PETALING JAYA: Rental rates for office space within the Klang Valley is expected to remain flat for the rest of 2015, as steady incoming supply will offset demand.
Savills Malaysia executive chairman Chris Boyd however asserted that the situation was not all 'doom and gloom' and merely temporary.
'For the remainder of this year, we do see supply exceeding average take-up. However, we do see stretches like this regularly.
'We're not seeing a potential oversupply. It's not a major alarm,' he told StarBiz.
Boyd said the fall in oil prices was a contributing factor for demand not meeting supply.
'The fall in oil prices meant that the expansion by oil and gas players has been temporarily shelved, so take-up has been slower and it will take a longer time to fill up those spaces,' he said.
Boyd added that rental rates of office space are likely to remain subdued for the remainder of 2015.
'We believe the economy will pick up next year and take-up will improve,' he said.
According to CH Williams Talhar & Wong's (WTW) in a report earlier this year, some 5.89 million sq ft is expected to come into the market this year.
It pointed out that the economic uncertainties in Malaysia and in the European countries, as well as the slower growth in China and other Asian countries, gave negative signals to foreign investments into Malaysia.
With the large supply of office space, WTW said it expected the take-up to be slow, especially in Kuala Lumpur, which depends on multi-national companies' demand for space.
Among the office buildings that are expected to be completed this year are Menara TH @ Platinum Park, Naza Tower @ Platinum Park, IB Tower, Menara Bangkok Bank, Solaris Sultan Ismail, KL Trillion, Quill 15 @ Vision City, Q Sentral (Lot B, KL Sentral), The Ascent @ Paradigm Mall, The Prime @ Altium and the MKN Embassy Techzone.
WTW noted that the general office market in the Klang Valley remained stable, hovering at 84% during the second half of 2014.
It said Kuala Lumpur had experienced a marginal decline in occupancy rate of 0.5% (which stood at 86.5% and 87% in the third and second quarters respectively) and remained stable in the fourth quarter of 2014.
'In terms of space taken up, the overall market in the Klang Valley had experienced slow take-up rates, registering at about 240,000 sq ft during the second half of 2014 compared with a total net-take up of about 1.57 million sq ft during first half of 2014,' it said.