Bank Negara Malaysia has advised leading bankers to be more cautious when lending to developers of office and retail space in the Klang Valley, reported The New Straits Times Online.
The advisory comes amidst the mushrooming of shopping malls in and around the Klang Valley, particularly Cheras.
The central bank noted that two huge malls, with a combined net lettable area (NLA) of more than two million sq ft, are set to open by year-end in Cheras. Interestingly, the two malls – Sunway Velocity Mall and MyTOWN Shopping Centre – are less than 1km apart from each other.
Knight Frank Malaysia revealed that 12 shopping malls, with a total NLA of around 2.82 million sq ft, were completed or opened in the first half of 2016. This takes Klang Valley’s cumulative supply of retail space to about 53.72 million sq ft.
And with 17 million sq ft of shopping space expected to enter the Klang Valley from now until 2019, industry experts warns of a major oversupply situation.
“Kuala Lumpur already has an average all-time high of 7.5 sq ft of retail space per person, more than the average for Singapore and Bangkok,” said Elvin Fernandez, group managing director at Khong & Jaafar.
The office space market also faces a similar bleak scenario.
With total cumulative office space under construction at 14.13 million sq ft, office space supply in the Klang Valley is expected to increase by 15.3 percent from this year to 2018, said Knight Frank.
By 2018, the estimated cumulative office stock would stand at 106.65 million sq ft, with majority of the new completions coming from the Kuala Lumpur fringe.
With this, residential properties may still be the best bet for property developers as the appetite for affordable homes continues to be strong.
Image sourced from Archello
Diane Foo Eu Lynn, Senior Content Specialist at PropertyGuru, edited this story. To contact her about this or other stories email diane@propertyguru.com.my
