Friday 29 Mar 2024
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KUALA LUMPUR (Aug 20): It is no secret that the office space market in Kuala Lumpur is facing an oversupply situation. The situation is expected to get more dire in the months ahead as the PNB Merdeka 118 will be completed and have tenants moving in. 

Data from real estate firm Cushman & Wakefield states that Kuala Lumpur has 58.76 million sq ft of office space in its central business district (CBD), far more than cities that are traditionally known as regional hubs for multinational corporations (MNCs) in this region — Singapore and Hong Kong.

Singapore's CBD has 31.12 million sq ft of office space, while Hong Kong's core area has 34.88 million sq ft of office space.

The vacancy level of office space in Kuala Lumpur's CBD stood at 28.3% as at the second quarter of 2022, according to Cushman & Wakefield. And this rate is expected to become more dire in the future as more office buildings are being planned, or already under construction, in the city.

Given this situation, concerted efforts should be made to attract MNCs to set up their regional base here, serving the region. MNCs are more likely to set up their base in the city centre, as they consider proximity to their peers, suppliers, service providers as priority when choosing a location for their regional hub.

It is not that Kuala Lumpur, and Malaysia as a whole, is lacking in many aspects that can be leveraged on to attract the MNCs. The capital city provides good value for MNCs — cheap rents, world-class infrastructure, and availability of good talents.

But there have to be strong and concerted efforts to bring them in. Already, InvestKL, an agency under the Ministry of International Trade and Industry, has been promoting Kuala Lumpur as a regional hub for MNCs since 2011.

The agency has managed to attract 103 MNCs to come to the Greater Kuala Lumpur region, exceeding its first 10-year target of 100 MNCs. The MNCs have invested RM18 billion in the economy, according to InvestKL.

However, given the grand vision that the government has for Kuala Lumpur — seen in the development of Tun Razak Exchange, a development dedicated to financial services, as well as the Merdeka 118, the second tallest tower in the world — it has to come with an even grander effort to attract investments.

This is especially so when this grand vision has inadvertently caused an oversupply of office space in the city, that needs to be addressed, to ensure the sustainability of the sector.

Read more about it in The Edge Malaysia weekly’s Aug 22 edition.

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