Recent developments in Malaysia’s office sector to watch out for

Hap Seng is set to become the new owner of the Menara Weld office building.

Despite growing challenges in the office market, the overall occupancy rate of purpose-built office space in KL City improved slightly to record at 67.5% during 2H2022 (1H2022: 67.2%). 

However, Knight Frank says the occupational demand in KL Fringe was lower but remained resilient at 86.1% (1H2022: 86.8%). The overall occupancy rate in Selangor also declined during the review period to record at 73.2% (1H2022: 74.1%). 

Here’s more from Knight Frank:

There were several notable office-related announcements during the review period. 

Tower Real Estate Investment Trust (Tower-REIT) is offering customisable office layouts to prospective tenants at Menara HLX in Jalan Kia Peng, Kuala Lumpur, through its collaboration with EzyOffice, an innovative renovation provider that serves clients through digitised office concepts and ideas. 

“Office Made Ezy” is the first pilot project in Malaysia that offers future / potential tenants of Menara HLX a comprehensive one-stop, build-to-fit workspace – available in several templates and dozens of variations for workspace units ranging from 2,000 sq ft to 13,000 sq ft.

Hap Seng is poised to emerge as the new owner of Menara Weld office building and The Weld Shopping Centre, located at the corner of Jalan Raja Chulan and Jalan P Ramlee in Kuala Lumpur. It is learnt that Hap Seng and the vendor, Great Eastern Life Assurance (M) Bhd, are in the process of finalising a deal at between RM240 million and RM300 million. 

Under the tenancy and lease agreement with Permodalan Nasional Bhd (PNB), which owns Merdeka 118, Maybank will occupy 33 floors of Merdeka 118, taking up 650,000 sq ft at an initial gross monthly rent of RM10.60 per sq ft for the first six years with subsequent adjustments for inflationary costs. This would translate into an effective monthly rental rate of RM8.92 per sq ft for Maybank’s new headquarters at Merdeka 118, or about RM69.58 million a year based on 650,000 sq ft of space. 

With Maybank on board, Merdeka 118 will have circa 70% occupancy once it is completed by the end of this year. The lease agreement will commence in the last quarter of 2025. 

Total waste management solutions provider, JAG Bhd, is acquiring a 12½-storey building in Taman Desa, Kuala Lumpur for RM35.29 million, as part of the group’s effort to expand its property investment business. The proposed acquisition will create a new stream of recurring income which will positively contribute to the group. 

JAG said Telekom Malaysia Bhd (TM) has expressed its intention to continue renting the property after the sale is concluded, and upon execution of the Sale and Purchase Agreement (SPA), JAG will negotiate a fresh lease with TM.

Riding on a solid Malaysia economic recovery this year with GDP expected to range between 6.5% and 7.0%, InvestKL has attracted global multinational companies such as Tupperware, British public-listed software development company Endava Plc, Baxter Southeast Asia and Arnott’s in setting up a regional hub in Greater Kuala Lumpur to serve the Asia Pacific market. 

The sign up of the four major companies amongst others facilitated this year has bolstered InvestKL’s 10-year strategic plan to attract RM35 billion in investments. This is anchored by the National Investment Aspirations for leading global companies to set up regional services and technology hubs in Malaysia through 2030. 

InvestKL, the agency under the Ministry of International Trade and Industry (MITI), has already completed a similar mission after securing over RM15 billion from 103 multinational corporations (MNCs) to invest in Greater KL over the last decade. In the first half of 2022, InvestKL has attracted RM1.68 billion worth of investments, creating 1,919 high-skilled executive job opportunities.