If there is an oversupply, prices should drop. It does not apply only for residential but also for offices. Businesses may be spoilt for great choices if there are oversupply of office space. In fact, one major reason why Singapore is one of the most expensive cities in the world is due to its property market, both residential and office rental rates. So, should we be happy if there are office space oversupply? If I am thinking of starting a business, I would hate it if my rental every month eats into majority of all my profits. I sell my products like crazy and the owner of the building gets to get high rental and dreams of vacations in Italy? Of course, I know if I happen to be the owner of such offices, I would be sad if I needed to reduce my rental because of oversupply.
For businesses, perhaps there going to be happiness all around. Reported in themalaymailonline, property expert Y.Y. Lau the country manager of JLL Property Services (Malaysia) Sdn Bhd said that when PNB118 is completed, it will cause an oversupply of office space in the Kuala Lumpur central business district (CBD). She said besides the 118-storey tower, there are also the 1MDB’s Tun Razak Exchange (TRX) and Bandar Malaysia. All these would be completed at a time when supply will outstrip demand. Asper data from JLL’s research team, new offices totalling 4.8 million sq ft will flood the CBD. From now till then, an average of 1 million sq ft would be added every year.
Not all offices would face a bleak future. She said that those near train stations would have an additional advantage because if given a choice, Malaysians may choose not to drive due to lack of carparks, toll hikes, traffic jasmine time wasted on the road.
I think she is right. I could already see more and more of my colleagues taking the public transport including even my general manager) I recently calculated that Imay save up to RM250 per month if I were to take the LRT followed by Monorail to reach my office. The only issue still holding me back is flexibility. Without jam, I can reach home within 25 minutes via my car. With the LRT and then the Monorail, it would still take me at least 40-45 minutes for one way. Perhaps later, if it gets way too bad. Maximise your rented space before opting for a bigger one. Perhaps in 2019, Malaysia can be in the top10 cheapest rental for CBD in the world. We shall see.
written on 23 Mar 2016
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