Gross Rental Yield: approximately 4-6%, yields can be higher if it is well located in urban city such as Kuala Lumpur, Johor Bahru, and Penang.
Annual Appreciation Rate: approximately 3-5%, commercial properties in major cities usually have higher appreciation rate as the area has many business opportunities.
Vacancy Rate: approximately 22% in urban areas. The rate is higher due to the impact of the recent Covid-19 pandemic and the growth of e-commerce businesses.
Choosing a location:
- An area with good infrastrucure development and connectivity with global trade routes will be ideal (for example:KL).
- Area with growing economy or high tourist count is also ideal (for example: JB).
- Places such as Cyberjaya which is a hub for tech startups can also be an ideal location.
Pros and Cons of Commercial Properties
| Pros | Cons |
|---|---|
| Commercial properties often have longer lease terms (3-5 years), providing investors with a more stable and predictable income compared to residential properties. | Requires a larger upfront capital than residential properties. |
| If well located, can have higher yield than residential properties | The commercial property market is highly sensitive to economic changes. |
| Commercial properties in sought-after location can appreciate into high value overtime | Managing commercial properties requires the knowledge of market trends, and tenant relation. |