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New Straits Times
6 days ago
- Business
- New Straits Times
Kuala Lumpur faces glut of obsolete buildings, not just oversupply
KUALA LUMPUR: Kuala Lumpur's commercial property market is under intense scrutiny, with "For Rent" signs visible across office towers and shopfronts. On the surface, it appears the city is overwhelmed by oversupply, but industry data points to a deeper issue: Kuala Lumpur faces not just excess space, but excess outdated space. According to the National Property Information Centre (NAPIC), the occupancy rate for purpose-built offices in Kuala Lumpur fell to 72.1 per cent in 2023. By mid-2025, Cushman & Wakefield reported a vacancy rate of 27.49 per cent, while Knight Frank placed prime office vacancy at 23.4 per cent. The entry of new supply, such as the refurbished Menara 1194, Oxley Tower @ KLCC and several towers at Tun Razak Exchange (TRX), is expected to add millions of square feet of new space by next year. However, the real problem is not a general oversupply, but rather a phenomenon of 'obsolescence oversupply'. A JLL report found that around 70 per cent of office buildings in Kuala Lumpur were built before 2015 and now fall short on design, technology, and sustainability. Tenants are shifting towards newer, Grade A buildings with green certifications and ESG features. This trend is driving a sharp divide in performance across the city. In emerging areas like KL Eco City and Bangsar South, vacancy rates are as low as 8.5 per cent, compared to 19.4 per cent in the older Kuala Lumpur Central Business District (CBD). The rise of hybrid work has further accelerated this shift. A 2024 Cisco study found that 60 per cent of Malaysian workers believe hybrid arrangements improve their work quality. Flexible and modern workspaces are in demand, with providers like Common Ground reporting occupancy rates exceeding 85 per cent. For owners of ageing buildings, the message is clear: passive strategies are no longer effective. Instead, adaptive reuse is gaining traction. Examples include the transformation of the historic Lee Rubber building into the Else Kuala Lumpur boutique hotel, the revival of REXKL as a cultural hub, and the conversion of Block A of Kompleks Pejabat Damansara into a boutique retail centre. Policymakers are being urged to offer incentives and tax relief to support such transformations and promote sustainable urban renewal. In the retail sector, a similar two-tiered trend is emerging. NAPIC reported that occupancy in shopping complexes rose to 83.8 per cent in 2023, with private reports showing a further increase to 86.8 per cent by the end of last year. Malls such as Suria KLCC, Pavilion KL, and The Exchange TRX continue to thrive, buoyed by strategic locations, curated tenant mixes, and experience-driven concepts. The Exchange TRX, for example, features a 10-acre rooftop park designed to transform the retail environment into a lifestyle destination. In contrast, older malls that have not kept pace with consumer expectations are struggling to retain tenants and attract footfall — an issue now dubbed "outdated experience oversupply." The return of international tourism, bolstered by visa exemptions for Chinese visitors, is adding momentum to city-centre retail, with analysts forecasting rental rate increases of up to 10 per cent in 2025. At the grassroots level, Kuala Lumpur City Hall (DBKL) is bolstering small businesses by upgrading seven hawker centres since 2023. These sites offer cleaner facilities and accessible rent, with units priced as low as RM162 — and some at just RM40 per month — expanding opportunities for micro-retailers while supporting urban inclusivity. Despite visible challenges, the market is not in crisis. Kuala Lumpur is undergoing a structural transformation, with growth now concentrated in premium, flexible, and sustainable spaces. With GDP growth projected between 4.4 per cent and 5.5 per cent for this year and supported by infrastructure developments such as the East Coast Rail Link (ECRL) and Bandar Malaysia, the long-term outlook remains positive. Still, risks remain. Continued oversupply in obsolete buildings, rising operational costs, and global headwinds could weigh on the sector. For asset owners, initiatives such as green certification, adaptive reuse, and Asset Enhancement Initiatives (AEIs) are increasingly seen as essential to maintaining relevance in a changing market. Overall, Kuala Lumpur's commercial property market is undergoing a transformative phase that demands owners, investors, and policymakers adapt, innovate, and deliver value that aligns with the expectations of a new generation of consumers and workers.
Focus Malaysia
26-06-2025
- Business
- Focus Malaysia
Malaysian homebuyers redefine value in a more selective market
AT first glance, Malaysia's residential property market may appear quiet, but beneath the surface, a meaningful transformation is underway: a fundamental shift in how Malaysians approach property ownership. Today's buyers are intentional, value-focused, and sharply attuned to economic signals. The optimism of past years has given way to a more measured mindset shaped by global volatility, domestic caution, and a widening disconnect between asking prices and buyer expectations. This is not a retreat from the market; it is a recalibration. Malaysians are still buying, but with greater purpose and scrutiny. Supply expands, buyer expectations refocus According to the Property Market Q1 2025 Snapshots by National Property Information Centre (NAPIC), residential construction jumped by 30.2% year-on-year, an expression of developer confidence. Yet, transaction volume and value fell 6.2% and 8.9%, respectively, highlighting a growing misalignment between supply and demand. This shift is not rooted in economic weakness. With policy interest rate steady at 3.0% and inflation down to 1.4% in April, Malaysia's fundamentals remain stable. But instead of acting on optimism, buyers are choosing caution. It is a clear signal: affordability today is no longer just about price; it's measured by perceived value. Bridging the price gap through buyer alignment Differences between current residential offerings and evolving buyer preferences are becoming more noticeable across key regions. In Kuala Lumpur, high-rise homes took the biggest hit, with prices dropping 7.3% quarter-on-quarter, which was the steepest decline among property types. According to NAPIC, overhang grew 14.8% year-on-year, with unsold units mostly being condominiums priced between RM200,000 to RM300,000. However, data from PropertyGuru Malaysia for April 2025 indicates that the condominium market is stabilising towards an equilibrium, showing only a slight month-on-month decrease in demand of 0.7% for condominiums. Selangor, meanwhile, tells a different story. According to NAPIC data, the price gap is widening in the apartment and serviced residence segments, but savvy buyers remain active when value aligns with expectations. Overhang fell nearly 40% year-on-year, signalling strong movement in well-priced, practical homes. Across most segments, caution dominates mark-to-market activity amid ongoing economic uncertainty. Penang continues to attract attention, especially in the condominium segment. PropertyGuru Malaysia's April 2025 data showed a 9.1% increase in condominium listing views, driven by infrastructure developments such as the LRT Mutiara Line. However, NAPIC data indicates a decline in transactions for homes priced above RM1 mil, reflecting growing resistance to premium price points. Johor is shaping up as a market where rising prices are starting to test buyer patience. NAPIC reports an 8.7% year-on-year increase in high-rise prices for Q1 2025. Correspondingly, PropertyGuru Malaysia's April 2025 data shows a 19.5% year-on-year decline in interest for serviced residences, with overall views for non-landed homes also trending downward. Like the non-landed property types, demand for landed property types also decreased YoY. The rise of the value-conscious buyer A dip in the demand index does not mean buyers have disappeared. In fact, they are just more selective. According to April 2025 data from PropertyGuru Malaysia, apartment views fell 14.1% while semi-detached homes dropped 21.4% year-on-year. Yet, property types that strike a smart balance between price, location, and lifestyle are defying the trend. Some even gain traction. Selangor is a standout. Terraced homes continue to outperform, with demand rising 2.7% year-on-year and overhang falling 40%, according to NAPIC. This points to a healthy alignment between supply and real buyer appetite. In Penang, condominium interest surged 9.1% year-on-year, buoyed by better connectivity and more competitive pricing, highlighting the positive impact of infrastructure upgrades like the upcoming LRT Mutiara Line. Meanwhile, in Johor, the story is more nuanced. NAPIC data shows a 3.2% year-on-year increase in the All-Housing Price Index, led by high-rise and terraced homes. However, the price growth appears to be dampening sentiment, with declining demand suggesting that affordability concerns are weighing buyer decisions. These shifts tell us something important: buyers haven't exited the market. They are just more focused on finding real value. Developers are re–imagining value in real time As buyers become more measured and data-driven, developers are also evolving their strategies to stay aligned. The traditional playbook of driving volume or focusing solely on premium segments is being rebalanced to meet a market increasingly shaped by value-conscious demand. Success now lies in realistic pricing, particularly in the resilient RM500,000 to RM800,000 bracket. Homes within this range continue to see steady interest, especially when paired with strong connectivity and well-designed, liveable environments. Transit-oriented developments and communities with integrated green spaces are emerging as long-term favorites among buyers. Equally important is understanding the new pace of decision-making. Buyers are being more deliberate, investing time in research, comparisons, and consultations before committing. In this era of intentional ownership, developers who align with value-driven demand through realistic pricing, livability, and accessibility are well-positioned to thrive. ‒ June 26, 2025 Kenneth Soh is the country manager – Malaysia for PropertyGuru & iProperty. The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
Barnama
18-06-2025
- Business
- Barnama
MOC: Penang Extends Five Pct Discount For Overhang Units To All Buyers
GENERAL GEORGE TOWN, June 18 (Bernama) -- The Penang State Executive Council (MMK) today agreed to extend the five per cent discount for the purchase of overhang properties in the state to all buyers. Chief Minister Chow Kon Yeow said the conditions remain unchanged, as previously announced, with the discount offered for one year under the MADANI Home Ownership Campaign (MOC). 'It is also limited to participating developers registered with the Penang State Housing Board (LPNPP). 'The discount is also focused on units identified as unsold, for which relevant information will be obtained from the National Property Information Centre (NAPIC),' he told a press conference at Komtar today. Chow said, according to the Penang Property Market Report for the Fourth Quarter of 2024 released by NAPIC, a total of 2,796 residential units have been identified as unsold, involving various types of residential properties across the state. Previously, State Housing and Environment Committee Chairman Datuk Seri S. Sundarajoo announced a five per cent discount for the Indian Muslim community for the purchase of residential and commercial properties via the MOC, but the initiative was later reviewed following public criticism. The discount is among several incentives under the policy, effective from June 1, 2025, to May 31, 2026, including the introduction of a new category, Rumah MutiaraKu (RMKu) Type D, with a maximum ceiling price of RM400,000, and a reduction in contribution rates for developers who do not physically provide RMKu Type A or B units. --BERNAMA
The Sun
18-06-2025
- Business
- The Sun
MOC: Penang extends 5% discount for overhang units to all buyers
GEORGE TOWN: The Penang State Executive Council (MMK) today agreed to extend the five per cent discount for the purchase of overhang properties in the state to all buyers. Chief Minister Chow Kon Yeow said the conditions remain unchanged, as previously announced, with the discount offered for one year under the MADANI Home Ownership Campaign (MOC). 'It is also limited to participating developers registered with the Penang State Housing Board (LPNPP). 'The discount is also focused on units identified as unsold, for which relevant information will be obtained from the National Property Information Centre (NAPIC),' he told a press conference at Komtar today. Chow said, according to the Penang Property Market Report for the Fourth Quarter of 2024 released by NAPIC, a total of 2,796 residential units have been identified as unsold, involving various types of residential properties across the state. Previously, State Housing and Environment Committee Chairman Datuk Seri S. Sundarajoo announced a five per cent discount for the Indian Muslim community for the purchase of residential and commercial properties via the MOC, but the initiative was later reviewed following public criticism. The discount is among several incentives under the policy, effective from June 1, 2025, to May 31, 2026, including the introduction of a new category, Rumah MutiaraKu (RMKu) Type D, with a maximum ceiling price of RM400,000, and a reduction in contribution rates for developers who do not physically provide RMKu Type A or B units.
The Sun
18-06-2025
- Business
- The Sun
Penang extends 5% discount on overhang properties
GEORGE TOWN: The Penang State Executive Council (MMK) today agreed to extend the five per cent discount for the purchase of overhang properties in the state to all buyers. Chief Minister Chow Kon Yeow said the conditions remain unchanged, as previously announced, with the discount offered for one year under the MADANI Home Ownership Campaign (MOC). 'It is also limited to participating developers registered with the Penang State Housing Board (LPNPP). 'The discount is also focused on units identified as unsold, for which relevant information will be obtained from the National Property Information Centre (NAPIC),' he told a press conference at Komtar today. Chow said, according to the Penang Property Market Report for the Fourth Quarter of 2024 released by NAPIC, a total of 2,796 residential units have been identified as unsold, involving various types of residential properties across the state. Previously, State Housing and Environment Committee Chairman Datuk Seri S. Sundarajoo announced a five per cent discount for the Indian Muslim community for the purchase of residential and commercial properties via the MOC, but the initiative was later reviewed following public criticism. The discount is among several incentives under the policy, effective from June 1, 2025, to May 31, 2026, including the introduction of a new category, Rumah MutiaraKu (RMKu) Type D, with a maximum ceiling price of RM400,000, and a reduction in contribution rates for developers who do not physically provide RMKu Type A or B units.
