Potential Risks of a Long-term Office Lease in Malaysia. Owned by Amalthea Nominees (M) Sdn Bhd 401558-D

  • Serviced Office +603 2117 5100
  • Virtual Office +603 2117 5200
  • Coworking +603 2117 5200

NEWS & ARTICLES

Read the latest Servcorp news and press releases.

Potential Risks of a Long-term Office Lease in Malaysia

December 11, 2015 | Sharon Cheong

. . . .

 

An entrepreneur in Malaysia that has to rent an office is confronted with two main options of leasing available in Malaysia: long term lease and short term lease. The duration of the lease has a significant impact on the rental rate in Malaysia. Most of the property owners of the country lease their property for about 2-5 years (subject to the requirements of individual owners) and with or without an option to renew the lease. The contract extension is given for 1-2 years and is subject to an agreed amount of rent at the end of the lease. For lease renewal option, the owner generally requires that you give notice of two or three months about your intention to renew it. Most land owners in Malaysia do not accept leases that are shorter than a year. Keeping in mind the prevailing terms and conditions of property owners in Malaysia, do you think it is viable for your growing business to restrict itself by being on a long-term lease? Let's discuss some of the specific disadvantages of being on a long term lease in Malaysia:

Long term contract becomes a liability

If you are a new business, there is no point in getting into a long-term contract that could later become a liability in the event business does not perform as per the expectations.

You may be paying a higher rent

While the rent you pay for a long-term lease is generally lower compared to other arrangements, there is always the possibility that the rental market crashes and the rental value of your space go down. Once a long-term lease covers the company, it obliges the company to pay the agreed rent for the entire lease term, even when the rate prevailing in the market is much lower.

Greater expense for the company

There could be the need to either downsize or expand the business operations. For transactions involving the expansion, there could be the need to rent another office space. This results in higher costs for the company. In case of downsizing of business operations, the company is stuck in the current office, which can be too big for what they need or too expensive to be affordable. Again, the results are the greater expense of the company.

More responsibility for the tenant

With a long-term lease, there is more responsibility on the tenant for the property regarding the maintenance, which is otherwise not the major work that a tenant has to do with a short-term commitment.

Where to find the best offices for rent in Malaysia?

Segambut

Segambut is an area near the city of Kuala Lumpur, which currently remains the preferred location for companies that want to venture into the country and set up their infrastructure.

Chan Sow Lin

Chan Sow Lin comes under the vicinity of the capital city of Kuala Lumpur. The land values ​​in Chan Chowhave dramatically risen in the last decade comparing to the previous decades, with so many builders building high-rise commercial buildings.

Kepong

Geographically, Kepong is located on the northern border of Kuala Lumpur and Selangor. Kepong offers reasonable rent and a strategic location for all kinds of businesses.

Batu Caves

Batu Caves is an old commercial area in Malaysia. Geographically, the Batu Caves area is located on the border of the ​​Kuala Lumpur and Kepong and connected to Karak Highway, which means easy access to the East Coast.

Subang and Petaling Jaya

Subang and Petaling Jaya are the two very well developed areas of Selangor that have the offices of many of the reputed MNCs and logistics companies.

Puchong

Puchong area is a new commercial zone for all types of businesses. Geographically, the region is on the border of Puchong, Putrajaya, Selangor and South Puchong. This developing commercial location at the south of Selangor offers very reasonable rent for new entrepreneurs.

The best type of rental commitment for a business is the one that fits well with the goals and objectives of the business. The owner of the company and the administration must take into account all the factors that will determine the best type of lease they should go for. The general rule for small business startups is to seek a short-term lease in the initial phase. With the advent of serviced offices in Malaysia, many of the businesses are choosing this new option for the flexibility it offers. Upon hiring a serviced office, you only pay for space and the services used. There is also no long-term commitment or liability attached to it. Servcorp is the leading provider of serviced offices in Malaysia committed to serving their clients in the best possible manner. With more than 20 years of presence in Malaysia, we are still just a call away. Give us a call at +603 2169 6188 and allow us to find the best office solution for your needs.

 

. . . .

Published by: SERVCORP