THE average office rental in Kuala Lumpur city centre recorded a slower growth of 2.1% in the third quarter of this year (3Q 2019), according to property consultancy firm Knight Frank in its “Asia-Pacific Prime Office Rental Index for 3Q 2019” report.
The growth was 2.5% in the previous quarter. Despite the slower growth in average office rental, the firm described the prime office rental as stable amidst the cooling economy.
Knight Frank Malaysia Sdn Bhd corporate services executive director Teh Young Khean said: “Going forward, however, with the Kuala Lumpur City Centre’s office market remaining competitive amid high impending supply, landlords continue to offer attractive leasing packages to secure new occupiers and retain existing tenants.”
“Malaysia’s tallest tower, The Exchange 106 at Tun Razak Exchange (TRX), was awarded the certificate of completion and compliance (CCC) for the lower zone of the building in 3Q 2019. The building, which is reported to have achieved circa 20% pre-committed occupancy, offers good quality and high specification space and hence, commands higher rental rates,” he said in a report.
Knight Frank Asia Pacific Pte Ltd occupier services and commercial agency head Tim Armstrong said: “Going into 2020, amidst trade tensions, cooling economies, social and political unrest, occupiers and landlords will continue to face mounting pressures that are likely to subdue growth prospects.”
The index tracks 20 cities, including Tokyo, Shanghai, Taipei and Brisbane. It reported 12 of the cities as having either stable or increased rents; two less than the 14 reported in the previous period.
For instance, the average rentals for prime office locations in Hong Kong have plummeted 5.6% due to the continuing pro-democracy protests in the city as well as increasingly harsh tactics authorities are using to suppress the special administrative region of China.
Other locations that recorded quarter-on-quarter declines were Shanghai (-1.1%) and Beijing (-0.8%) in China, and Manila, the Philippines (-0.4%).
Australian office space appeared to be enjoying a revival, with the major cities of Sydney, Melbourne, Perth and Brisbane all reporting higher growth.
Singapore’s absolute rental yields declined by 0.6% during the same period, but this still represented an improvement from the previous quarter.