The emergence of decentralised in Kuala Lumpur

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The emergence of decentralised in Kuala Lumpur

August 2, 2018 / By Kalai Selvan

JLL Malaysia has now expanded its coverage of the office market in the decentralised submarket to include the areas which lie on the west and southwest of Kuala Lumpur. This area consists of two main precincts; namely Petaling Jaya and Puchong/ Subang Jaya/ Shah Alam. Petaling Jaya is located towards west of the city’s fringe and is considered a satellite township for Kuala Lumpur. Puchong/ Subang Jaya/ Shah Alam on the other hand lays outside the Petaling Jaya border and south-west of Kuala Lumpur.

The decentralised submarket is characterized by mature neighborhoods, vibrant commercial centers and extensive industrial areas. The precincts within the submarket feature most of the office buildings in the city, particularly around the areas of Mutiara Damansara, Bandar Utama and Old Petaling Jaya Town. It is also where good business hotels such as Hilton, Sheraton, Royale Chulan and One World are strategically located.

The Puchong/ Subang Jaya/ Shah Alam precinct is located near Port Klang, Malaysia’s biggest logistic port, making it an ideal location for back offices. The tenant profile of this submarket include FMCGs, pharmaceuticals, manufacturing, BPOs, shared services and logistics sectors. Tenants are attracted to this area because of lower rents compared to the city and its fringe areas. In recent years, Grade A office buildings that are GBI-accredited and MSC-compliant have emerged in the decentralised submarket, with several others in the pipeline. Overall, 65% of the buildings in this area are aged 15-years and below in comparison to less than half in Kuala Lumpur City.

The submarket is well connected with extensive transit system such as LRT[1], KTM[2] and MRT[3]. Feeder bus services that connect transit stations to the rest of the city compensate for the limited parking in the area. The decentralised submarket is also conveniently connected by several highways. Additionally, the developments are well-situated to great retail experiences such as The Curve, Sunway Pyramid, and One Utama. This coincides with the “Live-Work-Play” concept that seeks to attract and retain talent amongst the Gen-Y group.

Despite of all these advantages, the decentralised submarket hardly attracts tenants from top domestic and foreign MNCs as these corporations prefer to locate within the Kuala Lumpur City submarket. Kuala Lumpur City boasts prestigious addresses such as Bukit Bintang and KLCC, where Petronas Twin Towers are located. There also new iconic developments in the pipeline, such as Tun Razak Exchange and Merdeka 118. These developments will constitute the tallest buildings in the region, thus bringing the spotlight back to the submarket. Luxury hotels in the area are also unmatched compared to the ones in the decentralised submarket given its appeal to business clients. Although the city is infamous for its traffic congestion, the condition in the dececntralised submarket is not too different due to high-density neighborhoods and small roads.

While the decentralised submarket benefits from high occupancy rate from the expansion of shared-services and BPOs, the tenants there are price sensitive and may not provide high rents to their landlords. There is also plenty of land in the submarket with low entry barriers and adjacent to transit stations and highways. Tenants will be spoilt for choice when these sites are developed in the future, hence keeping rents low.

In conclusion, although the decentralised submarket has much to offer, it still does not match up to Kuala Lumpur City with its prestigious addresses, luxury hotels and world class developments.

[1] https://www.myrapid.com.my/traveling-with-us/how-to-travel-with-us/rapid-kl/monorail-and-lrts
[2] http://www.spad.gov.my/transport-operators/rail/ktm-komuter-route-map
[3] https://www.mymrt.com.my/