As more major new buildings are being built, it is expected that the gross rent of Kuala Lumpur’s offices in the Commercial Business District will stabilise by the end of this year, in spite of the higher projected vacancies.
Gross rents of offices in the KL fringe locations are set to increase by the end of 2018 as well.
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The completion of KG Tower in Kuala Lumpur city centre and KL Eco City Tower 3 (DBKL Tower) in the Kuala Lumpur fringe area in the 4th quarter of 2017 has led to a rise in vacancy levels by 2.4% when compared to the previous quarter.
Yet buildings which had good specifications showed a stable average gross rent at RM6.20 psf per month.
Meanwhile, unoccupied office space in the Klang Valley is expected to increase to about five million sq ft of business areas in the next four years.
Despite signs of a commercial glut in some areas, office rentals have remained stable, even though the average vacancy rate in the Klang Valley is around 20%, a situation that is not expected to change anytime soon.
In terms of the retail sector, it is expected that the capital values of retail properties will stay steady in the coming future, thanks to a limited supply and steady demand.
Malaysia has become the preferred destination for international brands in South East Asia when it comes to retail.
Due to a continued demand, global brands are able to expand faster in Malaysia, especially in the Klang Valley. This makes for an easier distribution process, as well as a tenant-friendly rental market.
In Q4 2017, the gross prime rent increased by just 0.1% since there were no significant factors to affect the rents. Capital values have also stayed the same in Q4 2017 and are expected to hold up better in the coming years.
The future appears bright for Malaysia, thanks also to the Belt and Road Initiative. Malaysia’s economy grew 5.7 percent in the first half of 2017 and is projected to grow by around 5.5 percent in 2018. Multiple investments are coming in to build infrastructure for logistics, manufacturing, transport and export. The country’s economic status is rising thanks to these investments, and more multinational companies are coming in to build their global headquarters here. The business climate is improving and the outlook is positive overall.
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