KUALA LUMPUR, March 3 — More than half of developers, fund managers and lenders polled in a survey by global property consultancy Knight Frank say that the commercial real estate market had worse than expected returns due to overpricing last year.
Knight Frank Malaysia’s Malaysia Commercial Real Estate Investment Sentiment Survey 2015 released today also showed that 43 per cent of those who chose not to invest in commercial property last year cited poor yield as the main reason.
“The yield is greatly affected by overambitious pricing on office and retail sectors,” BlackRock Property Malaysia director Patrick Liau said in the survey.
“The commercial real estate market may still present great opportunity for investment if the prices adjust accordingly to the rising cost of construction and borrowing.
“However, vendors tend to be a little too assertive on their prices making yields unattractive,” he added.
A total of 52 per cent believed that the commercial property market performed below expectations in terms of yield and returns last year, while 44 per cent said the market had performed as expected.
The majority at 85 per cent also said they felt less optimistic about the overall economic scenario this year compared to 2014.
A total of 78 per cent expressed pessimism about investing in commercial real estate this year, citing rising interest rates and the implementation of the Goods and Services Tax (GST) next month.
“It is predicted that at least for the first ten months of this year, the commercial investment market will see a softer subdued climate, as it will be grappling with rising cost of capital, selective lending and the implementation of the Goods & Services Tax,” Knight Frank Malaysia managing director Sarkunan Subramaniam said in a statement today.
Almost a third, or 30 per cent, cited global economic uncertainty as the reason for not developing commercial real estate last year.
The Knight Frank survey showed that 78 per cent of those polled had invested in, lent to or developed commercial property in 2014, while the rest did not do such.
