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Malaysia's Property Market: The Impact of Work-From-Home on Office space Demand

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Explore the changes in Malaysia's property market as work-from-home trends reshape office space demand, and learn how businesses and investors adapt to the evolving landscape of commercial real estate.

The COVID-19 pandemic has brought about significant changes to the way we work, with remote work becoming the norm for many industries. In Malaysia, the shift to work-from-home has had a significant impact on the country's property market, particularly in the commercial real estate sector. In this blog post, we will explore the impact of work-from-home on office space demand in Malaysia.

The Rise of Work-From-Home

Before the pandemic, remote work was not a widely accepted practice in Malaysia, with most companies preferring to have their employees work from an office. However, with the government's implementation of Movement Control Orders (MCOs) to curb the spread of COVID-19, many businesses had to adopt remote work as a temporary measure.

As the pandemic dragged on, work-from-home became more common, and many companies found that it was a viable long-term option. With the availability of communication and collaboration tools like Zoom and Microsoft Teams, remote work became more manageable and effective.

The Impact on Office Space Demand

The increase in work-from-home has had a direct impact on the demand for office space in Malaysia. Many companies are now questioning the need for a physical office, which has resulted in a decline in demand for commercial real estate.

According to data from the National Property Information Centre (NAPIC), the office space occupancy rate in Kuala Lumpur dropped to 79.4% in the third quarter of 2020, a decline of 3.7% from the previous year. The decline was even more significant in the secondary office market, where occupancy rates dropped by 7.3%.

Furthermore, the demand for office space is expected to remain low in the short to medium term, as many companies continue to adopt remote work as a permanent solution. The availability of more flexible working arrangements has also resulted in a shift towards co-working spaces, which offer a more cost-effective alternative to traditional office spaces.

The Future of Commercial Real Estate

While the rise of work-from-home has undoubtedly had a negative impact on the demand for commercial real estate, it does not necessarily mean that the industry is doomed. In fact, it presents an opportunity for the industry to adapt and innovate.

Many property developers are already exploring new ways to attract tenants and are focusing on creating more flexible and adaptable spaces that can cater to the changing needs of businesses. For instance, some are converting office spaces into co-working spaces, while others are integrating technology into their buildings to improve the overall tenant experience.

Demand for office space in Malaysia

As the world continues to adapt to the changes brought about by the COVID-19 pandemic, the question of whether there is still demand for office space in Malaysia has been a topic of discussion. With the rise of remote work and the growing popularity of flexible work arrangements, some may assume that the demand for office space has decreased. However, there are several factors to consider when exploring this topic.

Factors contributing to the demand for office space in Malaysia

  • The growth of the Malaysian economy: Malaysia has seen steady economic growth over the past few years, and this has led to an increase in demand for office space. As businesses expand, they require larger office spaces to accommodate their growing workforce.
  • The rise of co-working spaces: Co-working spaces have become increasingly popular in Malaysia, especially among startups and small businesses. These spaces provide an affordable alternative to traditional office spaces, and they offer flexible rental options that can accommodate different business needs.
  • The need for collaboration and creativity: While remote work has its benefits, there is still a need for in-person collaboration and creativity in many industries. Office spaces provide a dedicated environment for employees to work together, brainstorm ideas, and build relationships.
  • The importance of location: For businesses that require a physical presence, location is a key factor in choosing an office space. In Malaysia, prime locations such as Kuala Lumpur and Cyberjaya continue to attract businesses due to their accessibility and infrastructure.

Challenges facing the demand for office space in Malaysia

  • The impact of remote work: Remote work has become a norm for many businesses, and this has led to a decrease in demand for office spaces. As businesses embrace flexible work arrangements, they may require smaller office spaces or none at all.
  • The rise of virtual offices: Virtual offices provide businesses with a physical address and administrative support without the need for a physical office space. This is becoming an increasingly popular option, especially for businesses that operate entirely online.
  • The economic uncertainty caused by the pandemic: The COVID-19 pandemic has caused economic uncertainty, and many businesses are adopting a cautious approach when it comes to expansion and investing in office spaces.

While the rise of remote work and flexible work arrangements may have an impact on the demand for office space in Malaysia, there are still several factors that contribute to its demand. As the economy continues to grow and businesses require physical spaces for collaboration and creativity, the demand for office space may remain steady. However, businesses will need to consider the challenges and changes brought about by the pandemic and adapt accordingly.

Factors Affecting Office Demand

In recent times, the office market has undergone significant changes. The Covid-19 pandemic has accelerated the shift towards remote working, making it necessary for businesses to reassess their office requirements. This has led to an increased demand for flexibility and alternative office solutions. In this article, we will discuss the various factors that affect office demand.

  • Economic Conditions

The overall state of the economy has a significant impact on office demand. In a strong economy, businesses are likely to expand and require more office space. On the other hand, a weak economy can lead to downsizing and reduced demand for office space.

  • Industry Trends

Different industries have unique office requirements, and their demand for office space is influenced by trends in their respective industries. For example, technology companies require more collaborative spaces, while law firms may require more private offices.

  • Location

The location of the office plays a critical role in its demand. Offices situated in prime locations, such as city centers, are often in high demand. Businesses may be willing to pay a premium for these locations due to their proximity to clients, transportation links, and amenities.

  • Demographics

The demographics of the workforce are changing, and this has an impact on office demand. For instance, younger generations are more likely to prefer flexible working arrangements and may not require traditional office space.

  • Technology

The use of technology has transformed the office environment, and this has impacted office demand. The rise of remote working, video conferencing, and cloud computing has made it possible for businesses to operate with fewer physical offices.

  • Sustainability

Environmental concerns are increasingly influencing office demand. Businesses are seeking eco-friendly office spaces that promote sustainable practices and reduce their carbon footprint.

The demand for office space is influenced by several factors, and businesses need to consider these factors when making decisions about their office requirements. Understanding these factors can help businesses make informed decisions that support their long-term growth and success.

Future of Malaysian property market

The Malaysian property market has been a hot topic in recent years, with many investors and homebuyers wondering what the future holds. As the country continues to grow and develop, it's important to keep an eye on the trends and factors that could affect the property market in the years to come.

One key factor that is likely to shape the future of the Malaysian property market is the country's economic growth. With a robust and dynamic economy, Malaysia is well-positioned to continue attracting foreign investment and expanding its infrastructure. This, in turn, could drive demand for property as more people look for homes and commercial spaces to support their businesses.

Another important trend to watch is the shift towards sustainable and green development. As more people become conscious of their impact on the environment, there is likely to be a growing demand for properties that are designed and built with sustainability in mind. This could create new opportunities for developers and builders who are able to meet this demand.

Demographic changes are also likely to play a role in shaping the Malaysian property market. With an aging population and increasing numbers of young professionals entering the workforce, there could be a shift towards more compact and convenient housing options. This could mean a rise in demand for apartments and condos, as well as mixed-use developments that combine residential and commercial spaces.

While there are certainly challenges and uncertainties facing the Malaysian property market, there are also plenty of reasons for optimism. With strong economic growth, a growing focus on sustainability and shifting demographics, there are likely to be plenty of opportunities for investors and homebuyers in the years to come.


The COVID-19 pandemic has brought about significant changes to the way we work, and the impact has been felt across various industries, including the property market. The rise of work-from-home has had a direct impact on the demand for office space in Malaysia, resulting in a decline in commercial real estate.

However, the future of commercial real estate in Malaysia is not all doom and gloom. Developers and property owners who are willing to adapt and innovate can still find success in the market. As the saying goes, "necessity is the mother of invention," and the pandemic has presented an opportunity for the industry to rethink its approach and come up with new solutions that can cater to the changing needs of businesses.


Also check: Connectivity is key! The growth of businesses drives property value growth.


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