Finding the right balance

LOOKING at the Kuala Lumpur skyline from my condominium block, it is almost impossible to overlook the gradual but significant shift the city skyline is undergoing.

Petronas Twin Towers is undeniably the crown jewel among the huddle of skyscrapers. The 88-storey skyscraper, which was once the tallest building in the world, is now the tallest twin towers. It was an ambitious project aimed at putting Malaysia on the map.

The Petronas Twin Towers may very well soon be dethroned as the tallest building in Malaysia, with more ambitious projects in sight.

One that is quickly coming into form is the Signature Tower at Jalan Tun Razak, a commercial development with 92 floors and six basement levels in the upcoming Tun Razak Exchange(TRX).

An even more ambitious undertaking than the Signature Tower is the Merdeka PNB 118 project, touted as the country's tallest building at 118 storeys. It is also en route to becoming the fifth tallest building in the world.

The tower is owned by PNB Ventures Sdn Bhd, a subsidiary of the country's largest fund management company Permodalan Nasional Bhd (PNB).

It is understood that about 60 floors will be occupied by PNB's companies, 20 floors will be for a hotel and 20% will be up for lease. That is quite a number of floors up for rent.

PNB chairman Tan Sri Abdul Wahid Omar at a luncheon talk organised by the Malaysian Press Institute in August said that the tenancy take-up rate will also depend on the marketing aspects of the space.

"The challenge obviously is that there is a lot of commercial office space," he said during the question-and-answer session.

Nonetheless, he said he was confident that there will be demand for such a high quality development.

"In the longer term, I believe that as Kuala Lumpur becomes a global city with great infrastructure, great public transportation, great connectivity with the High-Speed Rail to Singapore, I believe there will be a lot of demand for office space," he said.

Will there be take-up for these ambitious projects? Time will tell.

The central bank noted in its quarterly bulletin that there is a supply and demand imbalance in the property market.

According to the report, unsold residential properties are at a decade-high with the majority of unsold units being in the above RM250,000 price category.

The oversupply of office space and shopping complexes in the major states will be exacerbated by incoming supply, potentially becoming more severe than during the Asian Financial Crisis.

In view of this, the government announced last month that there will be a temporary freeze on commercial and residential projects above RM1 million that have yet to get approvals for development. This supposedly came into effect on Nov 1.

It was later reported that the government may relax the freeze on luxury developments in prime areas such as the Kuala Lumpur City Centre and Bukit Bintang as there's strong demand from buyers and investors, despite the ban being applicable nationwide.

More than a month down the road it appears that some confusion is still looming on what really constitutes a freeze, with the government saying that the move was an intervention on its part to review and stabilise the property market – and the ban will be lifted once unsold properties come within reasonable levels.

Developers also appear uncertain on whether they are affected as I recall one saying – when the freeze came into effect – that they are not sure what constitutes the ban, and if their projects in Petaling Jaya were subjected to it. It was later understood that the freeze was nationwide.

The move of freezing approvals for upgrading luxury developments does seem like a step in the right direction, as affordability is also one of the major issues.

Perhaps, more needs to be done to cater to that segment of the market, especially with so called affordable homes not being within the affordable price range.

The freeze has to be clear cut. Where and to whom does it apply? The details should have been outlined earlier.

And what will become of the ambitious projects that are works in progress … will they be fully occupied or will they become ghost buildings? We will have to wait to find out.

The writer reports on business for theSun. Comments: