According to Knight Frank’s latest study, rents of prime office space in Kuala Lumpur declined by 0.4 percent in Q1 2016 compared to the previous quarter.
While this is a smaller drop than the 0.7 percent annual dip in 2015, prime office rents in Malaysia’s capital are expected to fall further over the next 12 months, given the substantial upcoming supply.
“In anticipation of an influx of new supply, landlords in Kuala Lumpur have reduced their asking rents,” said the property consultancy.
Nevertheless, the weaker demand for office space from the oil and gas sector arising from the rout in oil prices was offset by the healthy interest from the technology, media, and telecom (TMT) industry.
“There is also anecdotal evidence that start-ups are moving into prime space – demand dynamics which are similarly being experienced in Jakarta,” it noted.
Knight Frank’s gloomy rental forecast mirrors the projection made by JLL Property Services (Malaysia) Sdn Bhd. In March 2016, the latter said that Kuala Lumpur’s central business district (CBD) could be negatively affected by an oversupply situation in 2019.
Based on JLL’s statistics, 4.8 million sq ft of new office space will enter the market by that year, when developments such as the centrepiece tower in Tun Razak Exchange (TRX) are completed.
On average, about one million sq ft of office spaces per annum are projected to come on stream from 2016 to 2018, added the real estate consultancy.
Image: Sourced from http://klsentraloffice.malaysiapropertysearch.net/
Mangalesri Chandrasekaran, Editor at PropertyGuru, edited this story. To contact her about this or other stories email email@example.com