Prime office space in Kuala Lumpur dipped in Q2 2018 on a quarterly basis by 0.8 percent, or the sharpest decline among 19 cities in the region, and prime office rents there are expected to decline further over the next 12 months, Knight Frank revealed.
According to the property consultancy’s Asia Pacific Prime Office Rental Index, Grade A office rent in KL’s city centre slid by 2.5 percent year-on-year to RM5.9 psf per month, the second highest decline after Shanghai’s annual drop of 3.1 percent.
Knight Frank Malaysia’s Executive Director for corporate services Teh Young Khean told the Malaysian Reserve that the weaker rent is caused by the high upcoming supply and sluggish take-up of Grade A office space.
In fact, he is downbeat on the prospects of Kuala Lumpur and Selangor’s office market, as the large amount of incoming stock and lacklustre demand would drag down rents and occupancy rate.
“Landlords with older and newly completed buildings, especially in KL city, are more accommodating in providing additional incentives to retain existing tenants as well as to attract potential tenants.”
On the other hand, Singapore saw the 8th highest annual growth in Grade A office rents in the second quarter, and prime office rents there are expected to increase over the next 12 months.
Specifically, monthly prime office rents in the city-state’s Raffles Place and Marina Bay rose by 6.1 percent year-on-year to S$8.4 psf. On a quarterly basis, Grade A office rents there edged up 0.8 percent, as landlords raised rents due to tapering supply.
Overall, Knight Frank’s Asia Pacific Prime Office Rental Index rose 2.4 percent on a quarterly basis in Q2, surpassing the 0.9 percent gain seen during the prior quarter.
“Steady demand seen in the prime office market is expected to bolster rental growth for the second half of the year. Despite several headwinds, including tensions around trade, regional economic growth continues to fuel demand for Grade-A office space,” said Nicholas Holt, Knight Frank’s research head for Asia Pacific.
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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