Factory space rentals seen retreating in some Klang Valley areas

PETALING JAYA: Factory space in selected areas within the Klang Valley could see a drop in rates, as lot owners struggle to find tenants, given the current market situation.

“We’ve had two large factory lots in Puchong, over 100,000 square feet, which have been vacant for over a year. The landlords are now dropping the prices,” said Midas Properties negotiator Justin Tia.

He said a 100,000-sq-ft factory lot that was going for RM1.80 is now being offered at RM1.60.

“Another lot, which is approximately 166,000 sq ft in size, is now going for RM1.10 per sq ft compared with RM1.40 previously. We see a similar trend (of prices dropping) in certain locations for the remainder of this year.”

Tia said the drop in prices would likely apply to larger factory lots.

“For smaller lots, we believe the owners will retain the price, as there is more demand for them,” he said.

Tia added that some buyers were also holding back purchases following the implementation of the goods and services tax (GST).

“When we factor in the GST into the purchase price, some potential buyers are actually deterred.” An industry observer, meanwhile, said he expects factory lot prices to remain flat for the remainder of 2015.

“Many are adopting a wait-and-see approach right now,” he said.

According to Tia, prices of factories in locations like Shah Alam and Klang have been steady so far this year.

In Shah Alam, he said the price was at RM1.60 per sq ft for old buildings and about RM1.80 for new ones. Tia added that the average price of factory space in Klang was 98 sen and around RM1.30 per sq ft for old and new buildings, respectively.

According to CH Williams Talhar & Wong’s (WTW) 2015 Property Market Report, a total of 619 projects had been approved by the Malaysian Investment Development Authority (Mida) as of September 2014. Statistics from Mida revealed that the total projected capital investment was around RM63.5bil, with 55% foreign investments, while the domestic investment was at 45%.

“Projects invested in Malaysia are mainly in electronic and electrical products, as well as machinery and equipment followed by chemical and chemical products.”

Within the Klang Valley, WTW said terraced factories remained the largest segment of total supply of industrial units (76%) in 2014. The Klang Valley recorded 39,179 units of industrial factories in 2014, which was a 0.9% growth from 2013.

WTW said three new industrial developments were launched, which included the Gravitas Biz Park at Section 22, Glen Industrial Park at Telok Gong and Gateway 16 at Bandar Bukit Raja.

“The industrial sector saw a gradual increase in occupancy rates, where more vacant units were taken up in 2014. Rental rates in general remained flat as in 2013 where most of the industrial units were rented between RM1.00 per sq ft and RM2.75 per sq ft.”