According to its latest Asia-Pacific prime office rental index, a comprehensive analysis that tracks the rental performance of prime office properties across 23 key markets in Asia-Pacific – out of the 23 cities tracked, 15 reported stable or increasing rents in 2Q23 compared with 16 in 1Q23.

Perth led the quarterly rental growth at 5.3%, followed by Brisbane at 2.6%.

Knight Frank Malaysia executive director of office strategy and solution Teh Young Khean said the commercial office market here continues to be dynamic and activity in the sector is encouraging.

“We are observing strengthening market activity as the business climate continues to stabilise.

“Enquiry activity is on the rise as companies experiencing growth are seeking expansion and exploiting the tenant market to leverage the opportunity to upgrade the quality of the office space they occupy,” he said in a statement yesterday.

Adding impetus to this flight to quality is the emphasis on environmental, social and governance targets by companies with global mandates and landlords are strengthening their portfolios to deliver spaces that can match the requirements.Consequently, market conditions across most of the region are expected to remain tenant-favourable for the rest of the year, with the forecast for the next 12 months for Kuala Lumpur being flat.

Meanwhile, Knight Frank global head of occupier strategy and solutions Tim Armstrong said markets in Asia-Pacific had clearly outperformed with higher office utilisation rates compared with other regions and demand is holding up better, supported by a flight-to-quality trend.According to the National Property Information Centre, the overall performance of the purpose-built office segment decreased slightly to 78.5% in 2022 from 78.9% in 2021.

The occupancy rate for private office buildings declined further to 72.1% from 72.3% recorded in 2021.

Penang recorded an occupancy rate of 80.9% while Kuala Lumpur, Selangor and Johor saw rates that were lower than national level at 72.1%, 67.3% and 59.1%, respectively.

Private office buildings in Putrajaya recorded the lowest occupancy rate in the country at 49.4%