Latest news with #Previn
The Star
a day ago
- Business
- The Star
Glut of outdated office space in Kuala Lumpur
PETALING JAYA: The Kuala Lumpur office market, which is already under pressure from a never-ending oversupply issue, is also facing a glut of outdated buildings. Zerin Properties chief executive officer Previn Singhe noted that the Kuala Lumpur office sector, at the moment, 'tells a story of two very different realities'. 'We're no longer just dealing with an 'oversupply' problem. The real challenge is that we have too much of the wrong kind of office space. 'The gap between what's available and what the market actually wants is widening and that's reshaping how assets perform,' he told StarBiz. Previn said this was being driven by a clear flight to quality where newer, greener, better-connected buildings are not only attracting new entrants, but also pulling tenants out of older, less competitive stock. 'On one side, you have the new, green, well-connected towers that are pulling in strong tenants and setting record rents. Merdeka 118 and Exchange 106 are perfect examples. 'These are high-spec, environmental, social and governance (ESG)-compliant buildings with the kind of amenities and connectivity that blue-chip occupiers are chasing. Deals are getting done and tenants are willing to pay for the quality,' he said. On the other side, Previn noted that there is a large pool of older buildings that simply cannot compete in their current state. 'Many of these date back to the 1980s, 1990s and early 2000s, built for a very different era of office design and falling far short of today's ESG, digital and wellness expectations. 'Vacancy rates here are persistently high and in some cases, occupancy has fallen below 50%. Without substantial investment in upgrades or a complete repositioning, these assets will continue to lose relevance and revenue.' According to Knight Frank, occupancy rates recorded varying levels of growth across the Klang Valley, shaped by both new completions and ongoing leasing momentum. 'KL City and KL Fringe continued to register improvement, rising to 69.1% and 89.4% respectively in the first half of 2025 (1H25), from 67.5% and 87.2% in 2H24. 'Gains were largely driven by relocation and new set-ups in Grade A buildings – particularly those within integrated developments, reflecting a continued flight-to-quality as occupiers prioritise connectivity, building specifications and long-term space efficiency.' Meanwhile, Selangor's average occupancy held steady at 74.4% in 1H25, said Knight Frank in its Real Estate Highlights for 1H25 report. 'While new completions added space to the market, these were largely matched by ongoing tenant activity. 'Demand in decentralised areas remains relatively stable, supported by occupier interest in cost-efficient alternatives outside the city centre.' Meanwhile, average office rents in the Klang Valley registered modest gains across all submarkets in 1H25, it said. 'Submarket performance continued to vary according to vacancy levels and the availability of quality office stock. In KL City, average rents rose to RM6.69 per sq ft per month in 1H25 from RM6.64 per sq ft, driven by interest in Prime A+ and well-located Grade A buildings within integrated or transit-linked developments. 'While leasing momentum remains steady, rental uplift has been gradual, given the broader market's still-elevated vacancy levels.' Similarly, Knight Frank said offices within the KL Fringe area posted an increase to RM5.81 per sq ft per month from RM5.78 per sq ft. 'Although rental growth was more modest, the submarket continues to operate under tighter vacancy conditions. 'Selected commercial hubs such as Mid Valley, KL Eco City and Bangsar South remain highly sought after, with limited available space and high tenant retention, allowing landlords to hold firm or raise asking rents where occupancy is sustained.' In Selangor, Knight Frank said average rents increased marginally to RM4.24 per sq ft per month from RM4.21 per sq ft due to the inclusion of newer, higher-priced completions. Previn said it was vital for buildings to evolve to stay competitive. 'The PETRONAS Twin Towers is a prime example. Despite being 27 years old, it has remained one of the city's most prestigious addresses because it has been consistently maintained, modernised and aligned with current occupier demands.' Olive Tree Property Consultants founder and chief executive officer Samuel Tan said office building owners must make efforts to refurnish/upgrade their old buildings. 'With these exercises, not only will they be able to attract more tenants, the rental rates will be higher. 'Buildings that are beyond repair should be redeveloped. The highest and best use development should be implemented to extract the maximum value from the property.' Tan said many of these older or obsolete buildings can be repurposed into co-working spaces, hotels or even vertical data centres. 'The authorities can give incentives for refurbishment,' he said. In light of the current market situation (of oversupply of office space and obsolete buildings), Previn said the performance of office real estate investment trusts (REITs) will be highly polarised. 'Grade A, ESG-ready assets in prime locations are well placed to maintain value and occupancy, while portfolios with too much ageing, unrenovated stock will face pressure on rents, valuations, and ultimately yields. 'This is where active asset management becomes critical, focusing on enhancing buildings, recycling capital into stronger performing properties, and where viable, repurposing underperformers into alternative uses such as hotels, healthcare facilities, co-working hubs, or transforming them for multipurpose use.' Another important shift is in tenant decision-making criteria, said Previn. 'Five years ago, energy efficiency, digital readiness and wellness features were 'nice extras'. Today, they are non-negotiable. 'Occupiers are under their own ESG and productivity pressures, so they're actively seeking buildings that help them meet sustainability targets, reduce running costs, and offer a better employee experience.' In short, Previn said office REITs that invest in keeping their portfolios relevant through upgrades, smarter capital allocation, or strategic repurposing, will be in a far better place by year-end. According to Knight Frank, office stock in the Klang Valley grew by almost 1.1 million sq ft in 1H25, reaching a total of 119.3 million sq ft. It said an estimated 1.3 million sq ft is scheduled for completion in 2H25, led by Menara TNB Bangsar in the KL Fringe as well as Sunway South Quay Corporate Tower 1 and Sunsuria Forum C-Suites in Selangor. 'While the overall pace of new supply remains moderate, recent and upcoming completions continue to reflect a focus on workplace quality, integration with broader masterplans and alignment with evolving tenant requirements. 'These factors are likely to remain influential in shaping future development strategies.' Looking ahead, Knight Frank said external headwinds – including global trade tensions and monetary policy shifts – may delay leasing decisions and temper business expansion, especially among multinational occupiers. 'Additionally, occupiers are expected to monitor potential cost implications from the extension of service tax to commercial leases, which took effect from July 1, 2025. 'While some landlords may be able to pass on the 8% charge, those with weaker occupancy may face pressure to absorb part of the cost, compressing net yields.' These risks, though yet to materially impact current demand, could shape occupier strategies and investor appetite over the medium to longer term, said Knight Frank. 'Against this backdrop, leasing activity is expected to remain measured in the near term, with outcomes continuing to hinge on asset quality, location strategy and flexibility aligned with occupier cost management.'
The Star
10-08-2025
- Business
- The Star
13MP boost for affordable housing
PETALING JAYA: The government's announcement under the 13th Malaysia Plan (13MP) to develop one million affordable housing units between 2026 and 2035, will help ease pent-up demand and improve homeownership prospects. Zerin Properties chief executive officer Previn Singhe said the government's target of building one million affordable homes over a 10-year period is both 'bold and ambitious'. 'Beyond numbers, success will depend on building in the right places, close to jobs, transport and services, as well as ensuring these homes are designed to genuinely meet the needs of B40 and M40 families. 'This is so they do not risk becoming future overhang statistics,' he told StarBiz. Previn said it is imperative that there are 'supporting measures' to ensure this plan succeeds. 'Measures such as the improvement of existing affordable housing financing schemes, including the expansion of the rent-to-own and housing credit guarantee programmes, will be critical in widening access to homeownership for first-time and lower-income buyers. 'At the same time, making schools a mandatory component of large-scale housing projects will enhance liveability and strengthen long-term community value. 'Together, these measures push housing delivery beyond bricks and mortar –towards building integrated, future-ready communities.' Olive Tree Property Consultants founder and chief executive officer Samuel Tan also said the move by the government to build one million affordable homes under the 13MP was 'ambitious'. 'The government remains committed to ensuring access to quality, affordable and inclusive housing. As of this year, 180,000 housing units have been completed, with another 235,000 currently under construction.' He noted that structural issues, such as the mismatch between housing supply and demand, as well as property prices that remain beyond the reach of many, continue to pose challenges. 'Selection of locations and developers are equally important. Achieving one million houses is only a quantitative target. What is more important is the qualitative target.' TA Research said the planned increase in affordable housing supply, particularly in strategic locations, should help ease pent-up demand and improve homeownership prospects for lower- and middle-income households. 'On the demand side, improved financing mechanisms, including tiered interest rates and flexible tenure structures, are expected to enhance affordability, especially for first-time buyers. 'We are also encouraged by the government's move to empower a central housing agency to lead planning and delivery efforts.' The research house said this could significantly reduce inefficiencies and eliminate duplication of efforts between federal and state bodies, paving the way for more targeted and effective execution. Tan noted that Malaysia faces a significant challenge in providing affordable housing for its citizens, with house prices often exceeding what many can afford. 'This affordability crisis is driven by various factors, including rising land costs, construction costs and a lack of sufficient affordable housing supply. 'There is also a discrepancy between the types of housing being built and the actual needs of the population, with an oversupply of high-end properties and a shortage of affordable options.' This imbalance, said Tan, is exacerbated by factors like income inequality and variations in housing preferences across different demographics. Moreover, he said the construction industry in Malaysia needs to embrace modern technologies and innovative building methods to improve efficiency, reduce costs and enhance the quality of housing. 'The adoption of the Industrialised Building System (IBS), for example, can help accelerate construction and lower costs, making housing more accessible.' He added that there should also be a consolidation of housing agencies to initiate and monitor housing development. 'Currently, multiple agencies are doing the same job and this increases the cost and causes confusion among the stakeholders,' Tan said. To ensure that initiatives under the 13MP come to fruition, Previn emphasised that there is a need to 'prioritise execution over announcements.' 'Malaysia's development plans have historically struggled with delivery gaps. To avoid repeating this pattern, we must establish clear ownership and accountability structures at both federal and state levels. 'There is also a need to ensure transparent timelines, key performance indicators and public reporting mechanisms for all flagship initiatives.' Previn also said there is a need to enable stronger inter-agency coordination, particularly between planning units, regulators and implementation bodies. 'Without robust execution frameworks, even the most well-crafted plans risk stalling.' Another significant structural shift that has been proposed under the 13MP is the mandatory adoption of the build-then-sell (BTS) model for housing development - to be enforced through amendments to the Housing Development Act. TA Research noted that while the intention is to curb project abandonment and enhance buyer protection, it added that the move introduces substantial funding and working capital risks for developers. 'Under the 10:90 BTS structure, developers must complete construction before receiving the bulk of sales proceeds. This could delay new launches and deter participation from smaller players with limited balance sheet strength or constrained access to project financing. 'In our view, this would accelerate market consolidation and widen the competitive gap in favour of well-capitalised players.' That said, the research house said it does not expect the implementation to be immediate. 'Given that it requires legislative amendments, the process is likely to involve multi-stakeholder consultations and industry engagement. A rushed rollout would be disruptive, and we believe policymakers are aware of the potential implications. 'We anticipate a phased approach that balances buyer protection with developer viability, potentially through exemptions, transitional support, or segmentation by developer scale,' it said. Previn also concurred that the BTS model is a major structural change that enhances consumer protection and market credibility, which reduces risks of poor-quality or abandoned projects. 'It will also accelerate IBS adoption, improving efficiency and delivery timelines. 'However, smaller, highly leveraged developers may face liquidity pressures, longer project cycles and higher financing costs, unless accompanied by supportive financing mechanisms or phased implementation of BTS.' Without sufficient large, capable IBS suppliers, Previn warned that there would be bottleneck risks that would push up costs and erode affordability. Tan meanwhile noted that currently, developers are allowed to sell houses before they are built under the 'sell-then-build' model. He noted that making the BTS model mandatory will be difficult. 'There are many obvious merits for this initiative. But it carries several problematic issues. Only the deep pocket developers can afford to implement this scheme. 'It will then be an uneven playing field for the start-ups and smaller development companies.' Tan said the additional holding cost will be passed on to the end-purchasers, making house prices more expensive. 'This will jeopardise our Home Ownership Programme. On the other hand, it will ensure that abandoned projects are curbed. End-purchasers buy what they see ensuring that quality is maintained. 'We opine that this BTS model should not be mandatory. Developers are given the options to choose the most appropriate models. The authorities must monitor their performance to ensure quality and timely delivery,' he said. Previn said many of the 13MP's strategies such as the BTS model and affordable housing targets are conceptually strong, but 'must be grounded in market data and developer capacity.' 'Enforcing BTS across the board without a phased rollout could tighten housing supply and raise costs in the short term 'Additionally, affordable housing should not just be 'affordable to build' but also meet the preferences and needs of the target buyers,' he said.
The Star
07-07-2025
- Business
- The Star
Rising ESG adoption in real estate sector
PETALING JAYA: Property experts are seeing a rise in environmental, social and governance (ESG) adoption within the real estate sector, driven by heightened awareness among industry stakeholders. Zerin Properties chief executive officer Previn Singhe noted that ESG adoption has been 'cascading across Malaysia's property sector,' particularly in the Klang Valley, Penang and Johor. 'This isn't merely regulatory compliance – it's a fundamental market shift. Tenants, investors and financiers now demand sustainability as table stakes,' he told StarBiz. By asset class, Previn said the commercial segment (comprising the office, retail and hotel sub-sectors) was the most advanced when it came to ESG adoption, as it was driven by investor mandates and tenant demand. 'Key ESG practices include energy optimisation, electric vehicle charging, green leases (office and retail), low-carbon materials and enhanced indoor air quality monitoring – all of which are increasingly expected in premium assets.' He added that healthcare facilities were investing in high-efficiency heating, ventilation and air conditioning upgrades; air filtration systems that improve indoor air quality; and building automation systems that optimise temperature and airflow in real-time. 'Meanwhile, in the industrial/logistics sectors, which are being driven by global supply chain requirements, ESG is gaining ground through rooftop solar, green tenancy clauses and tracking of resource use especially in export-oriented industrial parks.' As for the residential segment (comprising both landed and strata developments), Previn noted that developers like Gamuda Bhd , Sunway Bhd and Sime Darby Property Bhd are integrating ESG into landed homes through solar panel infrastructure, bioswales and sustainable landscaping. 'In strata properties, the management corporations are beginning to adopt waste separation and water-saving retrofits, though progress is often limited by fragmented ownership and funding constraints. 'Individual private landed homeowners are also tapping into solar panel incentives under Tenaga Nasional Bhd 's Net Energy Metering 3.0 scheme to reduce energy bills.' Olive Tree Property Consultants chief executive officer Samuel Tan said ESG adoption within the property market has been gaining traction over the years. 'Going forward, it will become the norm rather than a mere white-washing or marketing gimmick. 'Beyond ESG adoption in the construction and development stage, there will be further integration (of ESG practice) right from the acquisition and planning phase, to the eventual stages of building completion, maintenance, leasing and asset management.' Olive Tree Property Consultants executive director Tan Wee Tiam, meanwhile, said it was not surprising that ESG adoption had gained prominence within the real estate market. 'ESG adoption in real estate development ensures long-term compliance of environmental integrity and conformity of ethical practice. 'Such practice will definitely become more prevalent moving forth in view of the challenges such as global warming and extreme temperature changes, rapid building obsolescence due to lousy construction method and sloppy maintenance, lack of ethical and proper governance control in the whole development cycle. 'All the malpractices, if not curtailed in the initial stage of the development cycle, the adverse impact will eventually manifest itself subsequently. The risk to the buyers and investors will be very high and likely become a costly one.' Going forward, Previn said the outlook for ESG adoption within the real estate industry remains promising. 'ESG is becoming increasingly embedded in both the strategy and compliance frameworks across the real estate sector. 'Over the next three-to-five years, we anticipate deeper integration of ESG principles into investment decisions, asset management and day-to-day operations.' Previn believes that there will be stronger policy alignment, including mandatory disclosures, green building codes and carbon pricing mechanisms. 'There will also be improved digitalisation of ESG data, with tech tools enabling real-time monitoring of energy use, emissions and indoor air quality.' He also expects to see a rise of ESG-linked financing such as green loans and sustainability-linked bonds tailored for real estate players. 'There will be a broader adoption beyond prime assets, reaching into mid-market residential, industrial parks, logistic hubs and especially in energy-intensive sectors like data centres, which are expanding rapidly across Malaysia. 'We also see continued use of global ESG benchmarking platforms like the Global Real Estate Sustainability Benchmark which (provides ESG assessments and sustainability benchmarks for commercial real estate and infrastructure), particularly among real estate investment trusts and fund managers, to assess performance, identify gaps and communicate progress to investors.' However, Previn emphasised that capacity building remained critical. 'This is particularly among small and medium enterprises, property managers, valuers and strata communities to ensure ESG integration goes beyond compliance and becomes embedded in valuation, leasing strategies and long-term asset planning.'
The Star
04-06-2025
- Business
- The Star
IOIProp paying ‘high but reasonable' price
PETALING JAYA: IOI Properties Group Bhd (IOIProp) is paying a 'seemingly high but reasonable' price to take full ownership of Singapore's premium South Beach commercial properties, according to a property consultant. It was announced yesterday that IOIProp would be acquiring the remaining 50.1% stake in Scottsdale Properties Pte Ltd for S$834.22mil or RM2.75bil. However, the fact that the landmark deal would be partly financed by bank borrowings has garnered additional attention, given IOIProp' already high gearing position. As of the third quarter of financial year 2025, IOIProp sat on total borrowings of RM19.4bil, with a higher net gearing of 0.75 times. In a filing with Bursa Malaysia, IOIProp said it would acquire Singapore-listed City Developments Ltd's (CDL) 50.1% stake in Scottsdale – held via Ascent View Holdings Pte Ltd. With this, its equity interest will rise to 100%. Scottsdale is the holding company of South Beach Consortium Pte Ltd, which owns the South Beach commercial properties. Meanwhile, CDL is linked to Hong Leong Group Singapore. The South Beach commercial properties consisted of a 34-storey South Beach Tower offering 508,869 sq ft of Grade-A office space, South Beach Avenue with 30,797 sq ft of retail space and a 634-room JW Marriott Hotel Singapore South Beach. Zerin Properties chief executive officer Previn Singhe said while the price may seem high in current market conditions, one must factor in the strategic location, premium tenant mix, and limited supply of such integrated developments. 'It may also signal IOI Properties's optimism in the resilience of Singapore's prime real estate market. 'From a financial standpoint, the acquisition price of S$834.22mil appears reasonable for a landmark asset with Grade A offices, a luxury hotel, residences, and retail, especially considering the yield compression and flight to quality in Singapore's commercial sector,' he told StarBiz. The acquisition is based on an agreed property value of S$2.75bil on a 100% interest basis, which represents a 3% premium over the latest valuation of S$2.67bil as of Dec 31, 2024. Previn said IOIProp's acquisition represents a 'bold and strategic' move that reflected confidence in the long-term fundamentals of Singapore's integrated development market. 'The South Beach commercial properties are a high-profile, mixed-use asset with strong positioning in Singapore, and taking full ownership provides IOI with greater control over asset strategy, branding, and capital decisions. 'This move aligns well with IOI's long-term investment horizon and its vision to build a strong overseas recurring income base,' he said. Previn noted that it was a well-calibrated deal, where CDL exits with capital freed for reinvestment, while IOIProp solidifies its footprint with full control of a trophy asset. 'It is a win-win, and a great example of a mature, cross-border transaction between two seasoned developers,' he said. This was concurred by Olive Tree Property Consultants chief executive officer Samuel Tan and executive director Tan Wee Tiam, who viewed the transaction 'positively'. 'This is more so as the two nations are working closely under the Johor-Singapore Special Economic Zone arrangement. 'By increasing its stake in the South Beach commercial properties, IOIProp solidifies its footprint in Singapore's prime real estate sector. The South Beach commercial properties will provide IOIProp with a steady stream of cash flow,' they said in a joint reply to StarBiz. Meanwhile, Rakuten Trade head of equity sales Vincent Lau described the acquisition as a 'fair' deal. 'This acquisition is expected to strengthen IOIProp's profile, especially in a market like Singapore that is doing well on an international scale. Also, land is scarce in Singapore. Hence, having premium, income-generating assets over there is strategic,' he said. In a statement, IOIProp group chief executive officer Lee Yeow Seng said the acquisition of the 100% equity stake in the South Beach development marked a significant strategic expansion for IOIProp in Singapore. 'Combined with the IOI Central Boulevard Towers and the W Singapore –Marina View hotel, this acquisition will elevate the group's profile as one of the major landlords of premium office space and a prominent player in the hospitality industry within the Republic,' he said. Moreover, CDL executive chairman Kwek Leng Beng said the 'strategic' divestment enables CDL to realise exceptional value, while entrusting the ownership to a partner that knows South Beach well, marking a natural evolution in its successful partnership.
