Poor year for commercial, 2014 and 2015.

Let’s keep abreast with commercial properties. Latest survey from Knight Frank showed that over half of developers, fund managers and lenders polled said that commercial real estate market had poor yields last year due to the overpricing. Meanwhile another 43 percent said that they did not invest in commercial last year because of poor returns. In fact some office and retail sectors were overpricing themselves way too much. This is especially due to owners being over ambitious of the value of their property. When it comes to economy, 85 percent said 2015 would be a poorer year in terms of results versus 2014. Major reason? Yes, you guessed it right too. It’s the impending Goods and Services Tax (GST) less than one month away.
The most important statement comes from Knight Frank Malaysia managing director Sarkunan Subramaniam. He said, “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.”
So what does all these tell us? Well, for one thing, I hope they are really right. If they are right, the owners of these commercial properties would have to readjust their expectations and the market would move again. If they are right, then perhaps it would really make sense to scout for potential value, especially from owners who just could not hold so many units. In fact if GST really does affect so much of the decisions, it is time to really think hard. Perhaps it’s a huge opportunity to keep lots of spare cash like my colleague who sold his luxury condo and is currently renting a place. He said his cash will come in handy when the market goes down soon. Of course, when he said this, it was still last year. Let’s hope the survey is right and he is right. Reason being I am at this moment a little busy and lazy. So, perhaps the opportunity may just fall onto my lap soon.
Actually, I do think commercial property in total numbers are oversupply. However, when we look back at the really popular locations, it is still crazy and the yield is likely to be continuously good. After all, these more popular locations are all the more matured areas anyway. The question is which one would be the next to mature and gives good yields continuously. Sungai Buloh side or Bangi side? Haha. Yes, for those who read often, I prefer Sungai Buloh part. Happy waiting or deciding.
written on 3 March 2015
Next suggested article: Klang Valley – Retail Space Over Supply


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