KUALA LUMPUR (Feb 21): Knight Frank Malaysia today launched the third edition of its Malaysia Commercial Real Estate Investment Sentiment Survey, which found that the logistic/industrial sub-sector will be picking up pace in 2017, as office and retail markets will continue to be pressured.

According to the property consultancy, fund and real estate investment trust managers are switching their investment focus to the logistics/industrial sub-sector amid growth in e-commerce, which would drive demand for space. Respondents said the Johor and Selangor markets are more attractive for this sub-sector.

"This survey predicts the commercial real estate outlook based on sentiments of industry players," said Knight Frank Malaysia managing director Sarkunan Subramaniam. "Both office and retail markets will continue to be under pressure with rental and occupancy due to oversupply, while the logistic/industrial sub-sector is expected to gather pace in 2017 with the growth of e-commerce."

Meanwhile, there has been an increase in interest in the healthcare/institutional sub-sector among developers in 2017, with 32% of respondents expecting capital value for the sub-sector to increase this year.

Some 36% of respondents said the healthcare/institutional sub-sector in Johor will grow due to potential spillover from Singapore, as Johor offers affordable quality healthcare.

For the hotel/leisure sub-sector, Sabah and Penang were seen as the most attractive regions due to the strong tourism market. The attractiveness of investing in this sub-sector rose to 93% in 2017 from 65% in 2016.

For the office and retail sub-sectors, respondents expect these sub-sectors to continue to be under pressure amid oversupply. However, the two sub-sectors are expected to continue to be active.

Lenders are also expected to continue providing financing for the retail and office sub-sectors despite the tighter lending guidelines.