The covid-19 pandemic has transformed the whole real estate industry. According to a survey conducted by the Real Estate and Housing Developers’ Association (Rehda) Malaysia, 20% and 26% of the 134 respondents were optimistic about the property market/sales performance and residential sector growth, respectively, in 2H2021. According to The Edge City & Country, It is a much more favourable response compared with only 8% for both in 1H2021.
Thus, in this article, we are looking at major key trends for real estate moving forward to help the investor spot opportunities in the real estate industry.
The shifting behaviour and demand of consumers
Retailers are currently conducting a comprehensive assessment to configure their spaces as the consumers have shifted their buying behaviour. According to IBM’s US Retail Index, most of the categories are impacted badly except the essential services such as pharmacy, grocery or the mandatory services allowed by the government. Thus, retailers are thinking about how to configure their shopping spaces best to navigate through the crisis. In addition to that, the IBM report also clearly points out that e-commerce is projected to grow by nearly 20% in 2021, mainly because more people are choosing online shopping, especially for clothes, footwear, etc. Thus; retailers need to rethink the role of stores and optimise their portfolios; real estate companies have to consider building flexible leasing structures and repurposing current space.
Business surrounding us face inequality
The impact hit by pandemics and recovery by each industry is different. The pandemic badly impacts most industries, but some industries manage to rise. These industries, such as e-commerce, life science, and logistics, have benefitted from this pandemic. There will also be inequality in commercial real estate where many small shop spaces have unprecedented vacancies. As a result, there is continued downward pressure on rent or sale prices. Thus, this is an excellent opportunity to bargain for good deals for investors who have extra cash.
Driving the digital disruption
The e-commerce boom in the wake of the pandemic has spiked demand for express delivery and warehouse space, fuelling the bottom lines of logistics companies and driving expansions. Take the example of Tasco Berhad written from The Star; it has just closed its financial year ended March 31, 2021, with record-high profitability that rose four times to RM41.27mil.
Countries are closing their borders.
The pandemic has caused the border closure for most countries for health reasons. Due to the border closure, it has further highlighted the need to prioritise the resilience of local supply chains over the efficiency of global trade. As a result, there is a critical demand in warehouses to support the local supply chains. Many industrial warehouse owners are recalibrating and automating their warehouses to improve their warehouse efficiency and productivity. One good example is Mr DIY has launched a robotic e-commerce warehouse recently. The automatic selection in the warehouse helps reduce the possibility of human error. Its innovative design enables the warehouse to stock a wider variety of products. In return, it gives the customers more choices to choose from. Many last-mile delivery partners emerged and transformed smaller warehouses to be fulfilment centres.
Consumer preferences for landed low-density properties with spacious layouts.
The latest Real Estate Highlights for 1H2020 by Knight Frank Malaysia has shown buyers prefer landed properties or low-density developments with bigger or more spacious layouts that come with extra room/study. They also like these spaces to be converted into a home office as working from home may now become a new normal moving forward. According to a survey done by Edge City & Country, the buyers now are focusing on low density and flexible living. Rahim & Co International Sdn Bhd, director of research Sulaiman Saheh, has pointed out that more buyers appreciate natural lighting and ventilation and communal spaces and parks, contributing to their health and well-being.
Caution route for office space demand.
The pandemic also forces the pace of change in offices. Due to government regulation and social distancing, we know that the hybrid way of working is here to stay. Cisco Malaysia managing director Albert Chai has also mentioned to The Edge that almost 90% of Malaysian employees want to work either from home or office. He also stresses that organisations and companies have to adopt the hybrid way of retaining employees and attracting millennials and future talent. Thus the office management team has no choice but to reconfigure the working spaces to stay relevant in the future.
Clear asset winners in property sector
Retail, hotel and office spaces are impacted badly by pandemics due to social distancing and government regulations. However, for life sciences, data science and logistics are gaining traction. The supply for these commercial real estates is limited, and there is increasing demand for these properties. As a result, the prices for these industrial properties keep rising.
Navigating the uncertainty with IndustrialMalaysia
Industrial Malaysia helps transform your business and encourages innovations in strategising your property. We help reassess your portfolio, understand your short-term and long-term objectives, and map it with the latest consumer trend. We bring in a pool of tenants, local support of property experts and legal counsel to assist.
We believe in the impact of data; thus, we constantly leverage technology and trusted intelligence. We use data and analytics to understand the key trends impacting real estate and customise the solution for our customers.
We are experienced in building flexibility in your business processes. We help our customers in reinventing their business processes. And also assisting them in relooking at their pricing and cost structure, so they get the best deal.
Keen to know more? Reach out to us regarding the reinvention and efficiency of industrial space at hello@industrialmalaysia.com.my.