Kuala Lumpur office rents under persistent downward pressure | Realestate Asia
,Malaysia
14 views

Kuala Lumpur office rents under persistent downward pressure

Rents and capital values are still under pressure as landlords drop asking rents.

Soft demand persisted across all three submarkets of KL City, KL Fringe and Decentralised Areas, as tenants continued to be cautious in renewing their existing tenancies.

According to JLL, sectors such as technology, e-commerce, as well as the financial sector nonetheless performed well, with expansions recorded alongside movement due to flight-to-quality, while other sectors continued to see challenges and were observed to re-strategise their space requirements.

Here’s more from JLL:

Completions delayed due to stop-work order

Total supply stagnated as no new supply were noted during the quarter. Many scheduled completions saw delays (of around 3 to 6 months) as stop-work orders were issued on construction sites as part of the Movement Control Order (MCO).

Vacancy increased as rightsizing continued to be the main theme across all submarkets. We observed some occupiers either surrendering office space or putting hold on expansion plans during 1Q21.

Rents and capital values remain under pressure

Downward pressure on rents persisted as some landlords continued to drop asking rents in selected submarkets especially in KLC where the majority of occupiers are from the financial services and oil and gas industry.

Investment sentiment for office space was muted as many investors looked to re-strategise their investment plans. We have observed more buildings put up for sale by owners/landlords during the quarter.

Outlook: With WFH policy lifted, office utilisation is set to increase

The government relaxed the work-from-home policy effective 1st April, thus going forward, office space utilisation will likely increase as workers return to office in full or near-full force.

With significant supply expected in the coming years, office locations in KL City and KL Fringe may likely experience downward pressure on rents and occupancy rate.

Kuala Lumpur Office refers to Kuala Lumpur's Grade A office market.

 

Get Realestate Asia in your inbox
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

There were no new project launches in June.
The Osaka Umeda Twin Towers South will lead the supply throughout 2022.
Newcastle, Wollongong, and Gosbord are attracting hefty investments.
Investment sales surged to 86.3% in the second quarter despite tightened restrictions.
One company will invest US$10b in Japan, 70% of which will be invested in office buildings.
Institutional investors accounted for 71% of all commercial transaction volumes in the quarter.
This was boosted by two Blackstone portfolio sales - Milestone ($3.8b) and Kingdom II ($825m). 
Rents in Tokyo dropped 6.5% while Osaka and Nagoya recorded only 2.2% and 0.6% declines, respectively.
Occupancy rate in the Raffles Place / Marina Bay precinct reached 94.3% in Q2.
One of the demand drivers were tenants seeking small spaces of less than 1,000sqm.
Hong Kong’s strong export rebound and rise in food consumption would increase this asset’s value.
Island-wide rents declined 9.3% to S$26.20 per square foot per month in Q2.
This is a huge improvement from the 28% drop recorded in 2020.
It is also important to consider who pays for the technology infrastructure, the occupier or the developer? 
The APAC Prime Office Rental Index declined by just 0.8% despite Delta variant outbreaks.