Rising demand for office space

  • Business
  • Thursday, 09 Mar 2006

KUALA LUMPUR: The property sector is expected to be subdued this year, with speculative demand falling, said CH Williams Talhar & Wong Sdn Bhd (WTW) managing director Goh Tian Sui. 

However, the current strong foreign and local institutional investment interest was expected to provide some growth in certain segments, he said at the company's Property Outlook 2006 briefing on Tuesday. 

For residential demand, inflationary pressures will lead property buyers to take more time to decide, which is expected to translate into slower sales. 

“Volume will be flattish, luxury condominiums and serviced apartments, especially in the Kuala Lumpur city centre, are unlikely to experience the bullishness of previous years,” Goh said. 

In other segments, there are some bright spots to hearten the investor.  

With foreign and local institutional investors looking at retail, office and industrial segments, there would be competition for these properties, Goh said. 

WTW sees demand for office properties rising this year, with the number of transactions expected to increase. 

“Rents of prime office space, which have been stabilising in previous years, would face positive upward pressure,” said the report. 

Consumer spending, which was expected to be adversely affected by inflation, would reduce the upward pressure on retail rentals, it said. Occupancy would continue to be high in prime shopping centres, it added. 

In the hospitality sector, increasing tourist arrivals and further room rate hikes are expected to boost the business and investment performance of hotels this year. 

There would be continuing good demand for land in close proximity to newly opened highways, Goh said.  

Real estate investment trusts (REITs) are a trend that is set to continue into 2006. REITs that are expected to be listed this year are Tower REIT by Guocoland (M) Bhd, KPJ Healthcare REIT by Kumpulan Perubatan Johor and a third by Meda Inc Bhd

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