Moderate uptick in industrial property


Raine & Horne Malaysia senior partner Michael Geh(pic) told StarBiz that the projection was based on the National Property Information Centre

GEORGE TOWN: Despite the prevailing economic uncertainties, industrial property sales in Malaysia are expected to increase at a moderate pace next year, while the increase in value of transactions is projected to stay at a low single-digit percentage.

According to Raine & Horne Malaysia senior partner Michael Geh, the projection was based on the National Property Information Centre’s (Napic) third-quarter 2017 report.

The transaction of industrial units in the country increased by about 33% or 1,639 units in the third quarter versus 1,224 units in the second quarter.

Compared to the corresponding period in 2016, the increase is about 18% from 1,320 units, according to the report.

“This shows that there is still investment coming in for industrial properties.

“The value of industrial properties transacted in the third quarter increased slightly by about 1% to RM2.62bil from RM2.6bil in the second quarter.”

Geh told StarBiz: “We observed that the sales involved units with smaller built-up areas, which explains the reason for the decline in the value of transactions.

“The interest from investors in industrial properties should continue in 2018.”

According to Geh, the Digital Free Trade Zone (DFTZ) project announced in the first quarter would further boost the interest in industrial properties.

Although the quarter-on-quarter increase is encouraging for industrial properties, Geh said the projection for transactions for 2018 should not be too optimistic.

The strong double-digit percentage increase in transactions in the third quarter could be just a one-off deal, added Geh.

“The country had an overhang of RM1.18bil worth of industrial properties, at about 900 units, at the end of 2016.

“In 2016, the country saw the lowest transactions of industrial properties since 2010.

“A total 5,609 transactions valued at RM12.02bil were recorded in 2016 compared to 7,046 transactions valued at RM11.97bil in 2015.

“There would be pressure on pricing due to the overhang, which would take some time to clear.

“This is why we are projecting a moderate growth for sales,” Geh added.

Since the second half, Geh said, the market has seen a lot of investments in industrial properties for logistics and e-commerce activities.

The DFTZ is scheduled for completion in 2025 and the hub will handle up to RM300bil worth of goods in the Asean region, providing a growth platform for the e-commerce and logistics industries.

“But we expect the impact of the DFTZ to kick in gradually due to the overhang in industrial properties in the market,” he said.

The DFTZ is an e-hub that was established in a joint effort between the Alibaba Group and the Malaysia Digital Economy Corp to focus on lowering trade barriers for small and medium enterprises to have more access to global markets.

The hub will function as a centralised Customs clearance, warehousing and fulfilment facility in Malaysia and for the region. The DFTZ is connected directly to the Cross-Border E-Commerce Pilot Zone in Hangzhou, where Alibaba’s headquarters is located, through Alibaba’s OneTouch e-services platform.

In Penang, the number of transactions for industrial properties in the third quarter increased by about 70% over the second quarter to 152 units from 88 units, according to the Napic report.

“Compared to the third quarter of 2016, the improvement is about 50%,” he added.

The value of industrial properties transacted in Penang increased slightly by about 2% to RM196.8mil in the third quarter from RM192.6mil in the second quarter.

“Compared to the third quarter of 2016, the drop was 20% to RM196mil from RM244mil,” Geh said.

In the north-east district, the current selling price of light industrial properties per sq ft ranges between RM1,050 and RM1,100, an increase of about 5% from 2015.


   

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