PETALING JAYA: Property investors appear to have a better risk appetite for alternative investments in the next two to three years, according to Knight Frank Malaysia Commercial Real Estate Investment Sentiment Survey 2022, as it revealed almost equal interest to participate in serviced residences/hotels, co-working/flexible offices, senior living/retirement homes, and data centres.
“And they are not just focusing on the Klang Valley, location-wise, as the survey points to Sabah, Johor, and Penang among the popular destinations for these alternative investments,” explained Knight Frank Malaysia executive director of research and consultancy Amy Wong.
The study found that logistics and industrial sub-sectors remain the darlings of the real estate fraternity; while the next-best locations to invest in other than the Klang Valley are Sabah, Johor and Penang; and long-term play will be investments in hotel, retail and office sub-sectors.
In regard to capital value, 76% of the respondents expect the industrial and logistics sub-sectors to enjoy capital value appreciations in 2022, with 57% respondents also anticipating the same for the healthcare sub-sector. In terms of yield performance, 68% of respondents expect yields to increase in the logistics sub-sector, with anticipated higher yields for healthcare and industrial sub-sectors.
Predictably, these opinions are comparable on increase in rents, with rents of logistics properties expected to increase, according to 64% of respondents; and 53% also agreeing that increases are expected in the industrial sub-sector, in line with growing demand for space in these two sub-sectors. The occupancy rate for industrial and logistics sub-sectors is expected to be the same.
Due to continued pressure on occupancy rates and rents as supply continues to outpace demand, there is a predicted reduction in occupied office space. These views echoed the predictions on the market itself.
“Through this survey, which highlights the logistics and industrial sub-sectors as the favourites, respondents have expressed their confidence that these sub-sectors will be the quickest to recover within the next 12 months, along with the healthcare sub-sector,” Wong said.
Additionally, the traditional sub-sectors of hotel/leisure, office, and retail are seen by respondents as a long-term play.
Factors affecting Malaysian commercial property industry include the present low interest rates, the multiplier effect of ongoing mega projects, and continued foreign direct investment into Malaysia.
The survey was carried out across the Malaysian commercial property industry to comprehend current sentiments towards the commercial real estate sector and where it may lead in the near future.
“As we navigate the new economy in a somewhat changed world that is anticipating further disruption, there is a need to cultivate resilience in real estate portfolios – to anticipate risk and minimise disruption in an increasingly complex world,” said Knight Frank Malaysia group managing director Sarkunan Subramaniam.
