-venture company between Symphony Life Bhd Another project, Residensi Solaris Parq and United Malayan Land Bhd, launched by UEM Sunrise Bhd launched on 9th Ascott Star KLCC in September 2017. October is the serviced apartment Formerly known as Star Residences component of the the larger integrated Tower 3, it offers 471 fully-fitted units development known as Solaris Parq in ranging from 700 sq ft to 2,972 sq ft. A Dutamas. This first phase development total of 353 units will be managed by The comprises a total of 576 units housed in Ascott Ltd while the remaining 118 units two 41-storey towers (288 units each). will be individually managed. Selling The units range from 721 sq ft (1+1 bed prices start from RM1.6 million per unit type) to 2,469 sq ft (4+1 bed penthouse) or RM2,450 per sq ft on average. Ascott and are priced between RM873,800 Star KLCC is scheduled for completion and RM2,968,800 per unit (or RM1,100 by 2021. per sq ft on average). As of November, the maiden phase has reportedly Star Residences is an integrated achieved about 80% sales. The project is The Mews development comprising condominium, expected to be completed in 2022. serviced residence and retail components. The project features a 200m-long Star Walk of Fame that PRICES AND RENTALS is modelled after the Los Angeles’ The high-end condominium / serviced Hollywood Walk of Fame. apartment market remained lacklustre The consortium of Bukit Bintang City amid mismatch in supply and demand Centre (BBCC) development made up as well as in product and pricing. Asking of UDA, Eco World and the Employees prices and rentals in selected locations Provident Fund (EPF) board, launched remained under pressure. Lucentia 2 serviced apartments in In the primary market, several developers October. The 36-storey block consists progressed with the launch of new of 273 units ranging from 450 sq ft to phases of their on-going projects, 880 sq ft, selling at an average pricing at higher pricing (on per sq ft basis). of RM1,750 per sq ft. It is slated to However, it was observed more complete by the first quarter of 2021. discounts were being offered.

Whilst Mitsui Shopping Park LaLaport Lucentia 2 of BBCC, an ambitious Kuala Lumpur in BBCC is scheduled to transformation of a former landmark The Manhattan open by 2021, the whole development is in the capital city, offers 273 serviced

The remaining completions are from Residensi 22 in Mont’ Kiara (534 units) TABLE 1 and The Establishment in Bangsar (521 Completion of High End Condominiums / Residences in 2H2017 units).

By the first half of 2018, another three schemes with a total of 1,216 units are slated for completion. They are The Residences by Tropicana (353 units), Four Seasons Place (242 units) and Pavilion Hilltop (621 units).

During the review period, notable launches in KL City include Ascott Star KLCC (final tower of Star Residences) and Lucentia 2 of Bukit Bintang City Note*: Comprises 318 units of studios, suites and lofts. About 108 units will be managed by Fairlane Hospitality. Centre (BBCC). In the locality of Mont’ Source: Knight Frank Research

3 apartment units priced at RM1,750 per sq ft (on average). The initial phase of TABLE 2 Lucentia Residences, with similar unit Notable Launches in 2H2017 sizing, was launched about 10 months ago at RM1,650 per sq ft (on average).

During the recent launch, the fully fitted units in Ascott Star KLCC, were priced at RM2,450 per sq ft (on average). In comparison, the standard units at Tower 1 of Star Residences, were launched at prices ranging from RM1,600 per sq ft to RM1,700 per sq ft while units at Tower 2 were priced higher at RM2,200 per sq ft (on average).

OUTLOOK

Amid the prolonged slowdown in the Source: Knight Frank Research high-end condominium market, impacted by the slew of local cooling measures Kong, Indonesia and Taiwan. launches while re-planning their products as well as China’s curb on capital to cater to a changing market / buyers’ The freeze on approvals for four flight, more developers are diversifying profile. In the residential segment, more categories of developments including their target market to other countries / developers have switched their focus to territories such as Indonesia, Singapore, condominiums and serviced apartments st affordable housing. Taiwan and Hong Kong to boost sales. priced from RM1 million as of 1 November 2017 is causing market On a positive note, for the million Ringgit The Malaysia Property Tour 2017, held uncertainties as to its implementation. homes, the stamp duty stays at 3% in Central in August, saw the Although on a positive note, it may as the proposal under Budget 2017 to participation of 11 groups of Malaysian provide a breather to the oversupplied increase stamp duty from 3% to 4%, will developers such as GuocoLand, Mah market. not be implemented. The move may not Sing Group and UEM Sunrise Group, spur more transactions but it will maintain Even without the freeze, the market displaying a total of 16 Malaysian the market at the current levels. projects. has been self-correcting to find its equilibrium. The lower volume and value Meanwhile, under Budget 2018, a The Eaton Residences by Singapore- of transactions are reflective of the 50% tax exemption on rental income based GSH Corporation Limited has challenging market condition. Developers up to RM2,000 a month for residential done sales in regional countries / have been holding back and delaying properties have been announced to territories such as Singapore, Hong encourage the rental market. This may improve demand for investment properties that fall within this rental TABLE 3 category. The Government has also Average Asking Prices and Rentals of Existing proposed the formulation of the High End Condominiums, 2H2017 Residential Rental Act to protect the landlord and tenant.

Going forward, the high-end condominium / apartment market will continue to self-correct as it looks to find its equilibrium.

More developers are expected to shift their focus to established fringe locations as well as upcoming hot spots along the rail transportation routes targeting the middle and mid-upper income groups with niche and affordable housing products. Other developers with city * Excludes Binjai on the Park but includes Pavilion Residences *** Includes Twins @ ** Excludes Seri Hening **** Excludes Verve Suites which comprise centre high-end products will continue mainly fully furnished small units with their aggressive overseas marketing. Source: Knight Frank Research

4 REAL ESTATE HIGHLIGHTS MALAYSIA

HIGHLIGHTS KUALA LUMPUR & BEYOND KUALA LUMPUR () Office market to continue self- correction as increasing supply OFFICE MARKETS shadows low absorption. Within the integrated development of KL MARKET INDICATIONS Eco City, the newly completed Mercu Negative absorption of Kuala 3 (formerly known as DBKL Tower) is a Lumpur office space following Despite a stronger performing economy, 39-storey corporate office tower offering downsizing and consolidation of the Kuala Lumpur office market continued 418,000 sq ft NLA and typical floor plate O&G and its related sectors. to struggle with an oversupply of new buildings and subdued leasing activities. size in the region of 14,000 sq ft. New buildings completed over the past Resilient demand for MSC In the nearby development of KL three years continue to record vacancies certified space despite Gateway, Menara SUEZCAP 2 is a and landlords in older buildings are having oversupplied office market. 35-storey strata office building with circa to lower their rental expectations to retain 360,000 sq ft NLA and typical floor plate their existing tenants. of 11,600 sq ft. Certified with Green Luxury property freeze, effective The office market for Beyond Kuala Building Index (GBI) Gold, the office tower 1st November, affects new Lumpur (Selangor), however, appeared offers special facilities such as private applications in four development to be more resilient. Enhanced rail access to retail mall, children day-care categories, including office. connectivity continues to support demand centre, grand central park, iconic ring for decentralisation office locations. retail piazza and private drop-off. Moving into 1H2018, office buildings SUPPLY slated for completion include South Point Office @ and Mercu 2 of The cumulative supply of purpose-built KL Eco City in KL Fringe (formerly known office space in Kuala Lumpur and Beyond as Setia Tower); and Nucleus Tower, Kuala Lumpur (Selangor) increased to Menara Star 2 and Tower 6 of Sky Park in circa 100.1 million sq ft as of 2H2017. Beyond KL (Selangor). This follows the completion of three buildings with combined space of approximately 1.17 million sq ft during the OFFICE ANNOUNCEMENTS review period. There were several notable office related announcements in 2H2017. The recent completion of JKG Tower increased the cumulative supply of KL IJM Construction Sdn Bhd, a wholly- City to 51.8 million sq ft while in KL owned subsidiary of IJM Corp Bhd, has Fringe, the completion of Mercu 3 of KL secured a RM451 million contract from Eco City and Menara SUEZCAP 2 @ KL UOB Properties (KL) Bhd to design, Gateway, brought its cumulative supply to construct and complete the proposed 28.1 million sq ft. UOB Tower 2 in Jalan Raja Laut. The proposed building will comprise five levels The office stock for Beyond KL (Selangor) of basement car park, one level of lower remained status quo in 2H2017 with no ground floor, two levels of podium for a new completion. banking hall and 27 levels of office space Located along Jalan Raja Laut, the including a green lounge reception, a 32-storey Grade A JKG Tower is sky lounge and mechanical floors. The connected to a 13-storey car park development completion period is 40 annexe. It offers 390,000 sq ft NLA with months. typical floor plate ranging from 12,500 Hap Seng Consolidated Bhd’s property sq ft to 14,250 sq ft. The building, which arm, Hap Seng Land Sdn Bhd, will be boasts BCA Green Mark Gold and GBI developing a new commercial office certifications, features a grand lobby tower, named “Menara Hap Seng 3” on of 25-feet high and office space with the former site of the group’s Mercedes- floor-to-ceiling height of 9.5 feet. It is Benz Hap Seng Star Autohaus. To be also complemented with state-of-the-art constructed at a cost of RM312 million, building management system. the proposed tower will comprise 20 levels

5 of office space, a five-level podium, a HSBC. The building is expected to be Uptown Retail Centre Sdn Bhd, a showroom and a six-level basement car handed over to HSBC by December 2020. subsidiary of See Hoy Chan Sdn Bhd park with total NLA of 240,000 sq ft. It Group, to design, construct, complete Prudential will be relocating its will be linked to the existing Menara Hap and commission the proposed Uptown headquarters to a 27-storey building Seng 1 and 2 via pedestrian walkways and 8 office tower in Damansara Uptown. in the upcoming TRX, Malaysia’s first basement connections. The Mercedes- The 31-storey tower with net floor area dedicated international financial district. Benz Autohaus will be relocated to the (NFA) of approximately 480,000 sq ft will Slated for opening by 2019, the Grade A, new office tower upon its completion consist of 22 levels of office space, an LEED Gold-certified office building sits on slated by December 2019. eight-level podium incorporating a level a 1.18-acre site adjacent to TRX’s main of commercial space and seven levels of The construction of the iconic Merdeka pedestrian gateway from the Bukit Bintang car park, one ground floor level and three PNB118, touted to be Malaysia’s tallest area. The purpose-built building with gross levels of basement car park. Construction and the world’s fifth when completed, is floor area (GFA) of about 560,000 sq ft will is expected to take 39 months. progressing well. The sub-structure work house all of Prudential’s life insurance and for the has been completed asset management businesses in Malaysia Along Jalan in Mukim Petaling, and work is progressing to the super under one roof. Kuala Lumpur, a proposed mixed structure stage. Construction is being development comprising one block of Etiqa Insurance Bhd, a subsidiary of undertaken by a joint-venture between 25-storey hotel and office building and Ageas Holdings Bhd, is set to South Korea’s Samsung C&T and UEM two blocks of 53-storey service apartment complete its fourth property investment Group Bhd. Only 20% of the tower buildings atop an 11-storey podium, project with a gross development value space, representing about half a million one partial underground level and three (GDV) of RM500 million in . sq ft, will be marketed with another 20 levels of basement, is coming on- The 38-storey building, named Menara floors reserved for a 250-room hotel. The stream. Kerjaya Prospek (M) Sdn Bhd, a Etiqa, offers 380,000 sq ft of sub-divided balance 60 floors will be occupied by subsidiary of Kerjaya Prospek Group Bhd suites for leasing and is expected to be Permodalan Nasional Bhd’s (PNB) group has secured a contract valued at RM64.22 made available to tenants by July 2018. of companies. million from Kerjaya Prospek Property Sdn It is projected to be 98% occupied upon Bhd for its foundation piling works and HSBC Bank Malaysia Bhd has appointed completion. The building, designed to associated sub-structure works. IJM Construction Sdn Bhd, a wholly- have full range of ‘MSC’ compliance, has owned subsidiary of IJM Corporation the Green Building Index ‘Gold’ rating, Mudajaya Group has been awarded Berhad as the contractor to undertake the and Real Estate and Housing Developers’ a RM118.6 million contract by KLIAA- design, construction and completion of its Association Malaysia GreenRE ‘Platinum’ KLIACS Consortium to build the 16-storey headquarters at the rating. Hevea Tower in Sungai Buloh. Set to be (TRX) for a contract sum of approximately the headquarters of Malaysian Rubber Over in Beyond KL (Selangor), IJM RM392 million excluding lifts and facade Board, the office tower is expected to be Construction Sdn Bhd has also secured a works which will be procured directly by completed by September 2019. RM378 million contract from Damansara

FIGURE 2 Occupancy and Rental Trends 1H2012 – 2H2017

Source: Knight Frank Research

6 REAL ESTATE HIGHLIGHTS MALAYSIA

OCCUPANCY TABLE 4 During the review period, the overall Notable Tenant Movements (2H2017) occupancy rate for KL City remained stable at 80.1% (1H2017: 80.7%). New take-ups in Integra Tower, Menara Binjai and Naza Tower balanced several tenant movements out of UOA Centre, Menara TH Perdana and Central Plaza, resulting in stable occupancy for KL City.

As for the decentralised office locations in KL Fringe, the overall occupancy rates declined to 87.3% (1H2017: 90.9%) following completion of Mercu 3 of KL Eco City, which is vacant. In addition, there were several tenant movements out of Wisma UOA Damansara II, HP Tower and Menara IGB.

As for Beyond KL (Selangor), the overall occupancy rates improved slightly to record at 79.5% in 2H2017 (1H2017: 77.8%), following positive absorption in recently completed and existing buildings that include SunGeo Tower in , Block 9 of UOA Business Park, Source: Knight Frank Research Towers 2 and 4 of Puchong Financial Corporate Centre, Wisma Mustapha higher asking rents, ranging from RM7.00 Great Eastern Life Assurance (M) Kamal and Quill 18 (Block B). per sq ft to RM12.50 per sq ft per month Bhd reportedly acquired an office while in Beyond KL (Selangor), the asking building currently under construction in ABSORPTION rents are more competitive, ranging from Kuala Lumpur’s Golden Triangle for a During 2H2017, the net absorption RM4.50 per sq ft to RM6.00 per sq ft per consideration between RM450 million and of office space in Kuala Lumpur was month. RM500 million. The sale translates to circa recorded at -134,000 sq ft (1H2017: RM978 per sq ft to RM1,087 per sq ft on -101,000 sq ft) while for Beyond Kuala INVESTMENT ACTIVITY NLA. The office block forms part of the Lumpur, it was recorded at 398,000 sq ft Equatorial Plaza integrated development, Despite the challenging and competitive (1H2017: 27,000 sq ft). The positive take- which also includes a luxury hotel that is office market environment, opportunities being constructed on the site of the former up in Beyond Kuala Lumpur was mainly continue to be present. During the review Hotel Equatorial Kuala Lumpur. Targeted contributed by SunGeo Tower, Block 9 of period several sales of office buildings for completion in the third quarter of next UOA Business Park and Wisma Mustapha were recorded in KL City and Beyond KL. year, the Grade A office building will offer Kamal. On 7th September 2017, Amanahraya circa 460,000 sq ft NLA. RENTAL Real Estate Investment Trust (ARREIT) Prestariang Systems Sdn Bhd, a wholly- entered into a conditional Sale and owned subsidiary of Prestariang Berhad, Amid a growing mismatch between Purchase Agreement with The Intermark has entered into eight (8) separate Sale supply and demand, the average achieved Sdn Bhd for the proposed acquisition of and Purchase Agreements with Joyful Star rental rates in both KL City and KL Fringe Vista Tower at a purchase consideration Sdn Bhd to acquire an 8-storey semi- continued to be under pressure, declining of RM455 million in cash. The freehold detached signature corporate block of to record at RM5.98 per sq ft and RM5.67 property comprises a 63-storey office offices / retail suites known as Block 11B, per sq ft respectively. tower with 2 concourse levels and 3 Star Central @ for an aggregate basement levels. As at 31st July 2017, The average achieved rental rate in net consideration of RM11,406,951. the occupancy rate of the tower was Beyond KL (Selangor), however, remained recorded at 74.4%, although this may fall Serba Dinamik Group Berhad, a wholly- resilient at RM4.13 per sq ft supported to circa 66.3% due to non-renewal of one owned subsidiary of Serba Dinamik by sustained demand from domestic tenancy which expires on 30th November Holdings Berhad, has entered into a companies cum business operations. 2017. The sale of the Grade A office tower Conditional Sale and Purchase Agreement In Kuala Lumpur, well located Grade comes with an estimated net yield of with AFFIN Bank Berhad for the proposed acquisition of a 16-storey office building A office space continued to command 6.5%.

7 with a 4-storey basement car park known between the increasing office supply and as Bangunan Affin Bank for a total cash weak demand continues to widen. consideration of RM43,500,000. As at With reasonable yields (in comparison 24th October 2017, the occupancy rate to other regional countries), well located of the leasehold building stood at 100%, good grade office buildings continue to of which approximately 25% is occupied attract investors’ interest. by AFFIN Bank. Upon completion of the proposed acquisition, Serba Group is Effective 1st November, development expected to occupy 2 floors of the office approval for four types of development building. components, namely shopping Other office-related investment complexes, offices, serviced apartments announcements during the review period and luxury condominiums priced over include the following: RM1 million will be frozen indefinitely. The freeze will only affect new applications. Pelaburan Hartanah Bhd (PHB), which has close to RM6 billion worth of commercial Whilst the freeze is expected to bring assets and land, has decided to sell its some relief to landlords of newly 39-storey Menara Bumiputra-Commerce completed office buildings that have yet in Jalan Raja Laut for a consideration of to achieve significant occupancy levels, it RM560 million. The 10-year-old building is not expected to correct the oversupply could be the real estate investment firm- situation in the short to medium term. 16 cum-property developer’s first asset sale. million sq ft of incoming supply from on- PHB had purchased Menara Bumiputra- going and upcoming mega developments, Commerce for RM460 million from CIMB together with weak occupational demand Group through a sale and leaseback will continue to drag on the market. arrangement in December 2007. To remain relevant and competitive in a IJM Corp Bhd has entered into a share challenging tenant-favoured office market, sale and purchase agreement with KLIFD there may be opportunities for dated Sdn Bhd, a wholly-owned subsidiary buildings to undergo re-positioning and Mercu 3 of KL Eco City of TRX City Sdn Bhd, to acquire 100% redevelopment to match market demand. equity interest in Fairview Valley Sdn Bhd for RM1 million. Fairview Valley is the land owner-cum-developer of a 27-storey office building within the upcoming TRX. IJM’s construction division, IJM Construction Sdn Bhd, is undertaking the construction of the office tower. The Grade A, LEED Gold-certified office building with a gross floor area with a GFA of about 560,000 sq ft is being developed on a 1.18-acre site. Slated for completion in December 2018, it will be Prudential’s new Malaysian headquarters. To date, it has already secured tenants for 84% of its net lettable area.

OUTLOOK

The outlook for the both Kuala Lumpur and Beyond Kuala Lumpur (Selangor) office markets continues to remain gloomy.

The Business Conditions Index retreated to 103.1 points in 3Q2017 from a higher reading of 114.1 points in the previous quarter (source: Malaysian Institute of Economic Research). As businesses remain cautious on expanding, the gap JKG Tower

8 REAL ESTATE HIGHLIGHTS MALAYSIA

TABLE 5 Selected Grade A Office Asking Rentals

Source: Knight Frank Research

TABLE 6 Selected Office Investment Sales 2H2017

Building Name Location Approx. Lettable Consideration Area (sq ft) (RM per sq ft)

Vista Tower1 Jalan Tun Razak, 551,875 RM455,000,000 Kuala Lumpur (RM824 psf)

Block 11B, Star Central2 Cyber 12, Cyberjaya 17,999 RM11,406,951 (RM634 psf)

Bangunan Affin Bank3 Seksyen 14, Shah Alam 81,771 RM43,500,000 (RM532 psf)

1 Amanahraya Real Estate Investment Trust has entered into a conditional Sale and Purchase Agreement with The Intermark Sdn Bhd for the proposed acquisition of Vista Tower on 7th September 2017 at a purchase consideration of RM455 million. The freehold property comprises a 63-storey office tower with 2 concourse levels and 3 basement levels. As at 31st July 2017, the occupancy rate stood at 74.4%, although this may fall to 66.3% due to non-renewal of one tenancy which expires on 30th November 2017. 2 Prestariang Systems Sdn Bhd has entered into eight (8) separate Sale and Purchase Agreements with Joyful Star Sdn Bhd for the proposed acquisition of an 8-storey semi-detached signature corporate block of offices / retail suites known as Block 11B, Star Central @ Cyberjaya for an aggregate net consideration of RM11,406,951 (gross price of RM12,265,540). 3 Serba Dinamik Group Berhad, a wholly-owned subsidiary of Serba Dinamik Holdings Bhd, has entered into a Conditional Sale and Purchase Agreement with AFFIN Bank Berhad for the proposed acquisition of a 16-storey office building with a 4-storey basement car park known as Bangunan Affin Bank for a total cash consideration of RM43,500,000. As at 24th October 2017, the occupancy rate of the leasehold building stood at 100%, of which approximately 25% is occupied by AFFIN Bank.

Source: Knight Frank Research

9 Source: Knight Frank Research

HIGHLIGHTS VALLEY RETAIL MARKET

MIER Consumer Sentiment Index Cheras Selatan, Amerin Mall, opened (CSI) retreated further to register at MARKET INDICATIONS in December. The mall has secured key 77.1 points in 3Q2017. The MIER Consumer Sentiment Index tenants such as Pinnacles Screen cinema, (CSI) remains weak below the threshold SKM market, Aneka DIY Store, Upper level of 100 points, retreating 3.6 points In line with weak consumer Case café, Oppo, Cotton On, MPH, Texas from previous quarter to register at 77.1 sentiment, retail sales contracted Chicken and Burger King. points in 3Q2017. 1.1% in 3Q2017 against a 4.9% Empire City Damansara Mall located in growth in 2Q2017. Amid growing price pressures coupled Damansara Perdana was partially opened with a weak job market hindering income during the Sea Games in 2017. The growth, consumers continue to cut back Retail Group Malaysia has again is expected to fully open in on discretionary spending as disposable revised downwards its full year 2018. income falls. forecast for 2017 from 3.7% to 2.2%, its third revision from Retail Group Malaysia has again revised an initial projection of 5.0% its 2017 retail sales growth projection as consumers continue to cut from 3.7% to 2.2%, its third revision from back on discretionary spending an initial projection of 5.0%. amid growing pressures on their purchasing power. SUPPLY & DEMAND The review period saw the opening of Recent completion of circa 0.78 two shopping malls with a combined NLA million sq ft NLA of retail space of about 0.78 million sq ft bringing the brings ’s cumulative cumulative supply of retail space in Klang Empire City Damansara supply to 57.4 million sq ft in Valley to circa 57.4 million sq ft. The new 2H2017. Retail space per capita, completions are Melawati Mall (620,000 analysed at circa 7 sq ft per sq ft) and Amerin Mall (155,600 sq ft). Developers and operators of selected person, is one of the highest in the Melawati Mall, which opened its door shopping centres embark on asset region. in August 2017, targets to achieve 80% enhancement initiatives (AEIs) to address occupancy by year end. Its current key changes in the retail landscape and to In response to challenges on tenants include Concept Store, continue creating value for their shoppers the current real estate glut, Brands Outlet, , and tenants. approvals for new applications MPH, Mr DIY and Kaison. IPC Shopping Centre has reopened for shopping complexes, offices, Part of a mixed-use development that two levels, LG1 and LG2, as part of its serviced apartments and luxury also features serviced apartments in condominiums have been frozen

Growing e-commerce market sees FIGURE 3 more retailers embarking on ‘click Existing Cumulative Supply of Shopping Mall (Net Lettable Area) and mortar’ concept. (2H2017)

Source: Knight Frank Research

10 REAL ESTATE HIGHLIGHTS MALAYSIA

Phase 1 redevelopment project. New outlet, the reopening of Italian luxury Shopping Mall continue to maintain high tenants making their debut in the newly fashion brand, Prada and the debut of occupancy levels of 95% and above. refurbished mall include AEON Wellness, Swiss watchmaking company, Longines. , which remains the Australian furniture retailer King Living Malaysia’s largest kiosk for Calvin Klein popular amongst local shoppers and Penang Road Famous Teochew Chendul Watches & Jewelry is also located at Suria tourists, registered near full occupancy and Ben’s Independent Grocer. The three- KLCC. (99.9%) while at neighbouring The phase redevelopment is expected to be In Kuala Lumpur Fringe, Mid Valley Gardens Mall, occupancy was at 99.7%. fully completed by December 2017. Megamall continues to refresh its tenant During the review period, Suria KLCC’s One of Kuala Lumpur’s oldest mix. The F&B segment welcomed the occupancy level was at 96.0%. departmental stores, Sogo, has opening of Secret, Thai Hou Sek, The occupancies of selected suburban undergone a facelift. It has refurbished its MorganFields, Hey Cha, Zok Noodle malls improved marginally: The Mines Lifestyle Floor as well as Food & Beverage House and A’PIEU while in the healthcare (95.4%), Tropicana City Mall (93.7%), (F&B) and Beauty Floor. The new look and beauty care segment, Watsons, and (93.0%). Sogo is home to luxury boutiques and opened its second outlet at level 3 of the brands such as Coach, Victoria Secret, Charles & Keith, Bath & Bodyworks, NYX and as well as home-grown TABLE 7 Asian Designers that include Christy Ng, Largest Flagship Stores Opened in Klang Valley during 2H2017 Miss Suri and many more.

The nearby Pertama Shopping Complex has also completed its facelift recently and welcomed new F&B outlets such as TeaLive, Soulmate and a new renovated KFC.

Seven new shopping centres / supporting retail components with combined retail space of circa 3.9 million sq ft are expected to enter the Klang Valley market Source: Knight Frank Research by 1H2018. They are KL Eco City Retail podium, Retail Mall @ Four Seasons Place, GM Bukit Bintang, Eko River mall, providing seamless payment via Tap PRICES & RENTALS & Go, Click & Collect. Centre, Empire City Damansara Mall, The investment market was fairly active Evo Shopping Mall Bangi and Pinnacle Over at The Gardens Mall, Dyson opened during the review period. Notable retail- . its first concept store in Malaysia. The related investment announcements On top of that, two existing malls, namely upscale mall also saw the opening of include the following: Michelin One Star Putien’s fourth outlet Cheras Leisure Mall and Subang Parade Aeon Co (M) Bhd has entered into a and Inside Scoop’s 15th outlet in Klang will be adding up a total space of 20,000 sale and purchase agreement with Valley as well as Kakigori, a Malaysian sq ft to their current 260,000 sq ft and Foremost Wealth Management Sdn café serving Japanese desserts. 500,000 sq ft of retail space respectively. Bhd for the proposed disposal of Aeon During the review period, the retail Phase Two of Mitsui Outlet Park KLIA Mahkota Cheras Shopping Centre at sector continues to witness a foray of Sepang, on a 27,500 sq m site adjacent a consideration of RM87.8 million. The new brands as well as the expansion of to the current outlet, will be soft launched 7-acre freehold land is erected upon with existing brands and outlets. on December 15. About 35 new stores a two-storey building with built-up area of have been lined up for the opening. New 308,000 sq ft. The sale price is analysed to In the vibrant Kuala Lumpur City, Ladurée, brands at the outlet include Hummer circa RM285 per sq ft on built-up area. the French luxury bakery and sweets bags store and The Beauty Laboratory by maker house, has finally made its maiden Shiseido. It will be officially launched in Saujana Tunggal Sdn Bhd, a subsidiary debut at Mall in February 2018. of LBS Bina Group Bhd has inked an November. Other notable openings therein agreement with Jadi Wawasan Sdn include a two-level Cartier boutique and The average occupancy level for Bhd and Chua Choon Yang to acquire the F&B outlets of American bistro TR Fire shopping centres in Kuala Lumpur was Gerbang Mekar for RM105 million in Grill and Marche Movenpick. at 84.9% in 1H2017 while for Selangor, it cash and kind. Gerbang Mekar is the was lower at 85.4% (source: NAPIC). mall owner and operator of the M3 Meanwhile, Suria KLCC saw the Mall in Gombak, part of a larger mixed expansion and relocation of the oldest Prime and regional shopping centres development on 3.2 acres of leasehold independent, family owned Genevan such as Suria KLCC, Pavilion Kuala land known as “Medan Mega Melati” watch manufacturer, Patek Philippe Lumpur Mall, Mid Valley Megamall, The Gardens Mall, and that also includes 2 blocks of 16-storey

11 In 2018, we expect to see more TABLE 8 consumers turning to online shopping Incoming Retail Supply for greater choices, bargains and convenience. Align with the rapid growth in e-commerce, more retailers are jumping on the bandwagon by embracing the concept of ‘clicks and mortar’.

e-commerce is also gaining traction in the F&B segment. Uber has launched its food delivery service in Malaysia via its UberEATS app, joining other well-established food delivery service providers operating in the country, namely, FoodPanda, PappaDelivery and HonestBee.

Meanwhile, the popularity of e-hailing services has transformed the way we commute and helped to boost footfalls to selected shopping centres, with many having dedicated pick up stands at Source: Knight Frank Research strategic locations.

However, despite the rise in online shopping, bricks-and-mortar outlets are TABLE 9 still very relevant in the local retail industry. Retail Investment Sales 2H2017 Online retail sales account for less than Building Name Location Approx. Lettable Consideration 5% of total retail sales in Malaysia as Area (sq ft) (RM per sq ft) most shopping is done in stores. Visiting Aeon Mahkota Cheras Cheras, Selangor 308,000 RM87.8 million shopping centres remains a favourite Shopping Centre (RM285 psf) pastime for Malaysians during weekends M3 Mall Gombak, Selangor 165,123 RM105.0 million1 and holidays.

1 Saujana Tunggal Sdn Bhd, a subsidiary of LBS Bina Group Bhd has inked an agreement with Jadi Wawasan The current concern weighs more on Sdn Bhd and Chua Choon Yang to acquire Gerbang Mekar for RM105.0 million via cash and kind. Gerbang the high impending retail stock and the Mekar is the mall owner and operator of the M3 Mall in Gombak. M3 Mall is part of a larger mixed development on 3.2 acres of leasehold land known as “Medan Mega Melati” which includes 2 blocks of 16-storey serviced growing pressures on occupancy levels of apartments (M3 Residency) atop the mall. shopping centres across Klang Valley. Source: Knight Frank Research Amid this challenging market environment, it may be opportune for developers with serviced apartments (M3 Residency) atop For 2017, Retail Group Malaysia has yet to be launched retail developments the mall. revised down its earlier retail sales growth to revisit their plans to ensure project projection of 3.7% to 2.2% from an initial feasibility in a very crowded and diluted The monthly gross rentals of selected projection of 5.0% as retail sales declined market. prime shopping centres remained resilient by 1.1% in 3Q2017. The Malaysia Retail during the review period. Mid Valley Chain Association (MRCA), however, Megamall command rentals ranging from expects the country’s overall sales to RM21.40 to RM45.30 per sq ft while for grow at 4.5%. The retail industry outlook Suria KLCC, rentals are from RM35.10 to RM103.25 per sq ft. As for Sunway remains subdued in the short term. Amid Pyramid Shopping Mall, rentals range growing price pressures leading to lower from RM12.10 to RM23.80 on average disposable income, consumers continue (source: NAPIC) to spend prudently, cutting back on discretionary purchases. OUTLOOK The high GDP posting of 6.2% in 3Q2017 (2Q2017: 5.8%) and the recent The short term outlook for the retail strengthening of the local currency may, industry remains challenging although however, lift consumer sentiment and its mid to longer term prospects remain improve retail sales going forward. positive. Melawati Mall

12 REAL ESTATE HIGHLIGHTS MALAYSIA

HIGHLIGHTS PENANG PROPERTY MARKET

Penang is top on the national respectively but a drop of 19.6% for the list with approved investments MARKET INDICATIONS industrial sub-sector. worth RM7.71 billion in the According to the latest figures released manufacturing sector for the first by the National Property Information Sunway Bhd is set to launch several half of 2017. This accounts for Centre (NAPIC) for 3Q2017, there is an projects in Penang worth a total gross 45 per cent of the total RM17.02 upturn of 10.5% in the total volume of development value (GDV) of RM5 billion billion investments approved transactions for all sectors in the State over the next 10 years and with RM2 nationwide and which has also of Penang when comparing 3Q2017 to billion for long-term investment projects surpassed the total investments 2Q2017 and a slight drop of 2.0% when including malls and hotels. Sunway Valley for Year 2016 at RM4.29 billion. measured against 3Q2016. Residential City, a RM2 billion integrated project to transactions made up 73.0% in 3Q2017 be developed on a 24-acre site over 4 (was 72.4% and 73.0% in 2Q2017 and phases in , will comprise The Federal Government has 3Q2016 respectively) of the total volume shop offices, a shopping mall, service announced through Budget and recorded an increase of 11.4% apartments, an education institute 2018 that the capacity of Penang over 2Q2017 but a drop of 2.0% from (Sunway College), an office tower and a International Airport (PIA) will 3Q2016. For the period compared, medical centre. On mainland Seberang be expanded to cater for 12 3Q2017 vs 2Q2017, the various sub- , the group’s mixed development million passengers, an almost sectors performed differently; residential project in will include their 100% increase from the current with 11.4% increase; commercial first healthcare centre in Penang, the 6.5 million. There was an 8.2% with 7.1% drop; industrial with 72.7% 400-bed Sunway Medical Centre to be increase in total passengers increase; agricultural with 16.5% built over two phases, with the 1st phase handled by PIA from January to increase and a slight 1.8% decrease for featuring 250 beds. October 2017 numbering 5.92 development lands. When compared to million passengers compared to Aspen Group has awarded Kerjaya 3Q2016, there is a drop of 2.0%, 9.8% 5.47 million over the same period Prospek Group Bhd with a contract and 26.5% for the residential, commercial worth RM442 million to undertake the of Year 2016. Growths at other and development land sub-sectors main building works for “Vertu Resort” airports in the country range from respectively but an increase of 50.5% – a condominium project which will be -8.5% to 13.5%. for the industrial and 18.3% for the jointly developed by Aspen Group and agricultural sub-sectors. IKEA Southeast Asia. Vertu Resort, In terms of total value of transactions, the first urban resort-inspired high- there is a high 85.3% increase rise development in Aspen Vision City, comparing 3Q2017 with 2Q2017 and comprises five condominium blocks with a 76.6% increase in 3Q2017 over resort facilities and amenities. 3Q2016. Residential transactions for EcoWorld has in October launched the 3Q2017 only made up 39.3% of the first phase of Eco Horizon’s township in total value compared to 61.5% in . Eco Horizon, with a GDV 2Q2017 and 62.5% in 3Q2016 whilst of RM7 billion and to be developed over the agricultural and development 10 years, is a 300-acre township with land sub-sectors recorded a larger 230 acres set for development of over 20.6% and 28.1% share in 3Q2017, 2,000 landed homes and 70 acres for a jump from a 6.0% and 11.4% share commercial development. The first phase in 2Q2017 respectively. In terms of comprises 704 units of 2-storey terraced, performance for 3Q2017 vs 2Q2017, super link and garden homes with the agricultural sub-sector recorded scheduled completion in 2020. a 540.6% increase, the development land sub-sector with 355.2% increase On the industrial front, Boston Scientific followed by the residential, commercial Corporation has commenced operations and industrial sub-sectors with at its new 375,000 sq ft facility over 18.4%, 7.7% and 2.2% improvement a 20-acre (8.1-hectare) plot in Batu respectively. When compared to 3Q2016, Kawan, its 19th global manufacturing there is an improvement of 11.0%, facility and first in Asia. UST Global, 20.5%, 556.8% and 369.3% for the a leading digital technology services residential, commercial, agricultural company, has also opened a new facility and development land sub-sectors in Penang whilst leading semiconductor

13 supplier Broadcom Limited has opened RM806,700 to RM2,086,500 a unit or RM1.20 per sq ft to RM2.00 per sq ft a new RM59 million global distribution from RM850 per sq ft upwards. We per month with the upper band in the warehouse in Batu Kawan which will see understand that current prices have been range of RM2.10 per sq ft to RM2.56 per the shipping of over 90% of Broadcom’s reviewed upwards starting from RM1000 sq ft per month. For similar sized units products directly to its customers. per sq ft. in Gurney Drive, asking rents vary from New investments include a RM120 Queens Residences 1, launched in RM1.90 per sq ft to RM3.00 per sq ft per million investment by Federal Oats Mills 2016, comprises two 21-storey blocks month. For smaller sized units in Tanjong Sdn Bhd to build a new facility on a with a total of 500 condominium units Tokong and Gurney Drive, asking rents 2.7-hectare site in Penang Science Park on the upper floors and commercial are in the range of RM2.42 per sq ft to while Vitrox Corp Berhad will invest areas on the ground and first floors. The RM2.80 per sq ft per month whilst some RM130 million to expand its operations standard units featuring two-bedroom landlords are still asking higher rents of this year and next year in view of the to four-bedroom types and sized from more than RM3.00 per sq ft per month. growing demand for its test equipment 950 sq ft to 1,650 sq ft were put up for and systems. sale at prices ranging from RM787,900 OFFICE to RM1,966,900 a unit or stating from HIGH-END CONDOMINIUM RM829 per sq ft. The unsold units are The existing supply of office space now for sale at RM1000 per sq ft. (buildings of 10-storey and above) on In late June, Ideal Property Group Penang Island remains at 1H2017’s Phases 3 and 4 of Queens Residences launched Queens Residences 2, phase level of 5.71 million sq ft. There were no are expected to be launched soon. 2 of the “Queens Waterfront” project, a incoming supply for 2H2017. sea-front high-end development located In 2H2017, there were lesser sub-sale The occupancy rates for the four prime in front of in Persiaran activities in the secondary market for office buildings monitored in Georgetown Bayan Indah. To be developed over condominiums sized from 3,500 sq ft remain unchanged as at 1H2017’s range 5 phases, Phases 1 to 4 comprising to 6,000 sq ft although prices continue of 90% to 100%. The newer buildings residential units known as Queens to hold steady. Sub-sale transactions is located out of Georgetown, namely One Precinct, Suntech and Menara IJM Land collectively has an average occupancy rate of about 97%, the same level as 1H2017.

In George Town, asking rents of upper floor space for three of the buildings monitored range from RM2.80 per sq ft to RM3.00 per sq ft per month while passing rents at the newer Hunza Tower is higher at RM3.80 per sq ft per month. For buildings located out of George Town, the asking rent for the only lot (459

Site for Queens Waterfront by Ideal Property Group sq ft) available for rent at SunTech, is RM4.10 per sq ft per month; at One Precinct, a 7-storey office building with MSC status located in Bayan Baru, Residences 1 to Queens Residences 4 more brisk for developments in Tanjung asking rents for upper floor space are at with the final Phase 5 for “Queens Sports Bungah compared with and RM3.50 per sq ft per month exclusive of Centre” and an International School. The at prices ranging from RM596 per sq ft charges for air-conditioning usage. sports centre is slated to feature a 200m (The Cove) to RM764 per sq ft (Infinity track velodrome amongst other facilities. Condo and 1 Tanjong). A 2,537 sq ft unit In addition to the planned 370,000 A marina has also been planned for the at the newer Andaman at Quayside in sq ft from The Light City in the Light development. Seri Tanjung Pinang was transacted at Waterfront, new future office supply Queens Residences 2 is a 24-storey RM1,285 per sq ft whilst the latest two may come from Sunway Valley City in exclusive condominium block featuring transactions for the larger sized units of Paya Terubong, a RM2 billion integrated 450 residential units over 17 floors with 10,775 sq ft at indicated an project by Sunway Berhad; it will be commercial units on the ground floor improvement from RM600 per sq ft to developed over 4 phases on a 24- and first floor, 1 level of facilities and 4 RM740 per sq ft. acre site and will feature shop offices, service apartments, a shopping mall, an levels of car park. The standard units Asking rents for larger sized units in educational institute, an office tower and sized from 950 sq ft to 1,650 sq ft were Tanjong Bungah generally range from pre-launched at prices ranging from a medical centre.

14 REAL ESTATE HIGHLIGHTS MALAYSIA

Over in Batu Kawan on mainland TABLE 10 Seberang Perai, IKEA Store is currently Asking Gross Rents of Selected Purpose-Built Office Space on Penang under construction with target opening Island in early 2019. It will have 430,000 sq ft of space.

The several proposed shopping malls coming up over the next five years on the island are as listed in Table 11.

Occupancy rates for the prime shopping malls on the island range from 80% to 99% whilst for the secondary shopping malls, the range is generally from 70% to 90%.

In prime shopping malls, rental rates for ground floor retail lots generally range from RM13.00 per sq ft to above Source: Knight Frank Research RM35.00 per sq ft per month, depending on the mall, location and size of the units.

RETAIL construction is Phase 3 of Penang OUTLOOK The existing supply of purpose-built Times Square, namely The Wave with a The second half of 2017 did not witness shopping space on Penang Island commercial podium which is expected any improvement to the overall property increased from 6.69 million sq ft in to complete in late 2019. Together with market. Sentiments are still very much 1H2017 to 6.99 million sq ft in 2H2017, the upcoming Phase 4 (The Central, hotel subdued because of the overall financial with a circa 300,000 sq ft contribution & commercial), the retail section of both / economic situation as well as political from the recent completion of City Mall Phases 3 & 4 is expected to contribute uncertainties. This is reflected in the in Tanjong Tokong. It is expected to start some 340,000 sq ft to the existing supply overall volume of property transactions business in 1Q2018. when completed. in the state which continues to decline Retail developments under construction Future mall developments on Penang and similarly, the value of transactions, on Penang Island include 900,000 sq ft Island will include IJM Perennial although there is some slight of retail space from Sunshine Tower in Development Sdn Bhd’s proposed improvement for 3Q2017 compared to Bandar Baru . Sunshine Tower development of a five-storey retail mall 2Q2017. comprises three high-rise towers (office, with a gross floor area (GFA) of circa 1.5 However, the state has managed to hotel & service apartments) sitting million sq ft at The Light City Waterfront attract a healthy RM7.71 billion in on a 9–storey commercial podium and ’s proposed 1 million investments in the manufacturing with basement car parks. Completion sq ft proposed development in Paya sector in the first half of the year and is scheduled for 2019. Also under Terubong. some major developers have still been launching projects albeit at a slower pace. These augurs well for a possible TABLE 11 medium term improvement in the public Future Supply of Retail Space within Penang Island sentiments. During 2H2017, the office sub-sector continues to remain relatively healthy with both occupancy rates and rentals holding steady. This is expected to continue over the next few quarters as future supply is not forthcoming for the time being.

The condominium sub-sector is still consolidating whilst the retail sub-sector is expected to face further challenges with additional incoming supply poised to come into the market in 2019.

Source: Knight Frank Research

15 HIGHLIGHTS PROPERTY MARKET

As of 3Q2017, total cumulative MARKET INDICATIONS with Shiya Sdn Bhd to acquire 15.56 committed investment in Iskandar acres of land comprising 252 parcels In the third quarter of 2017, total volume Malaysia stood at RM244.46 of residential land in Taman Sri Pulai and value of transactions in Johor billion, with a 61:39 split between Perdana, Johor Bahru for RM8.15 million increased by about 7.0% and 3.2% year- domestic and foreign investment. (about RM12.00 per sq ft). The vacant on-year (y-o-y) respectively. terraced plots earmarked for courtyard- There were mixed trends in the various type terraced houses. The development Iskandar Puteri was accorded city is expected to start 24 months after the nd sub-categories. status on 22 November 2017, a completion of SPA and its estimated milestone for Iskandar Malaysia Compared to 3Q2016, the transacted gross development cost and profit 11 years after its establishment. volume increased for each sub-sector are worth about RM34.56 million and except for commercial. The industrial RM5.39million respectively. sub-sector showed the highest increment One Bukit Senyum, a high-end (53.8%), followed by development land Country Garden Pacific View (CGPV) has mixed development by Astaka launched the second phase of the Forest (17.5%), residential (9.2%) and agricultural Padu, has been granted node City development, consisting of hotel and (1.8%). status that comes with incentives landed residential components as well as such as full income-tax exemption Despite posting lower volume of three golf courses. The 11-storey high, by IRDA and Ministry of Finance. transactions (-7.4%), the transacted value twin-towered 5-star hotel will feature for the commercial sub-sector was 18.2% 305 guest rooms with sizes ranging from higher. As for the industrial sub-sector, 45 sq m to 323 sq m. Indicative room Berjaya Assets is set to reclaim the transacted value was 40.6% lower rates are from RM300 to RM6,000 per 55 acres of land adjacent to its despite higher transacted volume (53.8%). night. Meanwhile, the landed residential existing development. Work This indicates that lower valued industrial properties, consisting of two and three- is expected to commence in properties were transacted during the storey cluster and semi-detached homes 2018 and upon completion, the review period. with built-up areas ranging from 2,034 reclaimed land will be developed sq ft to 6,975 sq ft per unit will be priced On an annual basis, the value of into mixed use components from RM1.38 million per unit. The hotel, transactions for the residential, agricultural comprising hotels, high-end golf courses and residential units are and development land sub-sectors residential buildings and a expected to be completed in stages from increased 4.3%, 18.1% and 21.8% hospital. 1H2018 onwards. respectively. Serba Dinamik Holdings Bhd intends to MARKET HIGHLIGHTS enter into two separate Memorandum of Agreements (MoA) for the development of In November, MB Group entered into a industrial and commercial projects on a Sales and Purchase Agreement (SPA) 15.87-acre land in Pengerang, Johor and

FIGURE 4 Total Cumulative Investment in Iskandar Malaysia (2006 - 3Q2017)

Source: Napic / Knight Frank Research

16 REAL ESTATE HIGHLIGHTS MALAYSIA

construction work of mixed residential category recorded the highest number IKEA Tebrau was officially opened to the and commercial project on a 70-acre of transactions (1,169 units) in Johor public on 16th November. This is the third land in Kota Tinggi, Johor. The latter Bahru where the transacted volume had outlet in Malaysia. It has a basement car project, known as Pengerang Northshore increased by about 7.8% from 1,084 park providing 1,771 parking bays. The Residence, will feature landed residential units recorded in 3Q2016. retail mall is the largest in South-East properties, affordable apartments, shop-offices, a community complex and other amenities. The project forms part TABLE 12 of Serba Dinamik’s upcoming 132-acre, Johor Bahru: Average Asking Prices and Rentals of Selected RM1.40 billion mega development which Existing High-Rise Projects in 2H2017 will also include the Pengerang Eco- Industrial Park (PeIP) and the Pengerang International Commercial Centre.

UEM Land, through its subsidiary, Bandar Nusajaya Development Sdn Bhd, has entered into a Sales and Purchase Agreement (SPA) with Country View Resources Sdn Bhd, to dispose a parcel of freehold land in Iskandar Puteri for RM310 million (analysed at RM43.42 per sq ft). The 163.92-acre land is zoned Source: Knight Frank Research under commercial use.

Sunway Property has launched its latest mixed development, the GRID Collection TABLE13 within the Market Place precinct in Johor: Notable Launches of Landed Projects in 2H2017 Sunway Iskandar. The integrated development, on a 5.2-acre land in Medini Iskandar, comprises 41 retail units, 74 office units and 501 apartment units. The project with estimated gross development value (GDV) of RM374 million, is situated near the upcoming Coastal Highway Southern Link (CHSL).

Amari Johor Bahru, part of the Suasana Iskandar mixed development, officially opened in May 2017. The 242-room Source: Knight Frank Research 5-star hotel, a collaboration between United Malayan Land Bhd (UM Land) and ONYX Hospitality Group, marks the debut RETAIL Asia with approximately 46,731 sq m of the hospitality group in Malaysia. (503,008 sq ft) of retail space. As of 1H2017, the total retail space in Located along the busy Jalan Wong Ah Johor stood at 19.06 million sq ft, a 3.6% WCT’s Paradigm Mall opened its doors Fook and Jalan Trus in the city centre, th increase y-o-y (1H2016: 18.40 million to public on 28 November. Among the surrounded by established and well sq ft). During the corresponding period, tenants are (anchor tenant), known office towers, retail malls and a occupancy improved marginally to 77.1% Golden Screen Cinemas, Padini Concept convention centre, the hotel is expected (1H2016: 75.9%). Store, Uniqlo, Brands Outlet, Harvey to achieve good occupancy. Norman, Blue Ice Skating Rink @ AEON Group continued its expansion Paradigm Mall and Village Grocer. The with the opening of AEON Bandar Dato seven-storey mall is located along the RESIDENTIAL Onn in early September 2017. The Skudai Highway. It has NLA of about 3-storey shopping mall has a net lettable 1.3 million sq ft. The other components In 3Q2017, District of Johor Bahru area (NLA) of about 600,000 sq ft and will of the 3-in-1 project include a 24-storey continues to lead with 3,118 transacted cater primary to the demand from within serviced apartment block and a 296- units or about 50.9% of the state’s total the larger neighbourhood of Bandar room hotel, to be built in the near future. volume of transactions, followed closely Dato Onn. This will be the sixth outlet by the District of Batu Pahat with 649 for AEON in Johor besides Bukit Indah, The opening of these three retail malls units (or 10.6%). Tebrau City, Kulai, Permas Jaya and (total about 2.4 million sq ft) in Johor Bahru has thus increased the current The two-storey terraced house Taman Universiti.

17 Group, entered into a Sales and Purchase attractive discounts and incentives, Agreement (SPA) with UEM Sunrise Sdn including absorbing legal fees, stamp Bhd to purchase a 100,000 sq ft of land duties and providing furnishings in some for RM13.0 million. The land is located projects. in Southern Industrial & Logistic Centre The affordability issues of home (SiLC), Iskandar Puteri. ownership has triggered the State Hsing Lung Sdn Bhd, a wholly-owned Government to come out with a new

IKEA Tebrau subsidiary of Karyon Industries Berhad mechanism by introducing the Rent–to- (KIB) has entered into a Sales and Own scheme under Jauhar Prihatin Purchase Agreement (SPA) with Parit Programme. Under this scheme, Yusof Oil Mill Sdn Bhd for the disposal of prospective buyers can choose to rent the retail space in Johor to about 21.46 a freehold industrial land for a total sale houses and have the option to purchase million sq ft. consideration of RM4.72 million. the unit after five years renting period. The State government has recently UDA Holdings Bhd has announced plans Johor Corporation has entered into launched 190 units within this scheme to build Angsana 2, which is located next an agreement with Xin Hwa Trading & under the first phase. By 2020, the State to its current retail mall. The proposed Transport Sdn Bhd (subsidiary of Xin Government is targeting to deliver 60,000 800,000 sq ft mall is expected to be Hwa Holdings) to dispose two parcels of units of affordable houses across Johor. completed in 2021 and has an estimated leasehold land in Pasir Gudang Industrial GDV of RM1.5 billion. Area, Mukim of Plentong for about The retail sub-sector is expected to be Tampoi City Centre is another project by RM26.53 million (approximately RM13.82 more competitive as the three newly UDA Holdings. The integrated project, per sq ft ). Both the lands are located opened malls have increased the supply to be built near the Angsana 2 Mall, adjacent to the existing warehouse of the of retail space by about 12.6%. In will comprise a business complex, group and will be used for the expansion anticipation of the income tax reduction a convention hall, hotels, luxury of a new warehouse. as announced in the Budget 2018, consumers’ purchasing power should condominiums and low-cost apartments. In August, Country Garden Pacific improve and in return will help to support View Sdn Bhd officially launched the the retail market in the near future. OFFICE 168.7-hectare Industrialised Building System (IBS) base with a projected cost Notable developments and catalytic The total purpose-built office space of RM2.6 billion. The manufacturing projects in other sectors such as oil and increased by about 5.0% to record at plant, which will be the largest factory gas (O&G), industrial and tourism will 12.25 million sq ft in 1H2017 (1H2016: in the world, is to be built in two phases help to support the growth of residential, 11.67 million sq ft) while occupancy rate with expected completion within three commercial and retail sub-sectors in declined to 77.7% (1H2016: 80.7%). to five years. The application of IBS in Iskandar Malaysia and Johor, in general. BCB Berhad has launched its shop the industry will increase efficiency and The Coastal Highway Southern Link offices in Medini known as VERSIS. productivity as well as speed up the (CHSL) which officially opened in 29th Currently, the project is under Phase completion period of the construction. November 2017 will improve connectivity 1A and consists of 54 units of 3-storey to the Second Link and its surrounding terraced and 3-storey semi-detached areas, thus attracting more investments offices. The average selling price starts OUTLOOK into this part of Iskandar Malaysia. from RM2.28 million per unit. Offered The second half of 2017 saw several The Pengerang Integrated Petroleum with Guaranteed Rental Return (GRR) new launches of landed residential Complex (PIPC), which will contribute of 5% for four years, the shop offices properties in Johor Bahru and Iskandar about RM8.3 billion to the nation’s are expected to be completed in 2019. Malaysia amid the soft property market gross income by 2020, is expected to Since its official launch in September, the condition. Instead of holding land banks, be fully completed in 1Q2019. Currently, project has received good response with developers are gradually releasing their the project is on track and about 77% circa 50% take-up rate. products amid in smaller numbers and completed as of end September. The offer reasonable prices and attractive project has generated a lot of job and sales package to attract potential buyers. INDUSTRY business opportunities for the local Properties with reasonable selling prices Despite the soft market, 2H2017 has community and this has indirectly helped that are strategically located with good recorded several notable industrial land the growth of the property market in the accessibility and offer adequate facilities, transactions in Johor. When compared surrounding areas. are still in demand and continue to be well to 3Q2016, there was a sharp hike in the received by the market. The recent opening of the Golf-Course volume of transactions (53.8%) in 3Q2017 in Desaru Coast near Bandar Penawar is despite a 40.6% decline in value. However, for non-landed properties, some expected to promote the tourism sector developers are postponing new launches In October, Luxx Newhouse Furniture in Johor, and attracts visitors especially whilst clearing existing stocks by offering Sdn Bhd, a subsidiary of Luxx Newhouse from Asia Pacific region.

18 REAL ESTATE HIGHLIGHTS MALAYSIA

HIGHLIGHTS KOTA KINABALU PROPERTY MARKET

Sabah Chief Minister has MARKET INDICATIONS the expansion programme, other major proposed total budget infrastructure works in the area include expenditure of RM4.10 billion. In the third quarter of 2017, the extension of the Jetty at Sepangar registered 2,091 transactions with Oil Terminal and the relocation of Kota corresponding value of RM1.2 billion RM228 million allocated to the Kinabalu Port operations to Sepangar Bay (source: NAPIC 3Q Property Sales Data). tourism sector, with focus to Container Port. The volume and value of transactions promote tourism development in registered a decline of 24.1% and 9.9% It was revealed in October 2017 that rural areas. respectively when measured against after the general cargo port operation is the preceding period of 2Q2017. The relocated to Sepangar Bay, Suria Group Sabah State Government has residential segment (57.3% share) will also be undertaking the construction yet to produce official guidelines remains as the dominant sub-sector in of a dedicated international cruise for Airbnb, although Airbnb Sabah followed by the agriculture sub- terminal at the Kota Kinabalu Port. The operations are declared non- sector (24.8% share). Ranked third is the port will be utilized as a marine gateway permissible in residential lots. commercial sub-sector with 8.7% share as well as a second entry point to the while the development land and industrial heart of the city. Kota Kinabalu Port sub-sectors account for the remaining has been identified as one of the three Fewer new project launches 5.7% and 3.5% share respectively. ports alongside Penang and Klang with during 2H2017, many comprising potential to contribute significantly to the of re-launches of balance units MARKET HIGHLIGHTS Malaysian cruise industry. or new phases of pre-launched The number of visitor arrivals to schemes. For year 2018, a total budget expenditure of RM4.10 billion has been proposed Sabah has grown from 1.1 million to by the Sabah Chief Minister. A sum approximately 3.43 million between of RM1.33 billion has been allocated 2002 and 2016, with a compound annual for infrastructure and transportation growth rate (CAGR) of 9.0%, showcasing developments in Sabah. The funds the healthy growth of Sabah’s tourism will be utilized to conduct studies on industry. As compared to the same traffic congestions within Greater Kota period in 2016, the number of visitors Kinabalu, , , , entering Sabah for the January - August and Sulaman. Road upgrades 2017 period was up by approximately in Kota Kinabalu, Penampang, Inanam, 10.6%. With the influx of tourists entering , Kota Belud and Ranau have Sabah, it is apparent that the tourism also been included under the budget. The industry plays a vital role in the growth tourism sector has been allocated RM228 of the state’s wealth. According to the million, with focus on promoting tourism (STB), total tourism development in rural areas. receipts for year 2017 will surpass the amount recorded in previous year Having been identified under the Eleventh (RM7.249 billion) if the uptrend continues. Malaysia Plan as a game changer to drive As of August 2017, the state has already and stimulate economic growth within recorded estimated tourism receipts of , Sepangar Bay RM5.158 billion. Container Port received the approval of the Federal Government to commence an Despite high tourist demand for online expansion programme under the Sabah home-sharing service in Sabah, Airbnb Development Corridor Initiative (SDC) with operations have been declared non- funding of RM1.1 billion. The programme permissible in residential lots. The aims to upgrade and expand the state government is set to come out infrastructure at Sepangar Bay Container with guidelines arising from concern Port with intention to develop the port into that residential properties are usually a transhipment hub, eventually serving not well equipped to comply with fire as the main gateway for Sabah as well safety regulations that are required by as the region to the ASEAN Economic accommodation providers such as hotels Community. Sabah Ports Sdn Bhd, and resorts. To legally operate Airbnb, currently the operator of the port, has properties must fall under the Hotels and been appointed as the Implementing Lodging House By-Laws 1996 and have Agency for the expansion. In addition to been designated for commercial use or

19 commercial mixed-use areas under the mix of high-rise affordable condominiums, of Kingfisher Inanam, comprising 484 Development Plan (DP). Furthermore, mid-end condominiums, a retail mall, units housed in two blocks of 28-storey whether the property is legally allowed for multi-storey car park and a hotel block. towers with built-up areas ranging Airbnb operations have to be clearly made between 865 sq ft and 1,160 sq ft. The SBC launched the second block of its known to property purchasers before units are priced from RM460,000 to highly anticipated CityPads on 28th August the execution of the Sales and Purchase RM748,000. 2017. Similar to its first block, market Agreements. The main objectives behind response was overwhelming whereby Sinaland is making a strong comeback such laws are to ensure that tourists investors took advantage of the incentives in Kota Kinabalu with its latest brainchild entering Sabah are not taken advantage offered during the 1-day exclusive event. – Elemen Utara KK. Elemen Utara KK of as well as to protect interests of is part of a 100-acre integrated mixed hospitality operators and investors. RESIDENTIAL development comprising of two high- Construction of a Sky Bridge linking Asia rise residential towers (Tower A and City to with sub- The residential market maintained its Tower B) adjoined by one commercial links to Centre Point Shopping Complex position as the dominant sub-sector in complex. Each residential tower houses and Warisan Square has commenced Sabah with a total of 1,199 transactions 294 apartment units (total 588 units) with in May 2017. The bridge will enhance worth RM451.23 million during the built-up areas ranging between 1,055 pedestrian’s walking experiences within review period (3Q2017), accounting for sq ft and 1,636 sq ft (dual key unit) and Kota Kinabalu city centre. approximately 57.3% of the total volume priced reasonably from RM385,000 of sales and 41.8% in value. onwards. Meanwhile, the commercial In line with Eastland Equity Bhd’s vision to diversify its property development into new geographical areas, the company has proposed a rights issue to fund a RM23.26 million land acquisition located within the heart of Kota Kinabalu CBD. The land has been approved for a mixed commercial development comprising of a 28-storey three-star hotel and a 28-storey of hotel suites with four levels of retail lots. Both blocks will also incorporate six levels of multi-storey car park and a basement floor. The gross development value (GDV) for the proposed development is estimated at RM356.92 million.

In October 2017, Jesselton Group signed a Memorandum of Agreement (MoA) with China State Construction Engineering in Beijing, for its latest brainchild – Jesselton Twin Towers. Upon completion, the tallest development in Kota Kinabalu will feature two blocks of 56-storey buildings housing Elemen Utara KK 819 units of high-end condominiums. The existing one-way lane along Jalan Bersatu, Damai will be upgraded to a dual Due to looming oversupply and sluggish complex, to be built at a later stage, will carriageway for the convenience of future market activity, there were lesser new comprise of 2-storey commercial shop residents / occupants. project launches in Kota Kinabalu in lots and multi-storey car park. the second half of 2017, with many The Housing and Urban Development Despite fewer launches, about 1,006 comprising re-launch of balance units or Board (LPPB) is undertaking a joint residential units were added to the new phases from pre-launched schemes. venture with a renowned local developer market as of first half of 2017, of which Many developers are gauging market to rebuild Taman Makmur. Existing 960 units comprise of condominiums response through registration of interests structures made up of 35 units of / apartments. There are still a number before putting their projects into the double-storey semi-detached and of impending supply, particularly market while others are reviewing and terraced houses, as well as the three- high-rise residential products that are re-planning their products to align with storey shop houses within the scheme currently under construction. A summary current market demand and trend. have been demolished to pave way for of the selected high-rise residential redevelopment. Pending final approval, Hap Seng Properties Development Sdn developments is tabulated as follow: the proposed regeneration will comprise a Bhd recently launched the second phase

20 REAL ESTATE HIGHLIGHTS MALAYSIA

TABLE 14 Selected High-Rise Residential Developments (Under Construction)

Source: Knight Frank Research Note: * Residential component forming part of larger mixed developments.

PURPOSE-BUILT OFFICE gross rental for Grade A prime office components that include a shopping mall, space ranging from RM4.50 per sq ft to a 5-star hotel to be managed by Marriot With no new completion in second RM6.00 per sq ft per month while non- Hotels & Resorts, a residential designer half of 2017, the cumulative supply of prime office space command gross rental suite (Pelagos Designer Suite) and a purpose-built office space (private and of between RM2.00 per sq ft to RM3.50 waterfront boardwalk. The consultant government) in Kota Kinabalu remained per sq ft per month. has proposed to reposition Oceanus as stable at circa 6.63 million sq ft with an a tourist destination mall, with a focus to average occupancy rate of 89.0%. RETAIL transform the boardwalk into a food and Although there is no additional supply beverage haven whereby both locals and Kota Kinabalu’s retail market is a of purpose-built office space during the tourists are able to enjoy good food and burgeoning sub-sector within the property review period, commercial office spaces beautiful sunsets under one roof among market. As of first half of 2017, the from recently completed Signature Office other things. existing supply of purpose-built shopping Suites @ Sutera Avenue and Boutique complexes in Kota Kinabalu stands at The review period saw the opening of Office @ have been added to the circa 5.8 million sq ft following the debut the Commercial Square of Aeropod @ market scene. of multiple shopping centres such as in August 2017. The 60-acre , Kota Kinabalu’s first Grade Jesselton Mall @ Jesselton Residences, Aeropod project by SP Setia is poised to A office building continues to see ITCC Penampang, and be the largest integrated linear city in Kota improvements in its occupancy rate; Mall. The emergence of new retail space Kinabalu. currently standing at 79.0%. Plaza Shell has compressed the occupancy rate Meanwhile, ITCC Shopping Mall continues to welcome well-established slightly to 88.8% in 1H2017 as compared has secured anchor tenant, Bataras retailers (SugarBun, The Chub’s Grill to 89.2% in 1H2016. Hypermarket, occupying 34,000 sq ft of and Gaya Seafood Restaurant) as well Sunsea Pavillion Sdn Bhd has appointed space within the newly officiated mall. A as corporate tenants (KPMG PLT, Mega a consultant to revive and manage memorandum of understanding (MoU) Legend Sdn Bhd, Knight Frank Malaysia Oceanus Waterfront Mall within the has also been signed between the mall’s Sdn Bhd) on board. integrated development known as developer (Sabanilam Enterprise Sdn Rentals of prime and non-prime CBD Kota Kinabalu City Waterfront (KKCW). Bhd) and mm2 Screen Management Sdn office space remained stable with asking The development comprises a mix of Bhd which will see the opening of the first

21 FIGURE 5 Cumulative Supply and Occupancy Rate of Purpose-Built Office Space in Kota Kinabalu

Source: Napic / Knight Frank Research

FIGURE 6 Cumulative Supply and Occupancy Rate of Shopping Complexes in Kota Kinabalu

Source: Napic / Knight Frank Research

22 REAL ESTATE HIGHLIGHTS MALAYSIA

mmCineplexes in East Malaysia at ITCC in prime areas that would command “sustainability” of the retail sector. Having Shopping Mall. The former 10.5-acre higher price per sq ft were designed in said that, the retail business should be plot of paddy field land is now home to smaller size configurations, to ensure viewed as a long-term game, therefore ITCC Shopping Mall, a 1.68 million sq ft that the lower absolute pricing remains we opined that the success of a shopping commercial facility that has successfully competitive and attractive to potential mall fundamentally lies in its ability to secured the Occupation Certificate for buyers and investors. Besides that, with attract patrons. High shoppers’ traffic Phase 1A in August 2017. the propelling tourism market, many is usually generated and sustained by Similar to the first half of 2017, there is developers are riding along the tide by having a good tenant mix comprising an absence of new proposed launches building projects that can cater to Airbnb complementary trades, as well as a for the retail sub-sector. However, operations legally. well-planned positioning system that is in line with the demographic profile of its approximately 700,000 sq ft of retail Despite the fact that there is no new catchment population. A well-planned space will be coming on-stream in the incoming supply, the purpose-built and executed tenant mix can help a mall near future. office market has plateaued with overall to sustain its “destination” status even in occupancy hovering at a healthy level. the face of ferocious competition. MARKET OUTLOOK Meanwhile, there is still concern on the Both developers and purchasers continue to be cautious amid the current challenging property market environment. TABLE 15 The property market will need some time Asking Gross Rentals of Selected Purpose-Built Office Space in Kota Kinabalu to self-correct and slowly shift back to its equilibrium level. The responsiveness will depend on multiple aspects such as regulatory factors, economic conditions, demographic factors, to name a few.

The overall residential market is expected to remain stable but challenging. Demand for affordable and quality properties in sought after locations, is expected to sustain as there are genuine buyers in the market. With affordability remaining a key issue, developers have responded to the market environment with more affordable projects leading the way.

The high supply pipeline of residential properties, particularly high-rise units from recently completed and soon to be completed projects is expected to exert pressures on the capital and rental market. Tenants continue to be spoilt for choice while landlords are faced with Source: Napic / Knight Frank Research lower potential returns particularly in locations with weak occupational demand and high project completions. In addition, current issues regarding the legality of online home-sharing services such as Airbnb within residential schemes have also impacted investors’ appetite towards products of this nature.

There were fewer property launches when compared to the previous years as many developers are in the midst of reviewing and re-planning their products to align with current market demand and trend. For instance, selected new launches

23 MALAYSIA CONTACTS Eric Y H Ooi Executive Chairman +603 228 99 668 eric.ooi@ my.knightfrank.com

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RESIDENTIAL RESEARCH [email protected] GLOBAL HOUSE PRICE INDEX

GLOBAL HOUSE PRICE GROWTH INTERNATIONAL PROJECT MARKETING WEAKENS The main story from this quarter’s data is of slowing growth. Overall, the index increased by 5.1% year-on-year compared with 6.3% last quarter. Dominic Heaton-Watson This represents the index’s lowest rate of annual growth since the start of 2016.

Although nearly nine in every ten of the an annual basis meaning it is second only Results for Q3 2017 countries tracked by our index recorded to Ukraine as the weakest-performing Senior Manager The Knight Frank Global House Price positive annual price growth in the year to market. The oil-dependent Saudi economy Index increased by 5.1% in the year to September 2017, almost half saw their rate is struggling to gain traction, which along with the recent introduction of a levy September 2017 of annual growth decline compared with the previous quarter. on expatriate workers is stifling housing demand. +603 228 99 741 The shift was most evident at the top of the Prices increased year-on-year in 88% rankings table. Thirteen of the 15 strongest- The US and the UK are following different of the countries tracked but almost performing housing markets around the trajectories, mirroring their economic half saw their rate of growth decline world registered a slowdown in their rate of performance. Average prices in the US compared with last quarter annual growth in the year to September. accelerated 6.2% over the 12-month period, [email protected] up from 5.8% last quarter whilst the UK has Iceland leads our annual rankings with incurred a marginal dip from 2.8% to 2.6%. Iceland leads the index for the fourth average prices ending the year to September The UK market remains highly localised with consecutive quarter but its rate of 20.4% higher, down from 23.2% last affordability a key concern in many markets. growth has slowed quarter. Iceland has now topped our annual rankings for four consecutive quarters. China has slipped from 12th to 19th position in our rankings. House prices are now rising European housing markets averaged Hong Kong has clung on to second place at their slowest rate for five quarters, up by 5.6% price growth in the year to but data from the Hong Kong Ratings and 6.5% on an annual basis according to the September, up from 2.3% three Valuation Department shows price growth National Bureau of Statistics. years ago equated to only 1.7% in the three months European housing markets are firmly back PENANG BRANCH to September. in the spotlight. On average, the region China has slipped from 12th to Estonia, Hungary and New Zealand have recorded 5.6% annual price growth in the 19th position in our rankings as tighter dropped out of the top ten this quarter. year to September, up from 2.3% three macroprudential regulations bite New Zealand slipped from 10th place to years ago. The good news for Europe 27th as annualised price growth declined doesn’t end there. Greece (0.7%) may finally Tay Tam from 10.4% to 5.2%. Tighter lending see price growth reach positive territory over conditions and plans to introduce a ban on the next quarter after nine years of negative foreign investors in 2018 have potentially annual growth. reduced some of the speculative activity in Despite Europe’s recent recovery, analysis the market. Executive Director over a five and 10-year period underlines the This quarter marks the inclusion of Saudi extent to which countries within Asia Pacific Arabia within the index for the first time. still rank amongst the highest performers. Latest data shows prices slipped 5.4% on (Figure 4). +604 229 3296 FIGURE 1 KATE EVERETT-ALLEN International Residential Research Global House Price Index Q3 2017 Annual performance over the last five years* “ Thirteen of the 15 strongest- 8% [email protected] performing housing markets 7% around the world registered 6% 5% a slowdown in their rate of 4% annual growth in the year to 3% 2% September.” 1% 0% Follow Kate at @keverettkf Q3 Q4 Q1 Q2 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3

For the latest news, views and analysis on 2015 2016 2016 2016 2017 2017 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2016 the world of prime property, visit Global **2017 JOHOR BRANCH Briefing or @kfglobalbrief Source: See final page *Weighted by PPP ** Provisional Ricky Lee The Wealth Report Global Cities: Asia-Pacific Prime Global House Price Executive Director 2017 The 2018 Report Office Rental Index Q3 2017 +607 3382 888 [email protected] Index Q3 2017 SABAH BRANCH Knight Frank Research Reports are also available at www.knightfrank.com Alexel Chen Resident Director +608 8279 008 [email protected] © Knight Frank 2017 This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted by Knight Frank Research or Knight Frank for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is allowed with proper reference to Knight Frank Research.

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