In Nawani Tie’s latest report on real estate in the Klang Valley, with the title, “KUALA LUMPUR Q1 2022:
Optimism Recovers as the Country Enters Endemic Phase”.
Total investment sales in Q1 2022 (RM315.9 million) registered a sharp decline of 33 per cent as compared to the previous quarter (Q4 2021, RM473.9 million). Comparing year-on-year, Q1 2022 was observed to have decreased by 20 per cent.
Main takeaways from the report:
Transactions of Q1 2022 focused primarily on land and industrial properties, with one office building transaction.
• Land sales have been a growing trend for developers looking to strategically increase their land banking and
strengthen future pipeline projects launches.
• It is observed several related party transactions this quarter with TIME, Far East Packaging, and Axis REIT.
• In addition to its existing integrated project at the Lifestyle Quarter of TRX, Lendlease expands its presence in Malaysia with a new 60:40 joint venture for a 1.2-acre site. The plan for this will be to construct a mixed development that will include hotel, residential and retail components.
• Sunway plans to launch a new medical centre and a shopping mall in their Sunway City Ipoh Township by 2025. The 200-bed medical centre will be under the Sunway Medical brand to cater to the surrounding population. With a net lettable area of 700,000 sq ft, the mall will integrate into the eco-focused surroundings.
• Land & General purchased a 3.55-acre land in Puchong Jaya within walking distance from IOI Puchong Jaya LRT Station and IOI Shopping mall. The land is said to have the potential to capture the new homebuyers’ market, which should contribute positively to Land & General’s future cash flows.
• Mapletree Logistics Trust acquired two industrial lands, approximately 5.8 acres. They plan to develop
this into a warehouse with a ramp-up system.
• AZRB had purchased from MTD Group a parcel of land to expand on their in-house production of precast concrete and serve as a store or depot for the group.
• EUPE had purchased 53.6-acre land in Kedah. The rationale behind this purchase is the group’s continuous efforts to sustain its core business as a property developer by acquiring viable land banks for future development.
*TIME had purchased a 13-storey KWSP Building at Changkat Raja Chulan, KL. It is seen as a related party transaction as KWSP is a major shareholder of TIME. It is said that this acquisition will increase space for operational facility expansion.
• Far East Packaging had purchased the single-storey detached factory building and warehouse that it currently occupies from KYM Holdings. It was purchased at a yield of approximately 8 per cent.
• HQ Pack Facility in Johor was another related party transaction where Axis had injected the property into
their REIT. The detached factory with a double- storey office leased to HQ Pack was injected at a yield of 6.6%.
Market Outlook
Increasing market activity observed as Malaysia continues its slow recovery post- Covid-19 pandemic.
Thus Nawawi Tie Research expects the opening of international borders starting in April will improve overall sentiment in the market. Developers continue to seek strategic lands, an opportune time due to the soft market and greater availability of lands that would not be in the market otherwise. The real estate research house also anticipates sluggish market recovery this year with continued political uncertainty.
