Investment sales up 52.3% to RM1.3b in 3Q19

The uptake in transaction volume is driven mainly by related-party corporate restructuring

By FARA AISYAH / Pic By BLOOMBERG

INVESTMENT sales volume in Malaysia jumped 52.3% year-onyear (YoY) to RM1.3 billion in the third quarter of 2019 (3Q19), a report by Nawawi Tie Leung Property Consultants Sdn Bhd (NTL) revealed.

A total of 19 transactions were inked during the period, representing a staggering 277% quarter-on-quarter increase, the property consultant firm said.

The uptake in transaction volume was driven mainly by related-party corporate restructuring, despite the ongoing US-China trade war and other geopolitical uncertainties.

“Two major deals were the sale of Prince Court Medical Centre by Khazanah Nasional Bhd to related party IHH Healthcare Bhd, one of the largest healthcare operators in the region, while a portfolio of industrial assets of UMW Holdings Bhd, worth RM287 million, were injected into a special-purpose vehicle by the controlling shareholder, Permodalan Nasional Bhd,” NTL noted in its Kuala Lumpur (KL) 3Q report.

Other major deals, although not strictly real estate, included the sale of 17 Columbia Asia hospitals in the region — of which 12 are located in Malaysia — for RM1.2 billion to a consortium that includes private equity firm TPG Capital Asia and Hong Leong Financial Group Bhd.

Another active investor was Axis Real Estate Investment Trust, which contributed two industrial Johor based deals over the quarter.

Although several major office and hotel assets were previously reported as being offered for sale, no firm deals have been announced to date.

“Global geopolitics is affecting multiple value chains, and the year is thus expected to continue experiencing subdued investment activity,” NTL said.

For the office segment, it said KL’s occupancy rate fell from 79.7% in 2Q19 to 77.6% in 3Q19, as the newly completed The Exchange 106 contributed to the decline.

During the 3Q, the office market was mainly driven by the expansion of serviced office/co-working space operators and technology firms such as Klook, Agoda and Fave.

The retail segment saw a 4.5% YoY improvement in sales for 2Q19, mainly boosted by the Hari Raya Aidilfitri festive shopping.

The overall occupancy for shopping malls in the Klang Valley is estimated at 85.3%, while prime malls have continued to maintain their occupancy rate of above 90%.

On the residential end, weak market sentiments have resulted in an increase of overhang properties led by the high-end segment, especially in high-rise developments.

“The recent announcement by Bank Negara Malaysia to maintain the Overnight Policy Rate at an accommodative and supportive 3% is unlikely to boost the lacklustre residential demand.

“The residential market is expected to remain gloomy in 4Q19, as all players are likely to adopt a wait-and-see attitude, given concerns over the weak domestic economy and the US-China trade war, among others,” NTL said.

Three high-rise residential projects completed in 3Q19 with a total of 2,514 units added to the stock, the firm added.

The bulk of the supply, comprising 1,516 units, was from three towers of serviced apartments at EkoCheras, located outside the city centre at Jalan Cheras’ Mile 5.

The other two completed projects were Stonor 3 with 400 units and Aria KL City Centre with 598 units.

About 1,510 units are expected to enter the market in 4Q19, all of which will be located in the city centre.