KUALA LUMPUR: The influx of multinational companies (MNCs) seeking regional headquarters in Kuala Lumpur (KL) is contributing to a more competitive office landscape, says Knight Frank.
Knight Frank Malaysia executive director of office strategy and solutions Teh Young Khean said the global property consultancy remained positive on the office market outlook, with notable MNCs expanding and setting up business in Malaysia, especially Kuala Lumpur.
In a statement, Teh attributed the trend to Kuala Lumpur’s competitive real estate costs and welcoming business environment.
“Despite higher vacancy rates among the Asia-Pacific region, KL city continues to show steady signs of improved occupancy rate and rental rates of prime grade buildings from quarter-to-quarter (q-o-q),” he said.
The Knight Frank’s Asia-Pacific Prime Office Rental Index for the third quarter of 2024 (3Q24) revealed that prime office rents in Asia-Pacific are stabilising, falling 0.1% q-o-q, suggesting a potential bottoming out of the market.
It noted that the trend is supported by growth in the Indian markets, which exhibit strong and sustained demand from offshoring operations and domestic businesses.
According to the report, 16 out of the 23 monitored cities reported stable or increasing rents year-on-year (y-o-y), up from 15 in 2Q24, with rents declining 2.5% y-o-y, an improvement from the 2.8% drop observed in 2Q24.
Global head of occupier strategy and solutions Tim Armstrong noted that global economic uncertainties have led to more cautious capital expenditure strategies among occupiers, favouring renewals and consolidating office footprints.
“When relocations do occur, companies are opting for smaller, higher-density spaces, aligning with cost mitigation needs and the growing acceptance of hybrid work models,” he said. — Bernama
