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CBRE M’sia sees high demand for data centres, logistics assets

CBRE M’sia sees high demand for data centres, logistics assets

11 Nov 2021

Data centre and logistic asset segments are expected to remain in high demand in the future due to the work-from-home (WFH) environment, distance learning, and booming e-commerce business amid the COVID-19 pandemic, said Coldwell Banker Richard Ellis (CBRE) Malaysia group managing director Foo Gee Jen.

He said demand for data centres has grown tremendously over the year arising from student needs such as distance learning and WFH environment, while ecommerce has chalked up significant growth in the global retail market, which would have s spillover effect on the development of logistics centres.

“During the pandemic and the last five years of growth, e-commerce has been touted the industry’s ‘bright spot.’

“The global retail market grew by more than 140 per cent by 2020, up from 8.0 per cent in 2015. As a result, we anticipate that it will expand even further over the next five years,” he said during Pacific Trustees regional real estate investment trust (REIT) webinar titled “Movers and Shakers in Malaysia, Singapore, Hong Kong and China – What to look out for in 2022?.

CBRE is an American commercial real estate service and investment firm.

According to Foo, Malaysia’s real estate segment would also experience similar growth, with the country having some RM6.3 billion worth of online e-commerce business, which is expected to grow to about RM11 billion by 2025, with support from fashion, electronics, media, toys, and other industries.

“This (e-commerce) has accelerated the demand for logistic development in Asia. But I would like to caution about the direction of the logistic development in Malaysia, moving forward. We expect by 2024, another 5.5 million square feet (sq ft) of logistics centres will be developed and enter the market during that period.

“We expect the market requires about 4-5 million sq ft by 2024. So the concern will be, would there be a an over surply of logistics centre? This is very much depends on how fast the growth of e-commerce is between this year and next year and up to 2024.

“Looking at the current pandemic situation perhaps the demand would continue to surge and we still are living with COVID-19 for the next couple of years until everything settles down. Certainly, I think by then the demand will require more logistics and other first-mile delivery services,” he added.

Foo, however, highlighted that Malaysia is slightly delayed in attracting data centre operators as compared to its neighbour, Indonesia.

“Indonesia saw a lion surge of hyper-scale data centres within the last two years, and for Singapore, data centres contributed four per cent to the REIT, while data centres have yet to contribute to Malaysia’s REIT,” he added.

Meanwhile, comparing Malaysia and Singapore, Foo said there are 40 REITs in Singapore, which contributed 12 per cent to the Singapore Exchange, while for Malaysia, there are 18 REITs and they constituted two per cent of Bursa Malaysia’s market capitalisation.

Singapore’s REIT market capitalisation stood at US$82 billion, while Malaysia’s REIT market capitalisation stood at US$9 billion.

Source: Bernama