KL office market to stay soft in 2011

KUALA LUMPUR: The city's office market is expected to remain soft at the beginning of 2011 due to a large supply of new space entering the market over the next two years, said local consultancy YY Property Solutions.

The report, released on Nov 16, noted that five major office towers slated for completion sometime in this quarter (4Q) and around next year — namely One Mont Kiara, Majlis Agama Islam Wilayah Persekutuan (MAIWP) Tower, The Crest Sultan Ismail, Glomac Tower and Menara Binjai — will contain a total 1.69 million sq ft of space between them.

"The situation is expected to create a very competitive environment among the existing and new buildings," said the consultancy.

Nonetheless, the office market is expected to remain fairly stable until the end of this year, underpinned by strong economic indicators such as the 131 entry point projects (EPP) aimed at creating businesses and job opportunities under the government's Economic Transformation Plan (ETP), it noted.

The consultancy pointed out that as at 3Q, overall rental for Grade A office buildings were maintained despite new supply and newly-refurbished buildings in good locations.

In 3Q, rents averaged below RM6.50 psf while vacancies hovered just slightly under 12%, according to the report.
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