Prime office rents in Kuala Lumpur, particularly in the City Centre submarket, is forecasted to decline further over the next 12 months given the substantial amount of upcoming stock this year, according to property consultancy Knight Frank.
Based on its Prime Office Rental Index for Asia Pacific, monthly rent for office space in the capital reached RM5.3 psf in Q1 2017, down 0.8 percent quarter-on-quarter and 1.3 percent year-on-year.
Kuala Lumpur’s prime office market remained under pressure during first three months of the year in light of the soft demand and the significant impending supply, Knight Frank Malaysia Executive Director Teh Young Khean told the New Straits Times.
As a matter of fact, only 24,646 sqm of office space in the city was absorbed by the market for the whole of 2016, compared with completions of about 320,643 sqm during the same period, based on data from the National Property Information Centre (NAPIC).
However, the new supply of office space in Kuala Lumpur is expected to hit 4.72 million sq ft (438,502.35 sqm) this year, while six million sq ft (557,418.24 sqm) of space are projected to be completed by 2018.
Among the large-scale developments that will further boost the city’s inventory of office space in the next few years are KL118, Tun Razak Exchange (TRX), Bandar Malaysia and Bukit Bintang City Centre.
Consequently, Teh believes that owners of old buildings within the Golden Triangle may be compelled to reduce their rents as they seek occupants to fill up the space vacated by firms that either relocated or downsized.
Touted as a premium business district in Kuala Lumpur, the Golden Triangle contains many office buildings with a high concentration of occupants from financial institutions, insurance companies and service providers.
Not only does it have four- and five-star hotels, it is also famously known as the capital’s primary district for shopping and entertainment.
Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email firstname.lastname@example.org