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KUALA LUMPUR: The Kuala Lumpur office market this year is expected to remain soft as occupancy and rents come under pressure.
Knight Frank executive director Sarkunan Subramaniam said rentals will trend downwards as supply from the completion of new and refurbished office buildings are expected to overshadow tenants' demand.
Good grade office buildings in good locations, supported by amenities and public transportation will continue to be favored by the tenants, he added.
"Offices within integrated developments offering complementary support components such as retail and hotel facilities as well as MSC-status are expected to perform well," he said during his talk at the 4th Malaysian Property Summit.
However, Sarkunan said the incoming supply of office space might be cushioned by the government's initiatives to generate business and job opportunities such as the issuance of five new commercial banking licences by Bank Negara Malaysia and the setting up of an oil and gas hub.
He added that the government's Economic Transformation Programme (ETP) and proposed commencement of high impact infrastructure projects such as the MRT and the proposed extension of the LRT line would also benefit the sector.
According to Sarkunan, tenants are lowering overall operating expenses and are shifting from high cost financial centers to cheaper locations with ample amenities.
"Decentralised KL is growing both in supply and demand," he said.
"Bangsar is popular as it has the LRT line whilst Damansara Heights is losing out as there are no other public transportation except buses," he said.
The existing supply in KL city centre stands at 43.8 million sq ft as of 4Q2010, while supply at KL fringe areas is at 15.2 million sq ft. The pace of growth in office space in the KL fringes is growing more significantly since 2005 with an increase of 89.5% while KL city centre only recorded growth of 12.8%.
Meanwhile, the number of offices under construction in KL city centre will total 7.1 million sq ft or 14% by 2013 and 6.7 million sq ft or 30% in the KL fringe areas in the same period. Office space would increase by 23.5% by 2013 in KL in general from the total 59 million sq ft currently.
Office space under construction in KL fringe is expected to grow at double the rate of space in KL city centre in the next three years, excluding the Warisan Merdeka tower. The offices under construction in KL fringe include KL Sentral Park, Horizon 2 and 3 at Bangsar South and Bank Rakyat's headquaters.
Knight Frank executive director Sarkunan Subramaniam said rentals will trend downwards as supply from the completion of new and refurbished office buildings are expected to overshadow tenants' demand.
Good grade office buildings in good locations, supported by amenities and public transportation will continue to be favored by the tenants, he added.
"Offices within integrated developments offering complementary support components such as retail and hotel facilities as well as MSC-status are expected to perform well," he said during his talk at the 4th Malaysian Property Summit.
However, Sarkunan said the incoming supply of office space might be cushioned by the government's initiatives to generate business and job opportunities such as the issuance of five new commercial banking licences by Bank Negara Malaysia and the setting up of an oil and gas hub.
He added that the government's Economic Transformation Programme (ETP) and proposed commencement of high impact infrastructure projects such as the MRT and the proposed extension of the LRT line would also benefit the sector.
According to Sarkunan, tenants are lowering overall operating expenses and are shifting from high cost financial centers to cheaper locations with ample amenities.
"Decentralised KL is growing both in supply and demand," he said.
"Bangsar is popular as it has the LRT line whilst Damansara Heights is losing out as there are no other public transportation except buses," he said.
The existing supply in KL city centre stands at 43.8 million sq ft as of 4Q2010, while supply at KL fringe areas is at 15.2 million sq ft. The pace of growth in office space in the KL fringes is growing more significantly since 2005 with an increase of 89.5% while KL city centre only recorded growth of 12.8%.
Meanwhile, the number of offices under construction in KL city centre will total 7.1 million sq ft or 14% by 2013 and 6.7 million sq ft or 30% in the KL fringe areas in the same period. Office space would increase by 23.5% by 2013 in KL in general from the total 59 million sq ft currently.
Office space under construction in KL fringe is expected to grow at double the rate of space in KL city centre in the next three years, excluding the Warisan Merdeka tower. The offices under construction in KL fringe include KL Sentral Park, Horizon 2 and 3 at Bangsar South and Bank Rakyat's headquaters.
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