2010 Global Market Report - NAI Commercial Real Estate

Kuala Lumpur, MalaysiaSingaporeContactNAI Reapfield+60 3 2713 3399Country DataArea (KM 2 )GDP Growth (%)GDP 2009 (US$ B)GDP/Capita (US$)Inflation Rate (%)UnemploymentRate (%)Interest Rate(%)1334.3-3.3%$207.35$7,468.99-0.10%3.60%5.5%The dark clouds of late 2008 and early 2009 gave wayto optimism as the Kuala Lumpur market adjusted to thecurrent regional and global economies. An equities rallymidway through the year also aided the property market.The economy continued to be driven by the service andmanufacturing sector. The Malaysian Institute of EconomicResearch revised its forecast for 2009 GDP upward to acontraction of 3.3% from 4.2%. A rise from the earlierpredicted 2.8% to a positive 3.7% is expected for 2010.Rental rates in the market were strong for newly launchediconic buildings like UOA Bangsar (suburban) at RM 5.30and G Tower (CBD) at RM 6.50. The average occupancy inKuala Lumpur in the first half of 2009 was 83%. Roughly 12million SF of new space is expected to enter the market bythe end of 2010.Darul Takaful, Wisma Chase Perdana, Wisma Dijaya, WismaGlomac 3, Citibank Tower (50%) and Block B GBC transactionsbrought confidence to the office market, with theCitibank Tower partial sale in August valued at RM 828/SFand the Darul Takaful sale in March valued at RM 636/SF,indicating positive investor appetite.The manufacturing sector embraced the challenges ofreduced demand from major markets in Europe and the US.Industrial properties saw a correction of 20-30% fordetached and semi-detached properties in the Klang Valley;however, detached buildings in prime locations continuedto attract interest.Retail rates experienced a 10-20% decrease. Averageoccupancy rates stood at 85-90%. An estimated 1 millionSF is expected to enter the already crowded Klang Valleymarket in 2009 with an additional 2.3 million SF in 2010.The conditional sale of a prime 2.62-acre parcel of landalong Jalan Ampang in the City’s Golden Triangle for RM148.2 million made headlines in early 2009. The marketseems set for a selective play by developers who areexpected to introduce new and modern designed industrialbuildings.ContactNAI Singapore+65 63337738Country DataArea (KM 2 )GDP Growth (%)GDP 2009 (US$ B)GDP/Capita (US$)Inflation Rate (%)UnemploymentRate (%)Interest Rate(%)1334.3-3.33%$163.13$34,346.03-0.21%3.63%0.38%In a concerted manner similar to other parts of Asia, Singaporeemerged from the recession that ended with the release ofQ3 2009 economic data. The manufacturing sector expandedby 35% quarter-over-quarter and the service producingindustries expanded by 9%. However, the construction sectordeclined by 0.6%.The office market in 2009 saw a sharp decline of almost 40-50% in prime office rental rates in the first half of the yearstemming from the economic downturn. The decline of primeoffice rentals moderated in Q3 2009. We forecast the declineof prime office rentals in 2010 will moderate given thestronger economic momentum, even with greater officesupply coming on stream with MBFC, Asia Square and othernew developments in 2010. Class A vacancy rose to 4% inQ2 2009, up from 3.5% in the previous quarter.Large transactions in 2009 included the S $172 millionpurchase of three separate office buildings in a collectivesale; Aviva Building, Ceil House and VTB Building with a totalstrate area of 185,019 SF at a cost of S$929 SF. Strata titledfloors in Prudential Towers at level 20 to 25 were sold toKREIT who paid S$106.29 million or S$1,579 SF.In the retail market, Prime Orchard Road continues to transformand three major shopping centers will have opened byChristmas 2009; ION Orchard, Orchard Central and 313Sommerset. There are major additions and renovations atPark Hotel, Meritus Mandarin Hotel and 111 SommersetRoad. Prime Orchard Road rent averaged S$33/SF/month inQ3 2009, a decrease of 3.0% quarter over quarter. However,prime suburban rents inched up 0.7% quarter over quarter toaverage $28/SF/month in Q3 2009.The top five investments in 2009 were: SPA-led consortiumputs in a top bid of S$541.9m for a mall being developed inclements by Housing & Development Board. UOL’s successfulbid in the government residential land tender for the landparcel at Dakota Crescent for S$329 million (S$509/SFplot ratio); Swissotel Merchant Court was sold for S$260million to TA Enterprise; Katong Mall is sold for S$247.6million bought bu a consortium of investors led by formercapital and retail head. ARA purchased Suntec InternationalConvention & Exhibition Centre for S$235 million.Population (Millions) 27.761Population (Millions) 4.75Kuala Lumpur At A GlanceConversion:3.375 RM = 1 US$ RENT/SF/MO US$ RENT/SF/YRLow High Low High VacancyDOWNTOWN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAILDowntownNeighborhood Service CentersCommunity Power CenterRegional MallsRM 5.30 RM 6.50 $ 18.84 $ 23.11 N/ARM 5.50 RM 9.00 $ 19.56 $ 32.00 3.0%RM 3.50 RM 4.50 $ 12.44 $ 16.00 15.0%RM 3.50 RM 4.50 $ 12.44 $ 16.00 N/ARM 4.00 RM 4.50 $ 14.22 $ 16.00 15.0%RM 2.50 RM 3.50 $ 8.89 $ 12.44 20.0%RM 1.20 RM 1.40 $ 4.27 $ 4.98 N/ARM 1.50 RM 2.00 $ 5.33 $ 7.11 N/ARM 2.00 RM 2.50 $ 7.11 $ 8.89 N/ARM 13.50 RM 14.40 $ 48.00 $ 51.20 10.0%RM 7.00 RM 20.00 $ 24.89 $ 71.11 10.0%RM 2.50 RM 12.00 $ 8.89 $ 42.67 15.0%RM 22.00 RM 28.00 $ 78.22 $ 99.56 5.0%N/A N/A N/A N/A N/ADEVELOPMENT LAND Low/SF High/SF Low/SF High/SFOffice in CBDRM 1,000.00 RM 1,500.00 $ 296.30 $ 444.44Land in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRMRMRM200.0050.0025.00RMRMRM259.0070.0035.00$$$59.2614.817.41$$$76.7420.7410.37Retail/Commercial LandRM 300.00 RM 400.00 $ 88.89 $ 118.52Residential (per M 2 )RM 50.00 RM 70.00 $ 14.81 $ 20.74Singapore At A GlanceConversion: 1.38 SGD = 1 US$ RENT/SF/YR US$ RENT/SF/YRLow High Low High VacancyCITY CENTER OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAILSGDSGDSGDSGDSGDSGDSGDSGD72.0072.0060.0054.0054.0036.00N/A14.0030.00SGDSGDSGDSGDSGDSGDSGDSGD120.00120.0090.0072.0072.0054.00N/A17.0033.00$$$$$$$$52.1752.1743.4839.1339.1326.09N/A10.1421.74$$$$$$$$86.9686.9665.2252.1752.1739.13N/A12.3223.9120.0%5.0%10.0%20.0%10.0%15.0%N/A25.0%15.0%DowntownSGD 264.00 SGD 480.00 $ 191.30 $ 347.83 3.0%Neighborhood Service CentersCommunity Power CenterN/AN/AN/AN/AN/AN/AN/AN/AN/AN/ARegional MallsSGD 144.00 SGD 300.00 $ 104.35 $ 217.39 2.0%Solus Food StoresN/A N/A N/A N/A N/ADEVELOPMENT LAND Low/SF High/SF Low/SF High/SFOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidentialSGD 800.00 SGD 1,200.00 $ 579.71 $ 869.57SGD 500.00 SGD 800.00 $ 362.32 $ 579.71SGD 30.00 SGD 100.00 $ 21.74 $ 72.46SGD 20.00 SGD 50.00 $ 14.49 $ 36.23SGD 1,000.00 SGD 1,500.00 $ 724.64 $1,086.96SGD 600.00 SGD 2,000.00 $ 434.78 $1,449.282010 Global Market Report ■ www.naiglobal.com 34