It is worrisome that when one analyst said Putrajaya has the potential oversupply due to many projects come in to that area. Gan Eng Peng, head of Equities at Hwang Investment Management told that Even without some of the largest mega projects like the PNB building and financial hubs, we are facing that situation (in the future).

Instead of fear from market crash just like in Dubai, Malaysia especially in Kuala Lumpur still have the demand over supply. He added,”The key difference between the crash of Dubai and potentially in KL is that in Dubai, there was massive overbuilding combined with a collapse in end-demand due to the credit crisis.”

One of the way to cut off new supply is to impose a moratorium on the construction of new office buildings as undertaken a few years ago. Also, they should also reconsider some of their iconic projects as they are compounding the problem, Gan said.

Another difference, according to Real Estate and Housing Developers’ Association of Malaysia (Rehda) president Datuk Seri Michael Yam, was that around 80 per cent of Dubai’s 2.1-million population were expatriates. In contrast, Greater KL’s population was now 6.5 million and projected to grow to 10 million by 2020, he said.

They both said that this is to be expected as office space growth was outstripping demand while prices for real estate may soften with the planned supply coming through. Prices, especially of the old buildings, will also suffer capital stagnation or even losses as tenants move towards newer buildings, they said. But Rehda president believed the market would automatically correct itself before reaching a crisis similar to Dubai’s.

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