Existing Stock			Rents
	'000 sf	QQQ chg		'000 sf	QQQ chg
Golden Triangle	24,130	1.8%	Prime city centre	5.14	2.8%
Central Commercial Area	13,390	0.0%	Secondary city centre	3.50	2.9%
Decentralised Areas	13,290	2.7%
Other Areas in Klang Valley	11,500	0.0%

Positive outlook in the office market

The office market performed well in 2005 with key market indicators such as rental and occupancy showing slight improvements particularly in the Grade A office space . This year, demandfor office space is expected to continue to be skewedtowards prime accommodation and the business service sector being the main source of the growth in demand.

In the first quarter of 2006, one new building was completed. The Chulan Tower, previously named Menara LTAT, is locatedalong Jalan Bukit Bintang and has a nett lettable area of approximately 284,500 sf. However, total office stock within KLC increased by 1.3% to 50.8 mil sf, due to the minor reclassificationof Menara Palas (344,000 sf) which is geographically located within Selangor into the KLC stock. Being located off Jalan Ampang, this property is essentially a fringe city property.

Some 650,000 sf of new supply are expected to enter the market by end of this year and these are all located in the decentralized area.

During the review period, among the more notable leases include Asian Financial Bank moving into Kenanga International (16,500 sf), Volkswagen setting up base in Wisma UOA Bangsar (30,000 sf), Scan Associates in Menara Naluri (30,000 sf) and PM Securities in Menara PMI (15,000 sf).

The average asking rental for a Grade A office in the Golden Triangle currently hovers around RM5.00 psf. This is expected to go up in the next six months in the light of a tightening market due to the stronger demand and limited supply. Meanwhile, rentals at secondary grade buildings continue to remain stable with increases expected at selective buildings namely those located in proximity to LRT and monorail stations which will benefit from the recent increase in oil prices and the greater acceptance of public transport.

No significant movement was noted in the average occupancy levels of KLC office, remaining within last quarter's 87% - 88% range. On YOY basis, the average occupancy has increased by 0.7%.

During the quarter, there was a new launch of PJ Exchange (300,000 sf), a strata office project, off The Federal Highway, priced from RM400 psf. This project continued the recent trend of strata development which has picked up momentum, especially in Petaling Jaya which is re-establishing its commercial role as a popular decentralized office location.

Overall, the outlook for the office market remains positive for 2006. As this sub-sector of the property market is considered still in recovery mode, and with demand persistently strong over the last few quarters, further improvement in terms of overall rental and occupancy are expected in the mid-term barring any unforeseen events on the external front.

	Existing Stock			Rents
	'000 sf	QQQ chg		'000 sf
Overall Klang Valley	30,970	0.0%	KLC (city centre)	RM18-40
KLC	16,930	0.0%	Suburban(PJ)	RM10-28
Suburban Area	14,040	0.0%

A challenging year for the retail market

The retail sector is likely to feel a significant slacking of private consumption as consumer sentiment as represented by the Consumer Sentiment Index dropped by a large 26 points to 90.1 point in the 1Q06 from 116.1 point in 4Q05. This was also reflected in the quarterly retail sales growth which registered 4.4% against 4.8% in the corresponding period last year.

The 30 sen fuel hike for petrol on 28 February reflected the government's desire to further reduce oil subsidies as part of its fiscal consolidation drive. This has raised concern about rising inflation which is expected to rise above the 3.2 % registered for February.

The recent interest hike of 25 basis points and the proposed increase in utility cost could further hurt consumer spending in the months ahead, which is already on the wane as the market begins to feel the pinch of rising prices of goods all around. The government however remains optimistic that private consumption and domestic spending will remain resilient in 2006 on the back of strong economic fundamentals and expected growth of 6% for the whole year.

As at end 1Q 2006, with no new completions, total retail stock in Klang Valley remained unchanged at 31 mil sf. KLC dominated supply with 17.1 mil sf whereas in the suburban areas, total retail space amounted to 13.8mil sf.

Some 1.36 mil sf of new supply is expected to enter the market this year comprising three hypermarkets and several shopping malls. The most anticipated one will be the Cineleisure in Mutiara Damansara with 258,000 sf of retail space. The other proposed supply comprises of Mydin Mall, Klang City Square, Harbour Place, Equine Square and a Jusco mall at Balakong. All of these are located in the suburban areas and in Klang.

During the review period, overall occupancy is stable, with a marginal increase of 0.2% point to 86.7% from 86.5% in the previous quarter. Most hypermarkets and prime centers such as Suria KLCC, Midvalley and One Utama continue to post full occupancy. Rental rates have remained stable across the board.

With private consumption dampened by rising inflation and interest rates, the retail sector will likely to see more challenging times. Nevertheless stimulation from economic activities from the 9th Malaysia Plan and the recent high prices for palm oil could mitigate some of the negative effects.

For the whole of 2006, Malaysia is expected to register retail sales growth of 8.8% according to the latest MasterIndex of Retail Forecast released by MasterCard International.

Major Residentail Launches in 1Q06

Development	No. Units	Type of Property	Pricing(Range/Average)
Kiara 1888	182	Condominium	RM320 - 420 psf
Seri Maya (Savanna)	437	Condominium	RM250 - 422 psf
Laman 38	38	Condominium	RM236 - 413 psf

Source: DTZ Research Mar 2006

Market slowly feeling the pinch

The overall residential market for 1Q 2006 was rather subdued as prospective purchasers reflected on the impact of the recent hike in fuel prices and interest rate. The lower consumer sentiment will definitely have short term impact on purchasing decision for big ticket items such as houses especially at the mid to lower end of the market where the effect is likely to be felt most.

New launches in the quarter were mainly for up-market condominiums like Kiara 1888, Seri Maya (Savanna), Park 19 and Laman 38. Sale rates of luxury condominiums for some strategically, located projects increased by 3% to 5% whilst other reported no significant progress in their sales. There were also 2 previews of new projects at Mont Kiara, namely The Meridin (228 units) and Verve Suites, the latter targeting at a very youngish and fashionable market segment. Some proposed launches continued to be delayed by KL City Hall's review on the status of development approvals for apartments on commercial zoned sites.

Several projects were completed, mainly in Mont Kiara during 1Q 2006 were Mont Kiara Aman (344 units), I-Zen Kiara 2 (238 units), La Grande Kiara (298 units). Stonor Park was also completed, being the first of the new super-condos in the KLCC since the late 1990s. Due to the large number of units completed in Mont Kiara, there could be a mid-term impact on rental rates in this sub-market which has a well established expatriate community. Asking rental for part-furnished units at Stonor Park is about RM4.60 psf/month which is about 10-15% above current average rate of comparable projects.

All in, developers are likely to face a challenging time ahead not withstanding that the economy of the country continue to be projected to grow at a satisfactory rate.

Major Investment Sales in 1Q06

Property, Location	Type	En-block Price (RM mil)	Price psf (RM)
Wisma Merais, PJ	Office	57	358
Wisma TM	Office	70	314
Plaza Cygal Tower 2	Office	92.3	329
HP Tower	Office	130	373
Menara HLA	Office	221	539
Mutiara Rini	Office	168.3	500
Selayang Mall	Retail	120	329
South City Plaza Blk A	Office	8.9	270
South City Plaza Blk B	Office	9.1	271
Wisma Denmark	Office	130	473

Source: DTZ Research Mar 2006

Investment market remains active

During the first quarter, the investment market continued to be extremely active with some 22 properties being transacted across the country with an aggregated value of RM2.08 billion. Featured prominently during this period is Amanah Raya which purchased 9 of these assets for their proposed REIT and is setting the benchmark for such structured sale and lease back deals. These assets ranged from a retail mall, industrial assets, to 3 hotels.

The REITs were also active with AmFirst Property Trust purchasing Wisma Merais whilst Mapletree Logistic Trust Management Ltd of Singapore secured 3 logistic properties in Subang/Shah Alam. The quarter also saw the listing of Tower REIT by Guocoland (M) Bhd which is part of the Hong Leong Group which comprises 2 prime office buildings located in Jalan Kia Peng and Jalan Semantan in Damansara Heights.

Interestingly the range of assets transacted involved not just the traditional office and retail sectors but are seeing more industrial and even hospitality sectors. The latter being the sale and lease back of 3 hotels, one each in Langkawi Island, Alor Setar and Cherating, by the Holiday Villa chain to Amanah Raya Bhd at graduating yields, from 6.7% for the first year to 7.3% by the 10th year.

Axis REIT continued it aggressive growth in its portfolio with another strategic acquisition involving a warehouse belonging to MISC Logistic in Klang at a yield of 12.8%. Since it listing, this fund has added 3 new assets to its initial portfolio.

Going forward, we do see a convergence of yield rates across the various sectors and continuing interests by investors although this will be somewhat affected by the hikes in interest rate which is undergoing an upward cycle.

AREA TAXANOMY

STOCK

NEW SUPPLY
Refers to the supply of new properties confirmed i.e. projects with planning approval and there are definite plans to proceed with the development or under construction at the time of reporting. The year for new supply refers to the year in which the projects/units are expected to receive Certificate of Fitness for occupation.

ABSORPTION
Refers to the total number of net take up of accommodation or units in new projects being leased or sold. Resale of units is excluded.

RENTS
Average gross rents are computed based on a basket of properties, inclusive of service charges. Office - typical net floor size adopted are between 2,000 sq ft and 5,000 sq ft.

MARKET PRICES
Market prices are reported on per sq ft (psf) basis on net floor areas. The office and retail market are reflective of en bloc sales evidence (referring to the sale of entire land and building).