Gradual growth seen in office space take-up

KUALA LUMPUR: Office space take-up in Malaysia is seeing gradual positive growth, regardless of the outcome of the recently concluded 13th general election (GE13).

CBRE Malaysia Sdn Bhd executive chairman Christopher Boyd said unlike residential take-ups, office space occupancy has not been held back by concerns arising from GE13.

This is because office space is dependent on companies already keen on expanding before the election.

“Industries such as oil and gas, which have been expanding even before the election, would have continued to expand regardless of the outcome of GE13,” Boyd said.

However, it would be too early to note any noticeable increase in demand for office space, he said.

“You can’t expect to see the increase immediately, but you will see the trend in a few months,” he added.

In the GE13 held on May 5, Barisan Nasional retained its power by winning 133 parliamentary seats out of 222 contested.

Boyd said in a good year, office space take-ups could reach up to three million sq ft per year.

“And we see Malaysia’s office space take-ups reaching three million sq ft this year,” he told The Edge Financial Daily.

DTZ Debenham Tie Lung Sdn Bhd executive director Brian Koh also sees overall office space absorption being unaffected by short-term political sentiment as it is driven by market fundamentals.

He said there has been a significant uptick in the number of office sale transactions announced and signed in the last few weeks.

“These deals had been negotiated in the past few months and finalised after taking into account the outcome of the election.

“However, it would be purely speculative to try to quantify how much consideration politics will have on these transactions,” said Koh, who noted that a change in the state government could have become a factor in deals involving government linked companies.

One such deal which he singled out as having that predicament involved Bukit Damansara Development Sdn Bhd, a subsidiary of Johor Corp, and Malton Bhd, which was announced two weeks ago.

According to Knight Frank 2012 Real Estate Highlights, the cumulative supply of purposed built office space in the Kuala Lumpur city centre was at 48.3 million sq ft.

Along the fringe of the Kuala Lumpur city centre, the cumulative supply was unchanged at 17.5 million sq ft.

The report also said for this year, buildings due for completion in the Kuala Lumpur city centre include Menara Hap Seng 2 and Crest Sultan Ismail.

Together, these two buildings with a combined net lettable area (NLA) of some 580,000 sq ft will bring the cumulative supply in Kuala Lumpur city centre to 48.9 million sq ft.

However, the bulk of incoming supply for this year is expected to come from the fringes of Kuala Lumpur, which will see the addition of about 4.1 million sq ft of NLA.

The buildings include Menara LGB, Bank Rakyat headquarters, Menara Shell, Menara 1 Sentrum, CIMB headquarters and Nu Towers located in KL Sentral, said the report.

Most of these buildings, which are located within the MSC Cybercentre boundaries, are expected to be green-compliant.


This article first appeared in The Edge Financial Daily, on May 28, 2013.