The abundance of commercial real estate on the market in Malaysia’s Klang Valley is good news for tenants and is drawing attention from investors looking for higher yields in the Asian market.
The Singapore Business Times reports that 89 million square feet of commercial space is currently available in the industrial and commercial conurbation and that another six million square feet will come onto the market before the end of 2012.
Commercial property development in Kuala Lumpur
Along with these figures, a projected 13 million square feet of net lettable area is expected to be completed during the next two years. As a result, 20 per cent more property than is needed to satisfy current demand will be coming onto the market.
Prime rental values in Kuala Lumpur have held steady for the past 12 months. Looking ahead, however, analysts predict a price war is looming as more commercial space comes onto the market. As a result landlords will have to become increasingly competitive, as supply will far exceed demand.
In a competitive market 4.5 to 5.5 million square feet of commercial space in the greater Kuala Lumpur area is absorbed annually, according to the Business Times.
The city offers a stable market for commercial investors, and is placed fifth out of 22 cities in the Emerging Trends In Real Estate Asia Pacific 2013 report prepared by PriceWaterhouseCoopers (PWC) and Urban Land Institute. Last year, Kuala Lumpur occupied 17th place.
The report states that the long-term prospects for the city’s commercial property market are considered to be quite strong due to the government’s Economic Transformation Programme, which has been successful in attracting overseas investors.
