KUALA LUMPUR, Jan 16 — A real estate consultancy today said that smaller new malls will give its more established rivals a run for its money as the growing supply of new commercial spaces is expected to put downward pressure on rent.
Real estate firm CBRE WTW Malaysia in its 2019 property outlook said that retail in Klang Valley is strained by an oversupply of malls amid scarce opportunities, although the city’s status as a commerce hub could be a hedging factor.
This comes as more new but smaller malls open up within the city and Greater Kuala Lumpur, the report said.
“While the established mega malls with stable occupancy, strong footfalls and comprehensive tenant mix continue to impose their dominance in the market, competition will be more easily felt among malls of smaller scale,” the firm said.
Similar pressure is expected for the office market. CBRE WTW said that the pipeline supply in Klang Valley’s office market is estimated to be well over 15 million square feet up until the year 2020.
A large chunk of it will come from the many skyscraper office towers at the Tun Razak Exchange, a designated financial hub at the heart of the city which is still under construction.
These new additions would set the new benchmark of prime office rental which has been averaging between RM6.60 and RM7.00 per square foot over the years.
“Pressure could soon be induced on the overall occupancy rate as well,” the report said.
But the residential sector will continue to underpin most activity led by landed homes projects.
While the projects tend to focus outside the city due to cheaper land, the report said that the ongoing road networks would spur interests.
High-end high rise on the other hand, which currently dominate new launches, is expected to remain flat with further price reduction an
As of the first half of 2018, condominiums or apartments comprised 96 per cent and 37 per cent of total residential overhang in both Kuala Lumpur and Selangor.