ASEAN KEY DESTINATIONS
Retail/office space oversupply in Malaysia
The Klang Valley will face an oversupply of office and retail space within the next two to three years, according to property consultancy CB Richard Ellis (M) Sdn Bhd.
CB Richard Ellis executive chairman Christopher Boyd said while 2011 was a strong year in terms of demand for office space in the Klang Valley, rental values might succumb to an oversupply situation within the next 18 months.
“Short-term demand for office space is stable but unlikely to grow sharply,” he said at a talk entitled Kuala Lumpur Property Market In Times Of Uncertainty, which was organised by MIDF Research here Monday.
Boyd said that total office space supply in the Klang Valley stood at 80.8 million sq ft at the end of the first half of 2011 (compared with 80 million sq ft at the end of 2010).
However, it was estimated that an additional 25 million sq ft of office space would come onstream in the Klang Valley by 2015 (excluding mega projects such as the Naza group's KL Metropolis development, Warisan Merdeka tower and the Kuala Lumpur International Financial District).
According to Boyd, vacancy rates in Kuala Lumpur are under 13%.
“This is not an alarming number, but vacancy rates are expected to increase as more supply comes onstream.” A report by CB Richard Ellis also noted that prime gross asking rentals were flat at RM7 per sq ft with only a handful of buildings above this level.
Since rising steadily from 2002 to 2008, rentals at top city centre buildings have remained mostly flat for the past two years.
“Asking rents at most top buildings in the city centre are within the RM6 to RM10 per sq ft per month range, with only a few select buildings, such as Petronas Tower 2 and Maxis Tower, achieving monthly rents of RM10 per sq ft and above,” said the report.
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