More pressure on KL commercial property this year

With more incoming supply, Rahim & Co expects the Kuala Lumpur office market in 2016 to be more challenging in 2016.

According to the recently-released “Property Market Review 2015/2016” report by Rahim & Co, there are about eight million sq ft of upcoming office space in the pipeline for Kuala Lumpur over the next four years.

“We have 88.9 million sq ft of office space now and the average occupancy rate remains at a healthy 81%. However, with an additional eight million sq ft of incoming supply by the next four years, that will create pressure on the occupancy and rental rates,” said Rahim & Co executive chairman Tan Sri Abdul Rahim Abdul Rahman (pictured) during a media briefing yesterday.

He said the latest supply in Kuala Lumpur for 2015, such as Menara Ilham Baru, Menara Bangkok Bank and KL Trillion, has already created slight pressure on the office rental rate.

The report shows that the average office rental trends in Kuala Lumpur were between RM4 psf per month to RM12 psf per month.

“In order to keep the tenancy, there is no choice but to reduce office rents. However, we should not see significant changes in rental trends this year. We do not rule out the possibility that the massive incoming supply may make the authorities concerned, so they may freeze new office developments in the future,” Abdul Rahim noted.

However, he reckoned that dual compliant buildings (Multimeda Super Corridor and Green-rated status) in integrated developments with good transport links are still well-received compared with other major cities as they offer more affordable rental rates.

“Our average rental rate is fairly affordable compared with other nearby cities such as Singapore and Hong Kong. This is also our strength in attracting multinational companies to set up regional offices in Kuala Lumpur,” Abdul Rahim said. He added that prime Grade-A buildings currently command gross rental rates of RM7 to RM8.5 psf per month. - The Edge Property