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Malaysia remains an attractive destination for industry players

Malaysia remains an attractive destination for industry players

06 Aug 2021

Shift to e-commerce propelling the way forward

The Covid-19 infections in Malaysia showed no signs of abating despite the national roll-out of vaccines. The spike in positive coronavirus cases has led to the reimposition of movement control order (MCO) 2.0 in January 2021, followed by MCO 3.0 and full MCO since May 2021.

According to Knight Frank Malaysia’s Real Estate Highlights 1st half of 2021, stakeholders in the industrial property segment are expected to practise more caution in formulating their plans as they navigate through this challenging operating environment.

The robust growth of e-commerce amid the prolonged Covid-19 pandemic magnifies the importance of efficient strategies for both delivery and collection methods. The RM300mil allocation for e-commerce campaigns under the RM15bil Malaysian Economic and Rakyat Protection Assistance Package (Permai) is an opportunity to expand the e-commerce activities, which eventually translate to higher demand of logistics and warehousing space within the region, especially in strategically located centres.

 “The growth in the logistics sector is supported by more new requirements and space expansion from e-commerce players as well as last-mile logistics service providers. The accelerated shift from traditional retail to online order fulfilment will continue to generate strong demand to propel sustainable growth into the future.

“In the manufacturing space, we particularly see more interests surfacing in the electrical and electronics (E&E) sector driven by the global shortage of semiconductors as well as the 5G network roll-out. The E&E sector is amongst the top performers amongst key indices,” said Knight Frank Malaysia capital markets executive director Allan Sim.

According to the Malaysian Investment Development Authority (Mida), the total investments in foreign and domestic investments into the E&E industry doubled in 2019 compared to the previous year. “However, in 2020, there was consolidation in investments due to the uncertainty brought about by the Covid-19 outbreak and imposition of the first movement control order.

Having said that, we anticipate significant interests and growth potential in the E&E space moving forward, bolstered by current global demand for sensors, semiconductor, solar, internet of things (IoT) products, as well as further investments into artificial intelligence (AI), smart machines, etc of the future,” Sim added. Penang ranked third in the country with a total manufacturing investment of RM14.1bil in 2020, garnered RM1.08bil worth of approved manufacturing investments from 40 projects in 1Q2021. The industrial sector continues to remain as the state’s economic anchor in promoting high-tech industries, said Knight Frank Malaysia Penang executive director Mark Siaw.

“Penang state government aims to promote its global business services and to continue expanding its industrial land bank following the encouraging takeup at the Batu Kawan Industrial Park. Penang’s medical and logistics industries are seen to be up and coming, and once the pandemic is brought under some semblance of control, there should be more investment activities returning to Penang,” he said. Knight Frank Johor director Debbie Choy pointed out that a shift in the need for more extensive storage and efficient logistic services are seen in the Johor market.

“This increases the demand for industrial properties where some may consider shifting to smaller shop fronts or moving towards the digital platforms. Manufacturers that will benefit from the surge of demand for their goods during this time are also actively in search of appropriate sites for their expansion,” she said.

There were also recent significant announcements for the agriculture sector in efforts to incorporate more technology into modern farming methods, Choy added. In 1Q2021, the country recorded a total of RM80.6bil worth of approved investments in the manufacturing, services and primary sectors in 1Q2021, a surge of 95.6% from the same period last year (RM41.2 billion).

The Covid-19 crisis, however, has a silver lining for the logistics industry, said Knight Frank Malaysia research and consultancy executive director Judy Ong. “With prolonged periods of lockdowns and restrictive movements, there is a structural shift towards omnichannel retailing. The pandemicdriven e-commerce boom augurs well for the industrial property market due to growing warehouse space requirements to cater to the surge in last-mile delivery cum collection,“ she said.

Source: Star Property

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