RISING RENTALS: Malaysia’s inaugural office rental index reveals more companies moving to suburban areas
Average office rentals rose to above RM4 per sq foot per month since the second quarter of 2011 hitting an all-time high of RM4.04 psf in the last quarter of 2011 in tandem with the hot property market last year. From Q1 2009 to Q1 2011, average office rental was below RM4 psf per month, according to the inaugural edition of the Purpose-Built Office Rent Index (PBO-RI) Wilayah Persekutuan Kuala Lumpur.
The rent index divides the Federal Territory into four regions, namely Kuala Lumpur City Centre-Golden Triangle (KLCC-GT), Central Business District (CBD), Within City Centre (WCC) and Suburban. The KLCC-GT (Kuala Lumpur City Centre-Golden Triangle) is the most popular area as proven by its rental per sq foot which is the highest among all the regions at above RM4 psf per month since 2009. The average rental in this region shot up to RM4.66 psf in Q4 2011.
This prompted National Property Information Centre (Napic) director Dr Zailan Mohd Isa to comment that KL is different from other world cities as the KLCC-GT area is the prime area, not the Central Business District.
Some of the office buildings captured in the index are Menara Boustead, Menara Citibank, Menara Exxon Mobile, Wisma UOA 11 and Wisma Goldhill.
Two types of offices are used – investment grade and other grades within the same locality.
Outside the KLCC-GT region, office space commanded an average rent below RM4 psf per month. Even during the hottest period that is in Q4 2011, the average rent in CBD was RM3.27 psf, WCC at RM3.46 psf and Suburban at RM3.51 psf per month.
Despite not breaching the RM4 psf per month rental, office rental in Suburban and WCC showed upward trends which superseded the CBD rent. This shows that companies are moving away from the city centre into the Suburban area except for the KLCC-GT region which is still the most sought-after office address in KL,” added Dr Zailan at the launch of the index recently. She further commented that for multinational companies to relocate here, their prime concern is the facilities while the price level is not the most important consideration.
The suburban region includes Bangsar, Bukit Kiara, Damansara Heights, Jalan Pantai Baru, Jalan Istana and Jalan Syed Putra.
Published by the Valuation and Property Services Department (JPPH), Ministry of Finance, the index aims to gauge the growth of office rental as well as giving an indication to investors of the average office rental rates, thus allowing international companies to ascertain the competitiveness of the office market in Kuala Lumpur Most of the data had come from property managers reporting on 167 office buildings comprising 6,832 rental units in KL. Claiming to be the first rent index of its kind in the Asean region, the index defines purpose-built offices as buildings with office use of not less than 75 per cent of net lettable area.