Better outlook for logistics/industrial, healthcare/institutional sectors this year, says Knight Frank

PETALING JAYA (Feb 21): Developers, lenders and fund and real estate investment trust (REIT) managers expect logistics/industrial and healthcare/institutional properties in Malaysia to do well in 2017 despite the challenging operating environment, according to a survey by Knight Frank Malaysia.

According to the property consultancy firm’s “Malaysia Commercial Real Estate Investment Sentiment Survey 2017” (CREISS), the outlook for the logistics/industrial and healthcare/institutional sub-sectors, which enjoyed a fair performance last year, are expected to improve this year.

The survey covers industry players consisting developers (77%), lenders (7%) and fund and REIT managers (16%), said Knight Frank Malaysia managing director Sarkunan Subramaniam (pictured) in a press release today.

The survey revealed that fund and REIT managers are switching their investment focus to the logistics/industrial sub-sector as the growth of e-commerce will be driving the demand for logistics and industrial space.

The majority of respondents opined that Johor and Selangor are more attractive for this sub-sector. The attractiveness of investing in the logistics/industrial sub-sector leapt from 52% last year to 81% in 2017.

In addition, 20% of the respondents believe the capital values of the logistics/industrial sub-sector will move up this year. About 70% expect stable rentals in the sub-sector while 64% expect occupancy levels to hold.

Meanwhile, the healthcare/institutional sub-sector saw an increase of interest among developers in 2017 as the sub-sector is recession proof. About 11% more appeared to be interested in this sub-sector compared with in 2016.

Overall, 36% of the respondents picked Johor as the top region for investments in the healthcare/institutional sub-sector. This is likely attributed to the growing industry and potential spill over from Singapore.