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Thursday, January 28, 2010

CBRE sees office rentals in Malaysia stabilising in H1

KUALA LUMPUR: CB Richard Ellis Malaysia Sdn Bhd (CBRE) expects office rentals in Malaysia to stabilise in the first half of 2010, barring any major economic setbacks.

“Office rentals in Kuala Lumpur peaked at the end of the fourth quarter of 2008 and softened by about 15% as at the end of the fourth quarter of 2009.

“Rentals for Grade A offices stood at RM7 per sq ft at the end of 2009, similar to the first quarter of 2009 level,” according to a special report by CBRE Research.

Vacancies and rentals began to level out in the fourth quarter of 2009 as was witnessed in comparable cities around Asia as the market downcycle approached its end and leasing activity gradually picked up across the region.

Despite the addition of 4.76 million sq ft of new supply from 14 office buildings completed in 2009, vacancy rates stabilised at 13% by year-end as the bulk of this new supply was non-speculative and had been significantly pre-let prior to completion.

New supply set to come on stream over the next three years will continue to make for a highly competitive leasing environment and further improve the city’s appeal as a location in which to do business.

CBRE expects continued broad-based demand across a wide range of sectors including Islamic finance, oil and gas, agribusiness and commodities.

Executive chairman Chris Boyd said the combination of modern infrastructure, quality facilities and comparatively cheap rentals made Kuala Lumpur a highly attractive location for any prospective multinational considering a move.

“Kuala Lumpur offers a consistent cost advantage which is not a flash in the pan, as growth in the supply of new buildings serves to smooth any potential fluctuations in rental levels,” he said.

CBRE feels that the market has not yet experienced the full impact of the last budget announcements which further liberalised the acquisition of property investments by foreigners.

“With no requirements for local equity, we expect to see an increasing number of overseas institutions seeking investment grade property in Malaysia in 2010 and beyond,” said executive director Paul Khong.

“Kuala Lumpur offers a wide choice of buildings and locations at rentals which are going to remain extremely competitive in the foreseeable future,” added managing director Allan Soo.

By The Star

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