Y Y LAU, Director of YY Property Solutions Sdn Bhd (YYPS)
The word “oversupply” has been frequently used recently to describe the Klang Valley office market, which has its own merit by looking at the total existing stock of 104 million sq ft when calculating private-owned office buildings located in Kuala Lumpur, Selangor and Putrajaya.
As at 2Q 2013, average vacancy rate in KL CBD stood at 21 per cent compared to 26 per cent recorded in 1Q 2013. The lower vacancy rate is mainly due to the higher occupancy rates achieved by a handful of new buildings completed in the second half of 2012, as well as stable occupancy rates achieved by existing buildings included in their sample basket for monitoring good grade buildings in this submarket. As of now, there are still quite a number of buildings completed in year 2012 not achieving significant occupancy rates. Average gross asking rent for the monitored buildings remained stable at RM8.41 psf during 2Q 2013 compared to RM8.46 psf recorded in 1Q 2013.
During 2Q 2013, existing Grade A buildings in our sample basket for this submarket experienced improved occupancy rates, which helped to offset the high vacancy rates observed in the newly completed buildings in KL Sentral. Overall average vacancy rate in this submarket lowered to 17 per cent during 2Q 2013 from 19 per cent recorded in 1Q 2013. Average gross asking rent in this submarket edged up slightly to RM6.66 psf compared to RM6.50psf in 1Q 2013.
Demand for Grade A office buildings in the Decentralised Area remained strong during 2Q 2013 as there is lack of new supply of Grade A buildings in this submarket. Existing Grade A buildings in this location continued to enjoy high occupancy rates due to the limited supply of such good quality buildings.
KL CBD office market has been and will continue to be supported mainly by oil & gas companies and financial institutions. The support of LRT and Monorail services provide competitive advantages to the office buildings situated in this location. Likewise, the successful integrated development concept adopted by KL Sentral, Mid Valley City and Bangsar South in KL Fringe locations will continue to attract corporates to set up offices at these developments.
Datuk Mani Usilappan (Former Valuation and Property Services Department Director-General)
In the KLCC (Kuala Lumpur City Centre) area, occupancy rate is well under control with average occupancy rate of 82 - 83 per cent, which is fairly normal and consistent. There are not many pieces of land left in KLCC area for office development. Therefore, prime office space does not face an oversupply problem. A few years ago, rentals shot up to RM8.50 - RM10 psf but a lot of people didn‘t know that a lot of owners were giving 2-3 months of rebate.
K.H. Sim, Chairman of Allstones Group Asia Sdn Bhd
The market could move towards an overhang when projects such as TRX and Warisan Merdeka starts and nears completion. With these, there will be added supply which will saturate the existing market. At present, supply is definitely increasing faster than demand which has led to an oversupply situation.
Tan Lee Koon, Managing Director of GuocoLand (Malaysia) Bhd
A possible overhang in the office market has been a topical subject in recent years and often discussed each time a new mega project is announced. Malaysia has been fortunate enough to enjoy sustainable economic growth of over 5 per cent per annum in recent years despite uncertainties in the global economy. This has prompted many new developments in the Klang Valley, including the government’s mega projects like the TRX (Tun Razak Exchange) and KL Metropolis.
See Kok Loong, Director of Metro Homes Sdn Bhd
My view is that the current office market is undervalued in terms of rental per month, in relation to countries like Hong Kong and Singapore as we have not been able to draw in regional offices of MNCs (Multinational Corporations) into Malaysia in a big way, except for oil and gas companies.