Saturday, August 13, 2022

Change in investors’ appetite for alternative real estate investments

real estate investments

Investors have shown interest in serviced residences, hotels, co-working/flexible offices, senior living/retirement homes, and data centres

Investors’ risk appetites for alternative investments are expected to improve in the next two to three years, due to the need to cultivate resilience in their real estate portfolios amidst the nation’s post-pandemic recovery, said Knight Frank Malaysia.

According to its Malaysia Commercial Real Estate Investment Sentiment Survey, investors have shown interest in serviced residences, hotels, co-working/flexible offices, senior living/retirement homes, and data centres.

The respondents for the survey consisted of representatives at senior management levels across the Malaysian commercial property industry. Developers made up almost two-thirds of the respondents (63%), followed by commercial lenders (22%) and fund/REIT managers (15%).

About one-third of the respondents’ commercial real estate projects are located in the Klang Valley (31%), with the remaining top four states being Johor (17%), Penang (10%), Sabah (9%), and Negeri Sembilan (7%).

In a statement today, Knight Frank Malaysia said the survey also revealed that 76% of respondents expect the industrial and logistics sub-sectors to enjoy capital value appreciations in 2022, with 57% 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 and in the Industrial sub-sector expected to increase, in line with growing demand for space in these two sub-sectors, it noted.

However, the property consultancy firm also foresees a reduction in occupied office space due to ongoing pressure on occupancy rates and rents as supply continues to outpace demand.

Knight Frank Malaysia executive director of Research and Consultancy, Amy Wong said respondents are confident that the logistics and industrial sub-sectors will be the quickest to recover within the next twelve months, along with the healthcare sub-sector.

The traditional sub-sectors of hotel/leisure, office, and retail are seen by respondents as a long-term play, she said.

Meanwhile, group managing director, Sarkunan Subramaniam added that the growing awareness and adoption of environmental, social, and corporate governance frameworks in the real estate industry will help drive the value of sustainable real estate into the future.


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