This article first appeared in City & Country, The Edge Malaysia Weekly on June 10, 2019 - June 16, 2019

Grade A strata offices in integrated developments that are located close to light rail transit (LRT) or mass rapid transit (MRT) stations remain good choices for investment while industrial properties, particularly built-to-suit ones, will continue to be in great demand, Zerin Properties says in its latest “Property Market Overview and Outlook” report.

According to the firm, Grade A buildings are often the newest and highest-quality buildings in the market, outfitted with top-of-the-range fixtures, amenities and high-tech systems. Sought after by high-profile and white-collar companies, they are sited in high-visibility locations with excellent connectivity and access, and managed by reputable property management companies.

Zerin Properties says a noticeable trend now is transit-oriented developments (TODs), a result of developers responding to changing market demands. The younger working population prefers mixed-use developments over purely residential or commercial projects, it adds.

Last year, there was a significant increase in volume and value in the commercial market, up 8% to 23,936 units and 16% to RM29.51 billion respectively.

According to Zerin Properties, 29 office buildings were transacted at RM1.19 billion in 2018. Kuala Lumpur saw the most transactions with eight, followed by Selangor with seven, Sabah with five, Penang with four, and one each in Johor, Perak, Sarawak, Labuan and Putrajaya.

The average occupancy rate of purpose-built offices stood at 82.4% last year compared with 83.3% the year before. Kuala Lumpur recorded the highest negative take-up of 38,632 sq m (from 7,127,482 sq m in 2017 to 7,088,850 sq m in 2018).

Meanwhile, an occupancy rate of more than 80% was seen in the states, with Perlis maintaining its 100% occupancy rate, says Zerin Properties.

Over in the shopping complex retail subsector, the average occupancy rate decreased to 79.3% from 81.3% the year before. Zerin Properties attributes the decline to negative take-ups in several states, especially Selangor and Pahang — 32,665 sq m and 10,831 sq m respectively.

Six shopping complexes, worth RM237.24 million, were transacted last year — Johor and Perak with two each, and Terengganu and Kelantan with one each.

In the industrial subsector, there were 6,032 transactions worth RM15.1 billion last year, an increase of 5.4% in volume and 28.9% in value. Selangor continued to take the lead, contributing 33.6% to the total volume, followed by Johor and Perak with 14.4% and 10.5% respectively.

“Prices of industrial properties showed a mixed performance. Johor recorded several negative double-digit price changes, especially in Tampoi. In Penang, industrial properties in Barat Daya registered a better price change due to limited supply,” says Zerin Properties.

The industrial property overhang continued to rise last year, recording a total of 1,183 units valued at RM1.98 billion compared with 999 units valued at RM1.51 billion the year before. Johor accounted for 48.9% (579 units) of the total overhang units, the firm adds.

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