Industrial property sector to remain attractive


Knight Frank Malaysia's executive director of capital markets and industrial Allan Sim (pic) said growth in the logistics sector is supported by more new requirements and space expansion from ecommerce players as well as last-mile logistics service providers.

PETALING JAYA: The industrial property sector in Malaysia remains attractive due to the robust growth of e-commerce as well as the country’s favourable investment environment for high-value manufacturing and global services, according to real estate consultancy Knight Frank Malaysia.

The consultancy’s executive director of capital markets and industrial Allan Sim said growth in the logistics sector is supported by more new requirements and space expansion from ecommerce 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 such as manufacturing output, export as well as manufacturing sales,” said Sim in a statement, following the release of Knight Frank Malaysia’s “Real Estate Highlights First Half 2021” report.

The report, which feature the findings of the property market performance across Klang Valley, Penang, Johor Bahru and Kota Kinabalu show that stakeholders in the industrial property segment are expected to practise more caution in formulating their plans as they navigate through a difficult Covid-19 ravaged operating environment.

It noted that 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 would eventually translate to higher demand of logistics and warehousing space within the region, especially in strategically located centres.

“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), and smart machines,” said Sim.

<a href='/business/marketwatch/stocks/?qcounter=TNLOGIS' target='_blank'>Tiong Nam Logistics</a><a href='http://charts.thestar.com.my/?s=TNLOGIS' target='_blank'><img class='go-chart' src='https://cdn.thestar.com.my/Themes/img/chart.png' /></a>' warehouseTiong Nam logistics' warehouse

Meanwhile, Knight Frank Malaysia’s Penang branch executive director Mark Saw pointed out that Penang, ranked third in the country with a total manufacturing investment of RM14.1bil in 2020, had garnered RM1.08bil worth of approved manufacturing investments from 40 projects in the first quarter of 2021.

“The state government aims to promote its global business services (GBS) and to continue expanding its industrial land bank following the encouraging take-up 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,” said Saw.

The consultancy’s Johor branch director Debbie Choy added that there is a shift in the need for larger storage and efficient logistic services in Johor.

“This increases the demand for industrial properties where some may consider shifting to smaller shop fronts or moving towards the digital platforms.

“Also, 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.

The consultancy’s report also noted that in the first quarter of 2021, the country had recorded a 95.6% jump year-on-year in the total of RM80.6bil worth of approved investments in the manufacturing, services and primary sectors.

Knight Frank Malaysia executive director of research and consultancy Judy Ong said while the Covid-19 crisis has resulted in strict containment measures currently in place, continuing to severely disrupt supply chains, there was a silver lining for the logistics industry.

“With prolonged periods of lockdowns and restrictive movements, there is a structural shift towards omnichannel retailing.

“The pandemic-driven 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.

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