Malaysia - K.L Office Rental Market Stable

Malaysia

Rents for purpose-built offices in Kuala Lumpur were found to be stable over the past three years, with a slight uptrend seen in certain suburbs and city centre areas. Investor interest is still keen in Iskandar Malaysia, which has secured RM 10.67 billion in investments for 2012 – with Singapore the leading investor at RM 4.56 billion.

Malaysia - Kuala Lumpur Office Rental Market Stable

July 20, 2012

Rents for purpose-built offices were found to be stable over the past three years, with a slight uptrend seen in certain suburbs and city centre areas.

An index of rental rates for purpose-built offices in Kuala Lumpur showed that the market generally held steady over the past three years. The exception was a slight uptrend which was found in certain suburbs and city centre areas.

Defining purpose-built offices as buildings with office use of not less than 75% of net lettable area, the 2011 Purpose Built Office Rent Index (PBO-RI) compiled rental data from 6,831 tenancy leases from 167 buildings in Kuala Lumpur.

To be published on a quarterly basis, the rent index is developed by the Valuation and Property Services Department (JPPH), with assistance from Universiti Teknologi Mara (UiTM) and University of Malaya. It was created with the aim of providing a guide on current market rentals for investors, as well as a benchmark for the financial stability of Malaysia. National Property Information Centre director Dr Zalian Mohd Isa said, "Looking at the data, the market is still good."

The rent index has four categories: Kuala Lumpur City Centre-Golden Triangle (KLCC-GT), Centre Business District (CBD), within city centre (WCC) and suburban.

In the WCC region, average monthly rents increased gradually from RM 2.92 per sq ft in Q1 2009 to RM 3.46 per sq ft in Q4 2011. This represents an 18.5% increase over three years.

Similarly, rentals for purpose-built offices in the suburban region had also increased by 13.2% over three years, rising from RM 3.10 per sq ft in Q1 2009 to RM 3.51 per sq ft in Q4 2011. The suburban region includes Bangsar, Bukit Kiara, Damansara Heights, Jalan Pantai Baru, Jalan Istana and Jalan Syed Putra.

Commenting on the data, Zalian said this shows that companies may be relocating to suburban offices.

Meanwhile, average monthly rents remained stable in the KLCC-GT region, the most sought-after office district in the city. Rents rose a mere RM 0.06 over three years - from RM 4.60 in Q1 2009 to RM 4.66 in Q4 2011.

Rents for offices in CBD regions, however, fell slightly over the surveyed period, going from RM 3.46 per sq ft in Q1 2009 to RM 3.27 per sq ft in Q4 2011.

Overall, average office rents in Kuala Lumpur increased slightly over the three-year period, from RM 3.91 per sq ft to RM 4.04 per sq ft, the report added.