PETALING JAYA (July 8): Key players in the commercial property industry are optimistic about the logistics and healthcare sectors but remain cautious on the traditional retail and office segments as well as the hotel/leisure industry, according to Knight Frank Malaysia’s Malaysia Commercial Real Estate Investment Sentiment Survey (CREISS) 2021 released on June 7.
According to Knight Frank Malaysia, the severe disruptions to supply chains globally, which revolutionised e-commerce services, continue to drive the logistics sector while the critical need for good medical and healthcare support amid the pandemic coupled with attractive tax incentives is expected to see growth in the healthcare sector.
Knight Frank Malaysia deputy managing director Keith Ooi said in a press release: “It is no surprise that logistics was the clear winner as the preferred sector to continue to do well in 2H2021. The logistics industry in Malaysia has been growing steadily in recent years due to higher e-commerce penetration rate. This, coupled with the structural shift towards omnichannel retailing, has led to an increase in demand for modern warehousing space to meet the surge in last-mile delivery.
He added: “Prime logistics asset values are expected to rise further over the near term underpinned by strong growth in the e-commerce market and again, with interest rates staying low in the foreseeable future, yields are expected to remain at low levels.”
Knight Frank Malaysia capital markets executive director Allan Sim said: “The survey also highlighted that the ecosystem for industrial and logistics is in unison as developers and fund/REIT managers’ appetite for investments into the industrial/logistics sector are harmoniously complemented by lenders who are also expressing higher interest in funding these projects/assets.”
He added: “This will act as a strong support for the potential of increase in capital values of logistics assets and further reinforcing the standing of logistic assets class as a darling among the investors, fund managers and developers.”
Meanwhile, in the healthcare segment, more than 50% of respondents expect to see a spike in the capital values of healthcare (60%) and logistics (58%) assets. In the office and retail sub-sectors, about half of the respondents expect the capital values to hold while in industrial and institutional segments, the percentages of respondents are higher at 67% and 70% respectively, according to Knight Frank Malaysia.
The survey revealed that Penang’s healthcare segment has captured the interest of developers and investors. As Malaysia is currently ranked among the world's top health tourism destinations due to its affordable and high-quality medical treatment, Penang is one of the most preferred destinations for the majority of health tourists, said the firm.
Knight Frank Penang executive director Mark Saw said: “In January this year, the Penang state government unveiled the joint-venture project between Penang Development Corporation (PDC) and iHeal Health Sdn Bhd to develop the Penang Medical and Digital Technology Hub on 295 acres of land at Bandar Cassia in Batu Kawan. This project will help to promote Penang as the Asean hub for international standard medical and digital technology."
“In addition, other notable upcoming healthcare institutions scheduled to make their debut in the state include the likes of Columbia Asia, Sunway Medical Centre, Penang Islamic Hospital, Georgetown Specialist Hospital and they are expected to boost Penang’s medical tourism sector by offering quality healthcare services,” he added.
According to Knight Frank Malaysia, the survey findings revealed that there are more factors negatively impacting investment in the commercial property sector in 2021.
The top three non-favourable factors (>70% of respondents) were the third wave of the coronavirus outbreak, the current state of economy/government policies, and cancellation of the high-speed rail (HSR) project. The other unfavourable factors were compression of yield and lower returns and slow Covid-19 vaccine redeployment.
Knight Frank Malaysia managing director Sarkunan Subramaniam raises concern about the survival of non-essential services which continue to bear the brunt of the lockdowns.
Sarkunan hoped that the vaccination programme will continue to be ramped up as the country’s economic recovery hinges on its success to reduce the number of daily new infections and contain further outbreaks.