Upswing in KL's 1H2024 commercial property performance — Napic data

• In the first half of 2024, KL's commercial property market witnessed a remarkable surge, with transaction volume increasing by 45.9% and total transaction value reaching RM5.17 billion, a 103.6% increase from the previous year.

KUALA LUMPUR (Dec 5): Kuala Lumpur, a vibrant metropolis and economic powerhouse, has historically been a magnet for businesses and investors. However, the past few years have seen the market go through some major shifts beginning with the Covid-19 pandemic in 2020.

Post-pandemic, with the new normal of remote working and shopping, there have been some concerns over the demand for commercial properties, especially offices and retail lots. Subsequently, many were relieved when, over the recovery period since 2022, market sentiments have continued to improve despite being hampered by other global and local economic challenges.

Having braced through some of the hardest hits, how has the commercial property market fared in 2024 in the country’s capital city? Is it ready to shed its post-recovery position and step onto another growth plateau?

To assess the sentiments, we have examined the National Property Information Centre (Napic)’s transaction data for all commercial properties, comprising office lots, retail lots, small-office home-office (SoHo) units, shops of varying sizes, purpose-built offices, pre-war shops, hotels and *serviced apartments across all districts in KL.

As the latest available data dates up to only the first half of 2024, we have taken only the first halves of the analysed years to maintain a fairer comparison.

* Serviced apartments are categorised under commercial properties in Napic data because of their commercial land titles, even when the transacted properties are residential units.

In the first half of 2024, KL's commercial property market witnessed a significant increase in both volume and value. Transaction volume grew by 45.9%, while total value soared to RM5,173.6 million, a 103.6% increase from RM2,541.54 million in the same period of 2023, indicating a good sign of market vibrancy this year.

KL town centre experienced extraordinary upsurge

To gain insights into the demand for commercial properties in the different districts of KL, we have analysed transaction data across all the eight districts and shortlisted the top five districts with over 100 transactions. These districts are KL town centre, KL (excluding town centre), Petaling, Batu and Setapak.

Overall, KL commercial property market showcased robust growth in transaction volume and value during 1H2024, reflecting the city’s dynamic appeal across various districts.

Traditionally, KL town centre, encompassing KLCC, Bukit Bintang and Chow Kit, has led the charts, but in 1H2024, it experienced an exceptional growth, soaring by 81.9% year-on-year (y-o-y) from 765 units to 1,392 units in transaction volume, while value skyrocketed by nearly 200% from RM981 million to RM2,859.3 million.

The impressive surge was fuelled by high-value transactions, especially premium office spaces and retail outlets, cementing the town centre’s position as a key driver of KL’s commercial property market.

(Read also: Grade A prime office spaces continue to be in demand — JLL (Malaysia)

The wider KL area, encompassing neighbourhoods like Taman Midah, Taman Tun Dr Ismail (TTDI) and Salak Selatan, saw transaction volume rise by 48.8% y-o-y from 471 units to 701 units in 1H2024, with value growing by over 50% from RM588.4 million to RM918.2 million.

These figures reflect sustained interest in prime but more affordable locations that appeal to businesses seeking high-value commercial spaces outside the pricier town centre.

Healthy growth in KL's suburbs

Setapak, covering Wangsa Maju and Taman Bunga Raya, witnessed a 48.3% growth in transaction volume from 149 units in 1H2023 to 221 units in 1H2024, complemented by an extraordinary 123.9% jump in transaction value from RM123.2 million to RM275.8 million.

In Petaling, which includes areas like Bukit Jalil and Overseas Union Garden, transaction volume rose steadily by 35.1% y-o-y from 390 units to 527 units, while transaction value increased by 28.5% from RM363.2 million to RM466.6 million in 1H2024. The area continues to attract businesses targeting residential communities benefitting from its affordability and accessibility.

Batu district and its surrounding areas, such as Jinjang Utara and Bandar Menjalara, was the sole district to record a marginal 1.5% dip in transaction volume from 530 units in 1H2023 to 522 units in 1H2024. However, its transaction value increased by 34.8% from RM484.9 million to RM653.7 million, suggesting a focus on higher-value commercial properties despite a slight decline in activity.

Finding the right fit: Pricing and location for different business needs

KL’s commercial real estate market offers a variety of options tailored to diverse business needs and budgets. From start-ups to established enterprises, understanding the cost and the advantages of each district can help you make an informed decision.

For start-ups or small businesses, the wider KL area offers the most affordable options for purchasing office lots. The RM482.6 psf price provides an opportunity to secure an office lot in a central location without the premium costs of areas like KL town centre. Its accessibility and central positioning make it an attractive choice for new businesses seeking to establish themselves in the capital.

For entrepreneurs and small business owners looking for flexible spaces that combine residential and commercial use, such as SoHo units, Setapak offers the lowest price at RM464.50 psf. Its affordability makes it a great entry point into the SoHo market for those with budget constraints, while KL town centre remains an option for those prioritising premium urban amenities.

Strategic property choices for retail success

Retail businesses can find excellent value in Petaling, where the cost of retail lots is significantly lower. At just RM499 psf, Petaling offers a practical solution for businesses needing larger spaces to accommodate high inventory or foot traffic. Conversely, KL town centre commands a premium price of RM1,371.2 psf, likely due to its prime urban location and accessibility to affluent customers.

Setapak emerges as the best value for 2–2.5-storey shop units with a psf price of RM935.1. Its affordability and spaciousness cater to businesses that require larger layouts but want to avoid the cost burden associated with central districts. This is particularly beneficial for retail or service industries needing room to grow.

For businesses requiring vertical space and high visibility, KL town centre offers the most competitively priced 3–3.5-storey shop units (RM1,308.9 psf). These properties, while higher in cost compared to other property types, provide prime city exposure and are ideal for businesses with higher operational budgets seeking prominent urban addresses.

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