An oversupply of retail and office space within the next two to three years will take place in the Klang Valley, according to property consultancy CB Richard Ellis (M) Sdn Bhd (CBRE).
However, capital values are expected to rise for residential units next year but at slower rates than the past three years.
Christopher Boyd, Executive Chairman of CB Richard Ellis, said that while 2011 was a robust year in terms of demand for office space in the Klang Valley, rental values might result in an oversupply within the next three years.
"Short-term demand for office space is stable but unlikely to grow sharply," said Boyd during a talk hosted by MIDF Research entitled Kuala Lumpur Property Market in Times of Uncertainty.
At the end of the H1 2011, the total office supply in the Klang Valley stood at 80.8 million sq ft, which is slightly higher when compared to the 80 million sq ft at the end of 2010.
He noted, however, that the influx of multinational corporations (MNCs) in Kuala Lumpur would help stabilise the office market, with an additional 25 million sq ft of office space to come on-stream in the Klang Valley by 2015.
"This is not an alarming number but vacancy rates are expected to increase as more supply comes on-stream."
Based on current supply projections, there will be more office space in suburban areas than in the Golden Triangle by 2014 to 2015.
"We are seeing a shift in new office supply from city centre to suburban areas," Boyd said.
Meanwhile, Allan Soo, Managing Director of CBRE, noted that the Klang Valley would soon outgrow Singapore in terms of retail space per capita. As of Q3 2011, total retail space supply in the Klang Valley stood at 43.7 million sq ft in 133 shopping centres and hypermarkets.
By 2014, Soo estimated that the Klang Valley will have 53 million sq ft of retail space in 149 malls and hypermarkets.
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