Despite Malaysia’s weaker economic growth, real estate investors remain upbeat on office and retail properties, according to Knight Frank’s Commercial Real Estate Investment Sentiment Survey (CREISS) 2017.
The research revealed that the respondents are on the lookout for properties outside of Klang Valley, particularly in Sabah, Penang and Johor.
They chose Sabah and Penang as the best location for hotels and leisure assets mainly due to the influx of foreign visitors in both areas.
“Sabah and Penang were voted as the highly attractive places for hotel / leisure investment, likely attributed to their strong tourism market,” said Knight Frank Malaysia’s Managing Director Sarkunan Subramaniam.
But Kuala Lumpur is still the most popular investment destination thanks to major infrastructure projects like the ongoing Mass Rapid Transit (MRT).
However, the supply glut of commercial space in Klang Valley persists, and this is expected to negatively affect rents and occupancy levels. Nevertheless, over 50 percent of the developers surveyed will still continue to invest in retail and office properties this year.
In addition, leisure and hotel assets are currently the most sought-after real estate, with investor interest for both segments surging from 65 percent in 2016 to 93 percent in 2017. The next in-demand properties are from the logistics and industrial sector.
Meanwhile, 70 percent of the respondents expect rental yields for offices and industrial sectors to remain flat, while 50 percent predict a decline in the office and retail segments.
“Both office and retail markets will continue to be under pressure with rental and occupancy due to oversupply,” noted Sarkunan.
Knight Frank’s online survey involved key industry players. In particular, seven percent of those polled consisted of bank executives, 16 percent are fund managers, while 77 percent are developers.
Diane Foo Eu Lynn, Senior Content Specialist at PropertyGuru, edited this story. To contact her about this or other stories email diane@propertyguru.com.my
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