KUALA LUMPUR (July 7): Real estate investors have strong convictions on the industrial and logistic sector which they anticipate will continue to perform well under the current economic climate, according to the Malaysia Commercial Real Estate Investment Sentiment Survey (CREISS) 2021 survey report by Knight Frank Malaysia.

The report revealed that key players in the commercial property industry are generally optimistic on the logistics, healthcare and industrial property segments but remain cautious on the traditional retail and office segments, as well as on the hotel and leisure industry.

“The severe disruptions to supply chains globally which revolutionised e-commerce services, continues to drive the logistics sector whilst 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,” said Knight Frank Malaysia managing director Sarkunan Subramaniam.

Meanwhile, Knight Frank Malaysia executive director of capital markets Allan Sim said the industrial and logistics sectors are being voted by respondents to be the leaders charting the journey of recovery for the commercial property market.

The survey also highlighted that the ecosystem for industrial and logistics is in unison as developers and fund or REIT managers’ appetite for investments into the industrial or logistics sector are harmoniously complemented by lenders who are also expressing higher interest in funding these projects or assets.

“When examining further, we noted that the market is perceiving the impact of MCOs to be more severe for manufacturers that are reliant on human workforce, as compared to logistics that are deemed to encounter less downside risks amidst lockdowns and may even flourish by way of e-commerce substituting general retail. 

“However, attention has to be accorded to the facet of logistics that are serving the manufacturing sector, of which demand will be subject to the disruption of supply chains on a global scale,” Sim added.

He also concured with the respondents’ anticipation for an increase in rental and occupancy rates for the logistic sector.

“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 amongst the investors, fund managers and developers,” he shared.

In general, with the resurgence of COVID-19 cases and reimplementation of MCOs in recent months, Knight Frank Malaysia believed that the overall interest in other sectors are expected to continue to remain soft until the health crisis is brought fully under control.

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 (over 70% of respondents) were the third-wave of the novel coronavirus outbreak, the current state of economy, government policies and cancellation of the HSR project. 

The other unfavourable factors were compression of yield and lower returns and slow COVID-19 vaccination. 

“The Covid-19 vaccination progress is critical to our economic recovery and requires much greater focus and as such there is a need to increase daily vaccinations and the number of people registering for the vaccine to get to herd immunity as quickly as possible,” Knight Frank Malaysia deputy managing director Keith Ooi concluded.

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