Johor, Penang and Sabah are tops for hotel investment in Malaysia

Crowne Plaza Kota Kinabalu Waterfront (Crowne Plaza Kota Kinabalu Waterfront)

Malaysia is still attracting interest from commercial property investors in spite of sluggish economic growth. 

According to Knight Frank Malaysia's third Malaysia Commercial Real Estate Investment Sentiment Survey, investors are eyeing Johor, Penang and Sabah for new opportunities.

The leisure and hotel sectors are expected to generate the most interest this year, followed by the logistics and industrial sectors.

"Sabah and Penang were voted as the highly attractive regions for hotel and leisure investment, likely attributed to their strong tourism market," Sarkunan Subramaniam, managing director of the firm said in a statement. Interest in investing in the hotel and leisure sectors grew from 65 percent last year to 93 percent in 2017.

Since the new year, plans to bring Marriott’s Element brand to Malaysia have been announced, and IHG’s Crowne Plaza brand will open in Sabah in 2021.

“Sabah’s economy is also expected to grow fourfold over the next decade with support from the Sabah Development Corridor Economic initiative,” Leanne Harwood, VP of operations for South East Asia and Korea at IHG, said in a statement. “The city shows great potential for growth in tourism, especially with upcoming developments such as the Kota Kinabalu Convention City.”

Still, Kuala Lumpur remained the most popular property investment destination. This may not be an entirely good thing: Respondents claimed that the supply of commercial property in the Klang Valley (which includes Kuala Lumpur) was exceeding demand, and would continue to apply pressure on occupancy rates and rental yields.

The breakdown of respondents was 77 percent developers, 16 percent fund managers and 7 percent lenders.