KUALA LUMPUR (Oct 11): Knight Frank has forecast a 2.5% growth in prime office rents in Kuala Lumpur over the next three years, a growth rate which is ahead of the forecasts for two main cities in China — Shanghai and Beijing.
According to the global property consultancy firm’s Global Cities: The 2018 Report, KL ranked 12th highest in the Asia-Pacific rent growth three-year forecasts (end-2017 to end-2020).
Knight Frank Asia-Pacific head of research Nicholas Holt said rental growth prospects across major cities in Asia-Pacific look positive over the next three years, reflecting solid regional growth prospects translating into strong demand from a number of sectors.
“Occupiers in technology, media and telecommunications are especially likely to drive demand in many of the gateway cities, while we also expect to see more Chinese tenants active in the major markets,” he said during a media briefing on the key findings of the report.
Manila topped the list with a rent forecast growth of 19.1% over the next three years, followed by Brisbane and Singapore which have a forecast growth of 16.5% and 15.8%, respectively.
Meanwhile, Knight Frank Malaysia managing director Sarkunan Subramaniam said KL’s office rental has offered the most value among the 23 global cities in the report with an average per annum rental of US$23 psf or US$250 psm.
In terms of rental yield, Holt said some skyscrapers in KL have offered attractive yields of 6.5%, which is higher than other cities including Singapore (3%) and San Francisco (4.5%).
The report features the Skyscrapper index, which examines the rental performance of commercial buildings of over 30 storeys across 23 global cities in 2Q17.
In the Skyscrapper index, Hong Kong topped the list with per annum rental of US$304 psf or US$3,273 psm.
New York (Manhattan) and Tokyo came second and third with the per annum rental of US$162 psf (US$1,742 psm) and US$140 psf (US$1,502 psm), respectively.
Commenting on old office buildings that are losing their attractiveness to new Grade A buildings, Sarkunan noted that KL is now undergoing gentrification and property owners would need to rethink and repurpose their buildings to suit current needs in order to attract new tenants.