Early signs of weakness in commercial real estate

Another prime asset that was unscathed by for the year ended Dec 31,2020 was IGB REIT’s two prime assets – the Mid Valley Megamall and The Gardens Mall. Both had no change in their valuation as at the end of the financial year.

WITH the release of Malaysian Real Estate Investment Trust (M-REITs) respective fourth quarter results, we are now able to gauge the impact of Covid-19 on commercial real estate assets in terms of valuation as typically all REITs carry out a valuation exercise on their respective investment properties annually.

Judging by the report cards by listed M-REITs, the most impacted segment seems to be the retail segment as it took the biggest hit in the form of not only lower property income, but at the same time, asset values too were knocked down due to the lower valuation.