Lai Voon Hon
Chief Executive Officer
Ireka Land Sdn Bhd
StarBiz: Your expectations on the performance of the commercial property sector these one to two years.
I am generally upbeat on the performance of the office and hotel sectors for the next few years.
The office sector, especially “Grade A” offices in the Klang Valley, is in my opinion at an early stage of an up-cycle mainly fuelled by increased demand for office space due to a lack of new quality office supply.
The advent of real estate investment trusts, transfer of ownerships due to sales and leaseback preferences of corporations and the freeze in new speculative office development within Kuala Lumpur city centre have generated healthy performance of this sector.
The improved demand for offices have spilled over to suburban areas like Petaling Jaya, KL Sentral & Mont’ Kiara.
In what ways have the sector improved?
There has been a healthy increase in rental rates of offices and retail shops, especially ‘Grade A’ offices and popular shopping centres like KLCC, Mid Valley and One Utama.
On the hotel front, most hotel rooms in Kuala Lumpur have seen a big increase in room rates and occupancy rates. Our The Westin Kuala Lumpur Hotel, for instance, has achieved double-digit growth over the last two years.
I strongly believe we are only at the beginning of an up-cycle in the hotel industry and expect room rates and occupancy to continue to grow as we have a long way to catch up compared with the rates in other key Asian cities.
Factors for the improving performance in the commercial sector.
In the case of the hotel industry, it is largely due to increased awareness of Malaysia as a safe and affordable place to meet and to holiday.
Over the last few years Malaysia has become a popular destination for the Middle Eastern travellers.
The efforts made in the promotion of our country by both the private and pubic sectors have produced huge dividends.
This growth should be sustainable as the current room rates in Kuala Lumpur and at famous resorts in Kota Kinabalu and Langkawi are very low compared with our neighbouring countries.
The continued good performance of the economy in terms of GDP growth (expected to be 6% by Bank Negara) will continue to give confidence for businesses to set up new or larger premises.
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