More than half of the fund managers, lenders and developers who participated in a survey conducted by Knight Frank said that Malaysia’s commercial real estate market’s 2014 returns were worse than expected due to overpricing.
The Malaysia Commercial Real Estate Investment Sentiment Survey 2015 also showed that 43 per cent of investors who decided against putting money into commercial property last year gave “poor yield” as their main reason.
BlackRock Property Malaysia director Patrick Liau commented that the yield is affected by “overambitious pricing on office and retail sectors” and that the commercial real estate market may still offer some great opportunities for investors if prices adjust to reflect the rising cost of construction and borrowing.
At the present time, vendors are a little too assertive on their prices, which makes yields unattractive, he said.
Over half (52 per cent) of the those surveyed believed that the commercial property market performed below expectations when it came to yield and returns in 2014, and 44 per cent said that the market had performed as expected.
The majority of respondents said that they felt less optimistic about the market this year compared to 2014.
A total of 78 per cent were pessimistic about investing in commercial real estate this year, saying that rising interest rates and the implementation of the Goods and Services Tax (GST) next month was a disincentive for them.
Close to one-third, or 30 per cent, of respondents said that global uncertainty was the reason they did not develop commercial real estate in 2014.
The results of the Knight Frank survey indicate that 78 per cent of respondents had either invested in, developed or lent to commercial property last year, while the rest did not do so.
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