KUALA LUMPUR, Jan 23 — The oversupply in office spaces in Malaysia’s capital and satellite cities is expected to worsen this year amid weak demand for commercial properties, according to international property consultancy Knight Frank.
The firm’s data showed 7.6 million square feet of new office space will be added to existing stock this year alone, even as the overall take-up rate has been on the decline since 2015.
“The problem is never about the supply,” Knight Frank Malaysia managing director Sarkunan Subramaniam told the 2018 Malaysian Property Summit here today.
“The problem is demand… what to do to improve demand,” he added during his presentation on the Klang Valley office market performance and 2018 outlook.
“The tenant’s market is here to stay,” Sarkunan said.
Kuala Lumpur has the highest gap between occupancy and supply of purpose-built offices, with over 1.5 million square metre of space not taken up in 2017, according to government data.
Other states with notably low occupancy rates were Selangor, Johor and Penang.
The total occupancy rate for Kuala Lumpur was 81.6 per cent, 77.8 per cent for both Johor and Penang, and 72.5 per cent in Selangor.
The completion of the Tun Razak Exchange is also set to worsen the oversupply should demand remain soft, Sarkunan warned.
The 70-acre development is set to become the city’s new financial district. The master plan includes a total of 26 buildings and over 21 million ft of gross floor area (GFA) spread across office, residential, hotel, retail, F&B and cultural offerings.
The project is expected to add 10 million square feet of office space to an already crowded market, Sarkunan said.
Policymakers have been urged to respond with the necessary policies to avert a serious oversupply problem.
“It’s actually a very good idea, it’s needed and good for growth but the issue now is demand.
“There must be something done,” he said.
