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Sabah, Johor, Penang, Klang Valley are the best locations to invest

Sabah, Johor, Penang, Klang Valley are the best locations to invest

27 Jun 2022

Sabah, Johor, and Penang are the popular locations for commercial investors to invest in, aside from the Klang Valley, according to Knight Frank Malaysia’s 2022 ‘Malaysia Commercial Real Estate Investment Sentiment Survey (CREISS)’ released on June 27.

The survey was carried out across the country’s commercial property industry and aims to comprehend current sentiments towards the commercial real estate sector as well as where it may lead in the near future. Among the factors affecting this sector are the present low interest rates, with an overnight policy rate at 1.75% to 2% at the time of writing, the multiplier effect of ongoing mega projects and continued foreign direct investments into Malaysia.

In a statement, Knight Frank Malaysia executive director of research and consultancy Amy Wong said: “People appear to have a better risk appetite for alternative investments in the next two to three years. The survey revealed almost equal interest to participate in serviced residences/hotels, co-working/flexible offices, senior living/retirement homes and data centres.”

In regard to capital value, more than two-thirds of the respondents (76%) expect the industrial and logistics sub-sectors to enjoy capital value appreciations in 2022, with slightly more than half of the respondents (57%) also anticipating the same for the healthcare sub-sector. In terms of the yield performance, 68% of respondents expected yields to increase in the logistics sub-sector, with anticipated higher yields for the 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% of them also agreeing that increases are expected in the industrial sub-sector, in line with growing demand for space in these two sub-sectors.

There are similar expectations in the occupancy rate for the same two sub-sectors, and it is worth highlighting that there is a predicted reduction in occupied office space due to the reality of continued pressure on occupancy rates and rents as supply continues to outpace demand. These views are unsurprisingly echoed in the predictions on the market itself.

Wong stated that 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. Whereas the traditional sub-sectors of hotel/leisure, office and retail are seen by respondents as a long-term play.

Knight Frank Malaysia group managing director Sarkunan Subramaniam added: “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, which is to anticipate risk and minimise disruption in an increasingly complex world. The growing awareness and adoption of environmental, social, and governance (ESG) frameworks in the real estate industry will help drive the value of sustainable real estate into the future.”

Source: The Edge Markets

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