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Refurbishment vs redevelopment

Chapter 1 Refurbishment vs redevelopment

Malaysia property market has experienced a drastic change in 2008. The house market shifted from a growth at the end of 2007 to uncertainties scheduled to increasing building cost. Finally, the house market relocated into a comparatively peaceful market towards the end of 2008. With all the current banks wanting to tighten their loan conditions, obtaining lending options for development of all types of commercial building have been difficult within the last three years.

Yet, study implies that there continues to be a high demand for space in office building in area like Kuala Lumpur. Every once in awhile, there are several advancements of new office structures in Klang Valley area. From the analysis done by JPPH, there is an increase of around 10 million square metres of new office space throughout Kuala Lumpur. Yet, the average vacancy rate in office space lowered to 18. 6%. This proved that the demand for office building is still able to cater the upsurge in new office space. Study also exhibited that there surely is a new way to obtain about 280, 000 square metres of new work place and extra 92, 000 rectangular metres of office being refurbished and repositioned in the entire year of 2009. So, building owners have to battle to maintain the acceptance and the competitiveness of these building. The current insufficient new-build development boosts the likelihood of grade-A source shortages when the occupier market comes back, creating investment opportunities for carefully targeted refurbishment.

But, usually owner is great problem when they are in such situation. As everyone know, the refurbishment of work place offers advantages over new-build which can aid the accomplishment of economic, sociable and environmental sustainability. But, redevelopment is the best solution for reducing all problems about the maintenance, changing tenants necessity and other probems.

Making comparisons between refurbishment and redevelopment is also difficult because the word refurbishment may be used to encompass a broad spectrum of building works, from small cosmetic improvements to intensive reconstruction. But, in the majority of cases, refurbishment will be a quicker and cheaper means of restoring second-hand work place to grade-A specification. As a low-cost option, the refurbishment of work place should be intuitively attractive in an economic climate marked by too little development finance. But in many situations refurbishment is really as costly as redevelopment and more likely to hold with it greater hazards and physical constraints.

Problem statement

Malaysian has been accused as a clever constructor but poor director. For instance, certain office buildings in Golden Triangle tend to be searched deteriorated and relatively matured in comparison to other purposed-built office building. Example of such old office complexes are those office building on the fringe of Central Business Region, like Jalan Ampang. These old office complexes have a higher tendency to be still left vacant due to its poor workplace images. This can leads to lower local rental rate to be paid by the tenants to remain its competitiveness. Other important characteristic of such office building also includes by low occupancy rate, lower quality of the building and services provided.

Besides, recent office advancements are very more likely to adopt inexperienced features such as energy conservation, reduced amount of wastage and normal water consumption, as well as the utilization of green materials. This new trend in development got forced many owners evaluate the condition of their building and try to make several changes to the complexes to attracts more tenants. These initiatives are important to attract firms who fascinate energy-saving and environmental-friendly building.

But making such decision is not easy. The owners have to evaluate the cost and good thing about each choice, and determine the solution he really wants to increase the condition of his buildings. But other factors also have to consider. For instance, the interest the lender would charge for development of different risk, enough time of completion among others also greatly influence the decision-making of owner

Objectives of study

This analysis has three main objectives. You will find:

  • To determine factors influencing the decision-making in deriving a solution to the technique chosen.
  • To identify the benefits associated with building refurbishment or redevelopment to the building users.
  • To determine whether tenant wants refurbished secondary office building or newly redeveloped building.

Scope of study

The scope of this study will focus on selected office buildings, both building which had undergo refurbishment and those which had been subject to redevelopment. To make sure a more complete analysis, the newly made building is also regarded as building undergone redevelopment.

The respondents of the questionnaire are limited by tenants in Golden Triangle area only. As for the property administrator, all property professionals can be chosen as the interviewee. Building director who are hired by owners and acted on behalf of them, will gives their views in owner perspectives (maximise earnings) and current tenants will voice out their preferences in choosing a building space.

Methodology

All the relevant data are gathered through major data and extra data.

Primary data includes questionnaire, samplings, interviews and case study. In this review, respondents identified in questionnaire study are determined property manager who presents building owner's perspective and some tenants within Golden Triangle area through sampling. As for interview period, interviewees targeted are property administrator who will be the representatives of creating owners. Through this interview trainings, benefit of building refurbishment and redevelopment will be ascertained. Finally, case study of three similar office complexes may also be done as the quantitative examination. All three building will be compared according to the cost incurred for construction and the power obtained. Then your dissimilarities in term of occupancy rates, rental yet others will be computed to symbolize the increment in term of market value.

On the other hand, assortment of data in this research will also contains sources such as guide book, journal, articles, conference paper, property market records, internet/ website searching and other resources.

In addition, data will also be collected from books, magazines or newspaper article to acquire general home elevators building refurbishment and the effects of building refurbishment.

Further details of technique will be discussed in Section 3.

Structure of Study

This study consisted of five chapters. The brief discussion of every chapter is mentioned the following:

Chapter 1

Chapter 1 is the benefits of the analysis. This chapter begins with an intro of this analysis with a short background. Besides, other activities like problem affirmation, scope of review, methodology and more are also mentioned in this chapter.

Chapter 2

Chapter 2 is approximately the books review. In such a chapter, definition of building refurbishment and redevelopment, good thing about building refurbishment and redevelopment as well as others will be talked about in this section. Besides, factor influencing decision making of building refurbishment and the tenant preferences may also be discussed.

Chapter 3

Chapter 3 is the strategy. In this section, technique used to study and interview in order to gather information needed. The composition of questionnaire is also reviewed in this section. Furthermore, a short discussion on the opinion of respondents of questionnaire and interviews may also be carried out in the last part of this chapter.

Chapter 4

Chapter 4 is the chapter regarding research findings analysis. In this chapter, data gather will be analysed and presented in this section. An research on the good thing about building refurbishment and its value-enhancing ability may also be carried out by studying the information collected through interviews, questionnaire study, and extra data.

Chapter 5

Chapter 5 discuss about the final outcome and recommendation. In this particular chapter, bottom line from the studies and evaluation of data in the previous chapter will be discussed and summarized. Besides, it also demonstrate on the verification of the goals and overall overview for your research. Other information one of them chapter is the ideas for further review.

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