KUCHING: The big number of new shop offices/shophouses entering the market here has put pressure on rentals and made it harder for owners to find tenants.
In 2018, there was a substantial increase in the number of completed shop offices/shophouses, with estimated incoming supply of 1,053 units as at second quarter-2018.
Of the number, only about five percent was started this year (2018) based on National Property Information Centre’s (Napic) data, signifying a slowdown in new launches.
“This signifcant increase in supply of shop offices/shophouses in the Kuching market has resulted in higher vacancy rates and affected shop office rental and sales,” according to C H Williams Talhar Wong & Yeo Sdn Bhd (WTWY) in its “Sarawak Property Market : 2018 Property Market Review & Outlook” report released recently.
The leading property consultant said significant launches during 2018 include Royal Richmond Square developed by Kenbest that offers 70 units of four-storey shophouses at Jalan Datuk Mustapha.
It said the completed commercial developments in 2018 are:
• Milan Square,which comprises 61 units of four-storey shophouses located opposite Vivacity Mall along Jalan Wan Alwi;
• Metrocity Square comprising 23 units of three-storey shop offices at Matang, a secondary prime area;
• Gala City comprising 250 units of shop offices which are integrated with two blocks of apartments and a retail street mall along Jalan Tun Jugah,and
• Shop units for the final phase of Tabuan Tranquility, which offers an array of Soho units, shops and apartment along Kuching-Samarahan Expressway.
Of concern, according to WTWY,is the growing surplus of commercial property units in recent years in the form of shop offices/shophouses and retail units.
“Admist a soft market, property units take longer periods to sell, occupancies and rental rates of such units are affected and units are being disposed of at negotiated prices.
WTWY said as in 2017,there were no new office projects launched last year in the state capital.
The few completed projects include Tabung Haji Office Tower along Jalan Lapangan Terbang, covering six storeys of 2,162.4 square metres, Sentosa Parade Office Towers near Kota Sentosa and Gala City.
Both Sentosa Parade and Gala City were developed as part of a mixed shop office development.
“The office sector in Kuching is lacklustre and prices continue to be stagnant.
“Due to increasing office spaces coming into the market and shop offices constituting a significant alternative supply, take-up rates are slow and rentals are seen to be dropping to less than RM3 psf even in prime locations,” said the report.
In Bintulu, WTWY said the shop office market is shrouded by oversupply, which has also affected rentals and yields.
“Investment in shop office is unappealing, with most of the units acquired for own use. In line with this, the purchasing behaviour is also conservative whereby buyers prefer sub-sales in established or matured areas.
“Overall, performance of purpose built office was stagnant in 2018 and this should persist in 2019,” it added.
In Miri, purpose built office is a narrow market where supply and demand are limited, and most of the occupiers of such officers are oil and gas related businesses.
“The shop office market remained soft as take-up rate was slow. Oversupply of shop offices in Miri is expected to strain the market in 2019,” said the report
In Sibui, demand for purpose built office is motivated by corporate image and branding, with most of the spaces being owner-occupied, according to WTWY.
“The shop office market remains flat as sellers possess holding power despite oversupply situation in the market.
“Location will be the performance determinant, with established and matured areas enjoying higher take-up rates.” it said.