To everyone who’s currently working within the KL Central Business District, can you just drop by your finance department and ask them if the company will be saving more money due to lower rentals? If the answer is no, then perhaps it’s because they did not bother to ask the owner for some rental reduction? Times are hard. Supplies are coming in. Reports are saying rentals are declining. Some of the reasons that the finance department could use when talking to the current owner / office management. I just got to know that my company should be paying a higher rental next year. Of course that’s because our current rental is pretty low. Due to expansion, we have to move to a much bigger place.
Reported in a few medias today was a news which could be a good news for the Kuala Lumpur even if it’s a negative one for owners of prime office space. According to independent global property consultancy Knight Frank in its Asia Pacific Prime Office Rental Index, KL’s rentals fell by 0.7 percent in 2015 and dropped 0.4 percent from Q4 of 2015 to Q1 of 2016. Even though this is very marginal but it said that the decline is expected to accelerate in the next 12 months due to the new supply coming into the market. Due to this new sup,y, some owners of these units are already reducing their rental rates.
One major industry has moved out, the oil and gas. This has been partially filled up by the technology, media and telecom (TMT) sector. There were also more start-ups which are moving into prime space and this was also happening in Jakarta. Before everyone starts spreading this gloomy news, do note that the rentals in Singapore dropped 9.9 percent and that of Jakarta dropped 9 percent. According to the firm, “Singapore continued to be mired in a double whammy of significant supply and weak demand.” Earlier article here: 2019 should have “cheap rental”for office space in KL
Some of the upcoming supply include Malaysia’s tallest skyscraper, the 118-storey Merdeka PNB118, and other integrated projects like the TRX, Bandar Malaysia and KL Metropolis. All these are expected to be completed at almost the same period, thus causing supplies to suddenly jump upwards and this would outstrip the potential demand growth. As per JLL’s data from Q4 2015, the vacancy rates for KL’s CBD is at 13.5 percent. This is definitely considered healthy but let’s wait for their latest report to understand more. Happy following.
written on 1 June 2016
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