Developers unfazed by Kuala Lumpur's office space glut

Mangalesri ChandrasekaranApril 27, 2016


Despite Kuala Lumpur’s high office vacancy rate of about 20 percent as of Q4 2015, developers are still building many projects with office premises in the capital, reported The Business Times.

Based on the latest report from the National Property Information Centre (NAPIC), there are still 1.56 million sq m of unoccupied purpose-built commercial space during the period out of a total of 7.75 million sq m.

The capital’s vacancy rate also surpasses Malaysia’s average vacancy level of 16.3 percent and exceeds the regional average of 6.6 percent by over three times.

Moreover, a study by Savills showed that several Grade A buildings completed from 2011 to 2014 recorded dismal occupancy levels ranging from 50 to 75 percent.

However, more commercial developments are on the horizon, including large-scale ones.

In the next three years, about 63 new office buildings are expected to enter the market, adding an average of 4.9 million sq ft of space per annum. Comparatively, the annual supply only reached 2.8 million sq ft on average from 2001 to 2015, according to a recent study by Jones Lang Wootton (JLW).

Although Malaysia’s upcoming tallest tower, the 118-storey KL118 (Warisan Merdeka), was included in JLW’s survey, two mammoth projects were not taken into account, namely Bukit Bintang City Centre development (BBCC) and Bandar Malaysia.

Located on land previously occupied by the Pudu prison, BBCC is a massive integrated project. Its first phase, which will be launched in 2016, contains a 45-storey tower comprising 350 units of strata-titled offices measuring from 715 sq ft to 1,423 sq ft.

The much bigger Bandar Malaysia project is a mixed-use township located on a 486-acre site formerly occupied by the Malaysian air force. Its commercial component is expected to add more office space due to its sheer size.

China Railway Engineering Corp, a member of a consortium that owns a 60 per cent stake in Bandar Malaysia, also intends to build their regional headquarters in the township.

The Warisan Merdeka and China Railway’s regional hub are expected to be completed by 2020.

Meanwhile, Bank Negara Malaysia warned in its 2015 annual report that the supply glut in the commercial sector could negatively affect other sectors of the economy, such as developers and other construction-related segments.

Hence, the central bank advises that the massive developments should stagger to align with the current and future demand.


Mangalesri Chandrasekaran, Editor at PropertyGuru, edited this story. To contact her about this or other stories email


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