MALAYSIA is set to attract more global technology giants to expand their businesses in Greater Kuala Lumpur.
Apart from Cyberjaya — the country’s pioneering global tech hub which offers some of the most competitive rents for office space in tech and creative districts among the world’s 29 leading cities — the reputation of KL Sentral, Mid Valley City and Bangsar South are also rising among industry players.
According to Knight Frank’s recently-launched fourth-edition “Global Cities: The 2018 Report”, the prime rent for the Cyberjaya office market is just US$11.55 (RM48.90) per sq ft (psf) per year and it is ranked the second cheapest after Whitefield in Bengaluru, India’s high-tech industry centre which goes for US$9.65 psf per year.
Knight Frank Asia Pacific head of research Nicholas Holt said Cyberjaya has fostered some ultra perennial start-ups and cultures.
He said what is interesting about the Kuala Lumpur market is that more tech firms are moving into other major office areas in the city, such as Kuala Lumpur Sentral (Google) and Mid Valley (Facebook).
“While the new economy is driving demand in many Asia-Pacific office markets, rental costs in specific technology cluster areas vary significantly. De-centralisation has provided opportunities for tech companies outside the major tertiary office areas. This is reflected in Shanghai where opportunities can be found outside the CBD (central business district) in areas such as Zhangjiang Hi-Tech Park, compared with Bangkok where typically tech companies would be clustered in the CBD,” he added.
The report also stated that the most expensive tech district in the world is Shoreditch in London, which pushes rents for office spaces as high as US$90.75 psf — almost as high as prime rents in London’s main financial district.
Only two Asia Pacific tech districts made the top 10 most expensive list with Bangkok’s CBD, including Rama 1, Sathorn and Sukhumvit Soi 21, ranked fourth with rental price of US$74.25 while Beijing’s Zhongguancun is going for US$55.05, at 9th place.
Also worth highlighting are Hong Kong, Shanghai and Singapore, which boast some of the most expensive office buildings in the world yet still provide affordable office space in their emerging tech districts; office rents for Cyberport are US$36.90, Zhangjiang Hi-Tech Park US$27.50 and One-North US$41.45.
Invest KL chief executive officer Datuk Zainal Amanshah said there has been a steady influx of multinational corporations (MNCs) coming to Kuala Lumpur in recent years, making the city their regional hub.
He said the most recent MNC and Fortune 500 outfit, which has launched its Asian regional headquarters in Bangsar South, is American conglomerate Honeywell.
“Bangsar South is another hub which is very popular today among many multinational and local companies and the sort of activities that they are going to embark on is very digital-centric, embracing Industry 4.0... you can see the kind of businesses they are into — aerospace, automation, safety performance, material management and so on.
“So, this is another hi-tech company that has chosen Kuala Lumpur as its base. They (the companies) are coming here due to the ease of doing business in Kuala Lumpur, and we see a few factors, such as the mass rapid transit launch, as spurring foreign direct investments,” he said.
Meanwhile, according to the Knight Frank report, prime office rental in Kuala Lumpur will grow 2.5 per cent over the next three years, from a 1.7 per cent decline annually.
Knight Frank Malaysia Sdn Bhd managing director Sarkunan Subramaniam said 13 of the 15 markets are expected to see rental growth starting from the end of this year, with only two markets likely to see rent softening over the period.
On another note, Sarkunan said that the entry of several skyscrapers, such as PNB Warisan 118 Tower and The Exchange 106 in Tun Razak Exchange, will raise the benchmark of premium grade office space in Kuala Lumpur.
The current rent for Kuala Lumpur skyscrapers is US$23 (RM96.96) psf and the number has remained flat since last year, offering the most value across 23 global cities including Hong Kong, New York and Tokyo.