Eco-Friendly Infrastructure Posing to be A Bane for Malaysian Real Estate

The demand for eco-friendly buildings in Kuala Lumpur City (KLC) is expected to lead to higher rents as tenants prefer office spaces that promote sustainability and offer environmentally friendly features, according to a report by JLL. The report also mentioned that more buildings will need renovation works to incorporate green features and improve the quality of space to meet tenants' requirements in the medium-term.

Kuala Lumpur's office market experienced a positive demand trend, with a significant increase in net absorption, mainly due to tenant relocations from Grade B offices and non-green buildings. Technology companies relocating to green buildings in Kuala Lumpur City saw a notable increase in the quarter, indicating their preference for eco-friendly office spaces.

The completion of PNB Project 1194 was delayed, impacting vacancy rates, while Sunway South Square accelerated the completion dates for its two office buildings.Additionally, one building was taken off the supply list as the landlord announced plans for a comprehensive refurbishment involving significant renovations and updates.

Rents in KLC rose significantly due to the high demand for quality and sustainable office spaces, leading landlords to adjust rates accordingly. There was limited investment activity in the market due to the absence of prime assets for sale in the quarter.