IGB Commercial Reit poised for steady growth on firm office demand

KUALA LUMPUR: IGB Commercial Real Estate Investment Trust (Reit) is poised to sustain its steady performance in the coming quarters, driven by the growing demand for premium and flexible office spaces, said Hong Leong Investment Bank (HLIB) Research.

The research house said the country’s strategic push towards high-tech and high-value sectors is expected to underpin sustained demand for office-based functions such as research and development, engineering, and regional operations.

The expansion of flexible workspace operators including INFINITY8 at Menara Southpoint and WORQ at The Gardens North Tower also reflects growing interest from high-growth and multinational tenants seeking premium, adaptable office solutions.

“We believe IGB Commercial’s well-located assets, particularly within the integrated Mid Valley City ecosystem, are well-positioned to capture this demand, supported by strong connectivity and vibrant retail and lifestyle offerings,” HLIB said in a note.

Average rental rates have continued to rise to RM6.53 per square feet from RM6.36 per square feet in the same quarter last year, while portfolio occupancy has held steady at 92 per cent, the research firm added.

For the third quarter ended Sept 30, 2025, IGB Commercial posted a core net profit of RM23.8 million, a marginal 0.1 per cent increase quarterly but 27.7 per cent higher yearly.

This brought its nine-month earnings to RM71.5 million, up 26.1 per cent from a year earlier, in line with expectations and accounting for 77 per cent of HLIB’s full-year forecast.

Revenue and net property income were largely stable on a quarterly basis, easing slightly by 0.6 per cent and 1.1 per cent, respectively.

The research house said the stronger profit growth was also aided by a 12.7 per cent reduction in financing costs.

IGB Commercial declared a third interim dividend of 1.0 sen per unit, bringing total dividends for the first nine months of the year to 3.1 sen, up from 2.9 sen in the same period last year.

HLIB maintained its “Buy” call on IGB Commercial with an unchanged target price of 64 sen.

It described the ongoing recovery in the office market as favourable to well-located and established assets such as IGB Commercial’s portfolio, which has demonstrated resilience through sustained high occupancy and steady rental growth.

© New Straits Times Press (M) Bhd

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