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Malaysia Real Estate Report Q4 2010

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Key Insights On The Real Estate Sector Of Malaysia For protagonists in Malaysia's commercial real estate sector, the global financial crisis, and subsequent downturn in global trade, was not a particularly important issue. Malaysia's economy coped fairly well with the challenges of 2008 and 2009. After real GDP fell in 2009 by 1.7% y-o-y and in Q309 by 1.2%, the recovery began in Q409, with a quarterly growth rate of 4.5% y-o-y. High levels of private consumption and investment have been the main drivers. Looking forward, growth will likely be boosted by more streamlined regulations and increased foreign direct investment (FDI). Of much greater significance has been the over-supply of space ' particularly in the Kuala Lumpur office sub-sector. BMI's in-country sources, who were interviewed at the beginning of 2010 and again in June/July, have indicated that ' in most of the market ' rental rates have held up. On the limited information available to us, it appears that the same has not necessarily been true of capital values. Yields have risen more or less across the board ' and dramatically so in Kota Kinabalu. Our sources are, for the most part, confident that rental rates will track sideways or rise slightly in the coming year. Taking a longer view, we envisage that yields will fall slightly over the coming four years. In essence, we are looking for rents to increase marginally, but for capital values to increase by a slightly greater amount. Key Features Of This Report This is the latest edition of a new series of industry reports published by BMI that seeks to identify the key dynamics of the real estate sectors of 44 countries around the world, some of which are developed and some of which are, in every sense, emerging markets. Once again, the questions that we seek to answer for each country remain as follows: What are the main issues that will matter to actors in and around real estate development in the country concerned, both over the long and the short term' What are the main constraints that they face' What are the key insights that one garners when one compares the real estate sector of the country concerned with its peers in other countries' In Q3 we have introduced a very substantial new improvement to the reports. We have incorporated data and qualitative observations provided to us by commercial real estate agents operating in the countries we survey. As a result we have gained a much clearer picture of the balance between demand and supply in each of three main sub-sectors ' office, retail and industrial. We have also introduced a new approach to the forecasting of rental yields, which is discussed in the methodology sector of this report. In Q4, we have incorporated a lot of new data in relation to rents and yields in 2010. We gained this data by way of a new round of interviews with our in-country sources in mid-2010. In some cases, the latest information from our sources has caused us to make significant revisions to our forecasts for 2011-2014. We asked our sources to indicate what growth in rents is likely for 2011. We explain their answers in the Forecast Scenarios.

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Malaysia Real Estate Report Q4 2010

  1. 1. Find Industry reports, Company profilesReportLinker and Market Statistics >> Get this Report Now by email!Malaysia Real Estate Report Q4 2010Published on September 2010 Report SummaryKey Insights On The Real Estate Sector Of MalaysiaFor protagonists in Malaysias commercial real estate sector, the global financial crisis, and subsequent downturn in global trade, wasnot a particularly important issue. Malaysias economy coped fairly well with the challenges of 2008 and 2009. After real GDP fell in2009 by 1.7% y-o-y and in Q309 by 1.2%, the recovery began in Q409, with a quarterly growth rate of 4.5% y-o-y. High levels ofprivate consumption and investment have been the main drivers. Looking forward, growth will likely be boosted by more streamlinedregulations and increased foreign direct investment (FDI).Of much greater significance has been the over-supply of space particularly in the Kuala Lumpur office sub-sector. BMIs in-countrysources, who were interviewed at the beginning of 2010 and again in June/July, have indicated that in most of the market rentalrates have held up.On the limited information available to us, it appears that the same has not necessarily been true of capital values. Yields have risenmore or less across the board and dramatically so in Kota Kinabalu. Our sources are, for the most part, confident that rental rateswill track sideways or rise slightly in the coming year. Taking a longer view, we envisage that yields will fall slightly over the comingfour years. In essence, we are looking for rents to increase marginally, but for capital values to increase by a slightly greater amount.Key Features Of This ReportThis is the latest edition of a new series of industry reports published by BMI that seeks to identify the key dynamics of the real estatesectors of 44 countries around the world, some of which are developed and some of which are, in every sense, emerging markets.Once again, the questions that we seek to answer for each country remain as follows: What are the main issues that will matter toactors in and around real estate development in the country concerned, both over the long and the short term What are the mainconstraints that they face What are the key insights that one garners when one compares the real estate sector of the countryconcerned with its peers in other countriesIn Q3 we have introduced a very substantial new improvement to the reports. We have incorporated data and qualitative observationsprovided to us by commercial real estate agents operating in the countries we survey. As a result we have gained a much clearerpicture of the balance between demand and supply in each of three main sub-sectors office, retail and industrial. We have alsointroduced a new approach to the forecasting of rental yields, which is discussed in the methodology sector of this report.In Q4, we have incorporated a lot of new data in relation to rents and yields in 2010. We gained this data by way of a new round ofinterviews with our in-country sources in mid-2010. In some cases, the latest information from our sources has caused us to makesignificant revisions to our forecasts for 2011-2014. We asked our sources to indicate what growth in rents is likely for 2011. Weexplain their answers in the Forecast Scenarios. Table of ContentExecutive Summary .......... 5SWOT Analysis .... 7Malaysia Real Estate/Construction SWOT .7Malaysia Economic SWOT ........... 8Malaysia Business Environment SWOT ...... 9Regional Real Estate Overview ..... 10Table: Asia Pacifics Office Markets At A Glance Rents, 2009-2011 (US$ per square metre per month) 10Malaysia Real Estate Report Q4 2010 Page 1/4
  2. 2. Find Industry reports, Company profilesReportLinker and Market StatisticsTable: Asia Pacifics Retail Markets At A Glance Rents, 2009-2011 (US$ per square metre per month) . 12Table: Asia Pacifics Industrial Markets At A Glance Rents, 2009-2011 (US$ per square metre per month) ......... 14Real Estate Market Overview ........ 16Malaysia Real Estate Markets - Rentals in m²/month (MYR) . 17Table: Malaysias Real Estate Market Net Yield, 2008 And 2009 (%) ............ 18Table: Malaysias Real Estate Market Terms Of Contract/Lease ..... 18Table: Malaysias Real Estate Market Available And Vacant Space (mn ft²) . 19Forecast Scenario ........... 20Real Estate Outlook ...... 20Table: Malaysia Real Estate Markets Rentals in m²/month (MYR) ... 21Table: Malaysia Real Estate Markets Forecast Net Yield (%) .......... 21Construction Industry Outlook .... 22Table: Economic And Construction Data . 23Macroeconomic Outlook ............. 24Table: Malaysia Economic Activity ....... 25Business Environment ... 26Real Estate/Construction Business Environment Ratings ..... 26Table: Asia Real Estate/Construction Business Environment Ratings . 26Malaysias RECBER ..... 27Project Finance Ratings For Asia Pacific . 28Table: Design And Construction Rating ... 30Table: Commissioning And Operating Rating ........ 31Table: Overall Project Finance Rating ..... 32Malaysias Business Environment ............ 33Table: BMI Business And Operational Risk Ratings ............. 34Table: BMI Legal Framework Ratings ..... 36Table: Labour Force Quality ...... 40Table: Asia, Annual FDI Inflows 43Table: BMI Trade Ratings .......... 44Table: Top Export Destinations (US$mn) . 45Company Monitor ............ 47AZRB 47General Corporation Berhad ...... 49IJM Corporation Berhad ............ 50Isyoda Corporation Berhad (ICB) ............ 52MRCB ............. 53WCT Berhad ... 55BMI Methodology ............ 56How We Generate Our Industry Forecasts ............. 56Construction Industry ... 57Bank Lending .. 58Real Estate/Construction Business Environment Rating ....... 58Table: Weighting Of Indicators .. 59Project Finance Ratings Indicators .......... 61Table: Design And Construction Phase .... 61Table: Commissioning And Operating Phase Commercial Construction ....... 62Table: Commissioning And Operating Phase Energy And Utilities .. 63Table: Commissioning And Operating Phase Transport .... 64Sources ........... 66Malaysia Real Estate Report Q4 2010 Page 2/4
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