KUALA LUMPUR: The occupancy rate and rental trends for office market are likely to pick up in the next four to five years as the low economic cycle recovers during the period.
Axis Real Estate Investment Trust (REIT) Managers Bhd head of investment Siva Shanker said the office market was undergoing an overhang period and not facing a supply glut.
“A supply glut means there’s too much space but overhang means it would take a little bit longer to fill the space,” he said in his presentation on Office Market- Trend and Review on Tuesday.
The presentation was part of a session in the one-day property seminar titled The Malaysian Property Market: Opportunities Amidst Uncertainties organised by Rahim & Co Research Sdn Bhd.
According to a property report, occupancy rate in the first half of 2016 (H1 2016) was flat at 83% compared with nearly 90% in the second half of 2015, while the average rentals for H1 2016 inched up by 0.8%.
While saying that office vacancy rate in Malaysia remained at an acceptable level, Siva expected office rentals to fall in tandem with the softer market, and in certain areas, it might decrease by between 5% and 10%.
“This is also due to some oil and gas firms continuing to cut space, shrinking in the banking sector, and decentralised locations continue to receive lower interest from the potential tenants,” he said.
He said while there was no new office supply coming into the market in H1 2016, a further 5.8 million sq ft of space would enter the market in H2 2016.
At present, purpose-built office space in Kuala Lumpur stands at 51 million sq ft and office space in Selangor at 17.9 million sq ft.