Despite a stronger economic performance, the office market in Kuala Lumpur continued to struggle with subdued leasing activities and an oversupply of new buildings in Q4 2017, revealed a Knight Frank report.
Kuala Lumpur saw prime office rent fall 1.5 percent year-on-year while remaining flat quarter-on-quarter during the fourth quarter of 2017.
This comes as the growing mismatch between supply and demand continued to exert pressure on overall occupancy and rental levels, said Teh Young Khean, Knight Frank Malaysia’s Corporate Services Executive Director.
“On a positive note, with rising demand for co-working space, catering to the growing millennial workforce, 2018 will see active enquiries and leasing activities from co-working operators,” he noted.
Knight Frank’s Asia-Pacific Prime Office Rental Index rose 0.7 percent quarter-on-quarter and 1.1 percent year-on-year in the last quarter of 2017.
The property consultancy attributed the increase in the index to the rising rents registered in 12 of the markets tracked over the quarter.
Jakarta topped the index, with prime office rent climbing 3.8 percent quarter-on-quarter, albeit rents in this city are “expected to be tenant-favourable for at least the next 24 months”.
“Relatively strong economic performance has sustained active office leasing markets across Asia-Pacific in 2017,” said Nicholas Holt, head of research for Knight Frank Asia-Pacific.
Looking ahead, Knight Frank expect rents in 16 of the 20 cities tracked to either remain steady or increase over the next 12 months, similar to its previous forecast.
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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