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Industrial property segment stays as a beacon

Industrial property segment stays as a beacon

The Malaysian industrial sector is expected to continue being a “beacon” for the local property segment as the country gradually restarts the economy.

Knight Frank in its Real Estate Highlights Research for the first half of 2020 says rental rates of industrial space in prime sub-markets, namely Shah Alam, Subang, Petaling Jaya, Kuala Lumpur and Klang, are anticipated to remain resilient for the remainder of the year.

“Transactional activities, which were delayed during the movement control order, are expected to pick up during the second half provided that the Covid-19 pandemic remains under control or subsides.”

Knight Frank notes that the RM35bil Short-Term Economic Recovery Plan (Penjana), which was unveiled in June, will help to cushion the impact of the Covid-19 pandemic by encouraging more foreign direct investments (FDIs).

“However, the more holistic approach towards industrial development, namely the yet to be launched New Industrial Master Plan (New IMP) (2021-2030) is highly anticipated.

“The New IMP – focusing on eight core areas namely manufacturing, services, investment, trade, technology, productivity, standards and talent – is deemed to be the continuation of the Third Industrial Master Plan (IMP3) (2006-2020). It will set the direction of the country’s industrial developments for the next decade.”

Eco World Development Group Bhd president and chief executive officer Datuk Chang Khim Wah says the developer is seeing growing demand for industrial properties not just in the Klang Valley, but also in Iskandar Malaysia where the group has three business parks.

“We will definitely be actively promoting our products to both local and international players and we are confident that once the borders open, demand will further increase as more players realise the inherent attractiveness of Malaysia as a location for manufacturing FDIs.

“We look forward to working closely with the Malaysian Investment Development Authority, which has long been supportive of our efforts to promote our business parks overseas, as well as the various other government agencies at both state and federal levels, to grow this segment of our business strongly over the next few years, ” he says in an e-mail to StarBizWeek.

On Monday, Eco World sold 16.32 acres of industrial land at its Eco Business Park V (EBP V) to Baosteel Can Making (M) Sdn Bhd for RM53.3mil.

Located in Bandar Puncak Alam, Selangor, the 518-acre EBP V is Eco World’s fourth business park development.

Separately, Knight Frank notes that demand for industrial properties has been gradually improving since 2017.

“The Covid-19 pandemic, which continues to bring much uncertainty, has however derail the growth momentum. Players in the industrial property market are expected to be more cautious amid this difficult operating environment.”

Knight Frank says developers are unlikely to embark on large-scaled industrial park developments in the short term, due to lower demand for industrial property products.

“Still, against this backdrop, smaller-scale standalone developments as well as upgrading/redevelopment of existing buildings in established, matured industrial parks with good accessibility and connectivity, where land is scarce will take centre stage.”

Earlier this week, Port Klang Free Zone announced that it had leased its last available piece of industrial land to Swift Haulage Sdn Bhd to build a 175,000 sq ft regional distribution hub and storage facility for medical devices and fast-moving consumer goods. The lease will be for a period of 30 years with investment cost of RM70mil.

Meanwhile, Savills Malaysia in its Asia Pacific Investment Quarterly Report says the real estate market showed more life during the second quarter of 2020, with total transactions up by 13% quarter-on-quarter but falling 6% year-on-year.

Among noteworthy transactions, Petronas disposed of a 170-acre industrial yard for RM320mil to Serba Dinamik Holdings. The property is located in Kota Tinggi, Johor and is expected to provide Serba Dinamik Holdings a good foothold in the offshore upstream fabrication space.

Meanwhile, Kossan Rubber Industries, one of the largest glove manufacturers in the world, entered into a sale and purchase agreement with Grand Fortress Global to dispose of a 96.5-acre vacant freehold industrial site in Kuala Langat, Selangor for RM153mil.

Source: The Star 

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