I prefer that Kuala Lumpur has more office space versus demand. I do not wish demand to rise way faster than supply because supply of office space cannot suddenly increase but demand could if business confidence suddenly turns extremely positive. Earlier article here: Office space Klang Valley? Seems to be too many? Besides, there are still NO reports distinguishing those dilapidated office buildings versus the generally accepted ones.
Thus any supply numbers should be taken with some caution because I have been to many of these badly maintained office buildings where water is dropping down in the car park ceiling for example. Or those where the lighting is extremely poor and one would feel very unsafe. Somehow, these SPACE should be identified and taken off the calculation so that we can have a much objective view of the office space availability. Honestly, IF you need an office space, would you want to rent in these unfavourable condition places? Anyway, an official update as below:
Article in edgeprop.my here. Knight Frank’s Asia-Pacific (APAC) Prime Office Rental Index Q22019 showed that office rents in Kuala Lumpur city centre (KL City) had a marginal decline of 0.2% in the second quarter of 2019 (2Q2019) from the previous quarter and 0.7% compared with a year ago.
Knight Frank Malaysia executive director of corporate services Teh Young Khean said, “Faced with the high impending office supply driven by new construction, prime grade office rents in KL City continue to be under pressure with landlords competing to attract new occupiers as well as to retain existing tenants.”
The report showed that prime net headline rent in the city centre stood at RM5.80 psf per month and is forecasted to remain under pressure in the next 12 months. Within the 20 APAC cities covered by the index however, office markets rent are recovering by rising 0.9% quarter-on-quarter and reversing the 0.4% decline seen previously. On an annual basis, office rents are up 3.4% year on year in these APAC cities. This is slower than the 6.2% rise in last quarter.
Knight Frank head of research for Asia-Pacific Nicholas Holt said, “With no end in sight over the trade tensions between the world’s two dominant economies, the looming prospect of a hard Brexit and the ongoing concerns in Hong Kong, we expect the rest of 2019 to remain challenging for Asia-Pacific office markets.” The article is a long one and has many more references. Please read Article in edgeprop.my here.
If we are to read all the current economic signs for most countries, it is not a rosy one. That trade war is still on even if there are now uncertainty if the one who started it really wanted to continue pushing it. Yet, when we look at the office rental across APAC, somehow it is showing HIGHER rental rates!? Logically, economies are growing slowly, surely the demand for office space is also slowing? Unless of course the businesses continue growing and expanding but somehow the consumption demand is still not growing, thus accounting for lower GDP growth…? Anyway, happy reading more and understanding.
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