Post Covid-19, the difficult business operating environment will put further pressure on the occupancy and rental levels of the office, retail and hotel / leisure sub-sectors, according to Knight Frank Malaysia.
Sarkunan Subramaniam, Managing Director of Knight Frank Malaysia said that there is a need for direct intervention in the commercial property market to help in the recovery process as the current measures are limited.
“It must be recognised that prior to the pandemic, the market was already lacklustre and with all non-essential services and businesses grinding to a halt during this 6-week long MCO, it is bound to head further south,” he said.
Private healthcare businesses are also not spared, Subramanium pointed out, with many experiencing lower occupancies as local patients delay non-urgent treatments while the entry of foreign patients contributing to the country’s medical tourism industry are affected by travel restrictions and lockdown of countries.
Beside this, he hopes the government will also consider waiving the property taxes such as quit rent and assessment for the second half of 2020, and reduce the stamp duty to cushion the impact of Covid-19 on the Malaysia property market.
“It is also timely for the government to lift the cooling measures to spur transactional activity and encourage long-term investment,” Subramaniam said.
In its Malaysia Commercial Real Estate Investment Sentiment Survey (CREISS) 2020, the property consultancy firm found that with the exception of the healthcare sub-sector, over 50 percent of respondents expect capital values for all sub-sectors to remain stagnant in 2020.
The survey which was conducted in February 2020, gathered insights and preferences of developers, commercial lenders and fund/REIT managers in the commercial sector for 2020.
The survey revealed that about 41 percent and 60 percent of the respondents expect an increase in capital values for the logistics/industrial and healthcare segments respectively.
Meanwhile, close to 30 percent of respondents expect values of office and retail assets to decline in 2020.
Some 60 percent of respondents expect rentals of retail space to fall, while 46 percent expect rentals to trend down for the office segment.
On a final note, the firm said the magnitude of Covid-19 effects upon the real estate market is currently unknown and will largely depend on both the scale and longevity of the outbreak.