Property Market Report 2013: Commercial property sub-sector expected to remain challenging

KUALA LUMPUR: The outlook for the local shopping complex and purpose-built office sectors is expected to be challenging this year, with increasing supply of space and slower take-up rate, said the National Property Information Centre (Napic).

The performance of shopping complex is expected to be moderate in tandem with the bleak Business Condition Index (BCI) and Consumer Sentiment Index (CSI), Napic said in a statement yesterday.

“As at the fourth-quarter of 2013 (4Q13), the CSI fell below the 100-point threshold to settle at 82.4 points, the lowest since 2009. Likewise, the BCI declined further in 4Q13 to settle at 92.6 points, extending its earlier downtrend.

“The low indices indicated that consumers were cautious with their spending and business confidence has weakened,” said Napic.

However, it expects occupancy and rents in the office sub-sector to sustain this year until the completion of mega developments.

Last year, the commercial property sub-sector was ranked as the third most active market after the residential and agricultural sub-sectors, recording 34,298 transactions worth RM35.56 billion, according to the Property Market Report 2013 by Napic.

The shop sub-sector was the biggest contributor at 58.9% or 20,185 transactions of the volume and 39.7% or RM 14.11 billion of the value of transactions last year. However, compared with figures the year before, the shop market activity softened last year.

All types of shops recorded a decline in the volume of transactions. Three- to three-and-a-half-storey shops saw the lowest contraction at 8.9% and the highest was pre-war shops at 10.5%.

Two- to two-and-a-half-storey shops were the most active in terms of shop transactions, capturing 52.8% of the shop market share with 10,667 transactions. Selangor led the market with 1,137 transactions, followed by Johor with 1,054 transactions and Sarawak with 921 transactions.

The retail sub-sector saw slight improvement last year as the average occupancy rate of shopping complex increased marginally to 79.5% from 78.9% in 2012, due to the imbalance in completions and the take-up of new space.

The year saw the completion of 20 new shopping complexes, offering a total of 362,738 sq m of space from 510,662 sq m in 2012.

As at end of last year, the country had 12.39 million sq m of existing retail space, with another 1.25 million sq m in the incoming supply. The market also had 457,440 sq m of retail space in the planned supply.

The volume of purpose-built offices increased 20.8% to 29 transactions last year from 24 transactions in the previous year. Despite the increase in volume, the value of transactions fell slightly by 3.5% to RM1.27 billion from RM1.32 billion in 2012.

The majority of these transactions were in Kuala Lumpur, which recorded a share of 37.9% of purpose-built offices in the country.

This article first appeared in The Edge Financial Daily, on April 23, 2014.

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