News: Malaysian property investors are expected to shift their interest to commercial properties following new cooling measures introduced by the government, The Star reports, citing new market research. The research suggests that demand for office space could be suppressed by supply that is already in the pipeline arising from big commercial projects like the Tun Razak Exchange and the Warisan Merdeka Tower. However, the supply side is expected to put pressure on the market despite the high demand with a take-up rate of 3mn to 4mn square feet of office space every year.
BMI View: As with many neighbouring markets, the commercial real estate sector in Malaysia is tied to its economic performance and the investment climate as well as the outlook for both the United States and China. At present, the outlook is positive, although persistent structural challenges remain embedded in the Malaysian market, especially in the office sector. While Q113 showcased disappointing growth, consensus remains optimistic that the Malaysian economy will grow at roughly 5% in FY 2013, down from earlier projections of up to 5.5%.