Industrial appeal

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INDUSTRIAL real estate, which proved to be a resilient sector during the pandemic, is expected to remain on the radar of investors.

On the local front, several companies have announced their expansion in the industrial space, as the country transitions into the endemic phase.

Sunway Real Estate Investment Trust (Sunway-REIT) has announced that it was acquiring industrial property in Petaling Jaya for RM60.05mil.

According to Sunway-REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng, the acquisition is in line with the REIT’s strategic direction to expand its asset portfolio in the industrial segment.

The proposed acquisition will fortify its efforts to grow its property value to between RM14bil and RM15bil.

“The proposed acquisition will further strengthen our position as the second largest REIT in Malaysia, measured by property value,” he says.

Main Market-listed Dynaciate Group Bhd has also announced that it was acquiring 7,689.62 sq m of freehold industrial land in Seremban, Negri Sembilan for RM15mil.

Earlier this month, Dynaciate announced plans to acquire a 5.8-acre freehold industrial land in Bentong, Pahang for RM12mil.

Executive director Melvin Lim says the acquisition of the Bentong property is part of its ongoing strategy to identify, invest and develop potential industrial land and buildings.“Having seen the increasing demand and growth in industrial property markets in Malaysia, we are confident that the proposed acquisition will contribute positively to the group’s future earnings.

“This is taken into consideration with the strategic location of the Bentong property, as well as the provision for its future appreciation within its vicinity,” he says.

TF-AMD Microelectronics Sdn Bhd, an assembly and test service provider for high performance computing and communication solutions, has also announced plans to expand its manufacturing facility in Penang with the construction of a second site at the Batu Kawan Industrial Park.

With nearly RM2bil of capital investment, the new manufacturing facility is expected to create more than 3,000 new jobs in advanced semiconductor engineering, design and process technologies for high-performance computing solutions.

The new facility, spanning 1.5 million sq ft and occupying 14 acres, will manufacture advanced integrated circuit technology and is expected to be completed in 2023.Once completed, the facility will bring TF-AMD’s total manufacturing capacity to over 2.3 million sq ft.

Separately, integrated industrial space solutions provider AME Elite Consortium Bhd says its industrial parks in Johor are still attractive for foreign direct investments, as global players continue to diversify their supply chain to mitigate macroeconomic uncertainties.

Nasdaq-listed medical device giant Insulet Corp is building a manufacturing facility at AME Elite’s i-TechValley in the southern industrial logistics cluster in Johor.

The new fit-for-purpose facility with a built-up area of 400,000 sq ft is Insulet’s first presence in South-East Asia, complementing its existing manufacturing capacity in the United States and China, according to AME Elite.

The manufacturing facility is expected to be operational in mid-2024.

Bright outlook

Zerin Properties, in a paper on Greater Kuala Lumpur’s industrial sector performance for the first quarter of 2022, says the country’s industrial sector has remained resilient.

It adds that the sector is set to be a key driver for the real estate market, despite being faced with a myriad of challenges due to the pandemic.

“Greater KL’s demand for industrial properties is primarily concentrated in the established Petaling and Klang districts such as in Port Klang, Klang, Shah Alam, Subang and Petaling Jaya.

The high demand for electrical and electronic goods, rubber gloves and medical devices, due to the pandemic, has contributed to the robust manufacturing sector.

With eCommerce income hitting RM1.1 trillion in 2021, Zerin Properties says the industrial sector is expected to thrive further.

The rise of eCommerce in the wake of Covid-19 has spiked demand for express delivery and warehouse space.

Ramp-up warehouses are gaining traction in urban logistics.

It adds that growth in digitalisation such as automation, robotics,the Internet-of-Things, big data analytics, cloud-based computing and in-house software systems in daily operations, will help to spur the local industrial sector.

Zerin Properties says strategically located industrial premises with excellent connectivity to seaports and airports, as well as high visibility, will continue to outperform the industrial property market.

“Rising demand for factories and warehouses in other industrial hotspots such as Rawang, Serendah, Ijok, Banting and Sepang has also been observed.

“Built-to-suit facilities are also getting popular. These can be seen in areas such as Bandar Bukit Raja Industrial Gateway, COMPASS @ Kota Seri Langat and Subang Aerotech Park.”

Regional and global trends

On the regional front, CBRE, in its recent paper “What’s in store for industrial and logistics project management?” says 2022 is expected to be another robust year for the Asia-Pacific industrial real estate sector.

“Across Asia-Pacific, we have seen how the massive movement by consumers towards online retail during the pandemic has translated into logistics space demand being rapidly driven by expansion in the eCommerce operations and omnichannel distribution space.

“In addition to robust expansionary demand, we foresee a rise in flight-to-quality requirements, as more occupiers seek modern logistics facilities to enhance operational efficiency and install automation and other logistics technology, such as automated stacking systems, sufficient loading/unloading zones and back-up power equipment for warehouse tech cold storage.”

CBRE notes that the biggest trend, going forward, is the continued drive towards the construction of more green, safe and hygienic warehouses and industrial facilities.“For warehouses, going green can not only significantly reduce the running costs of a warehouse facility, it also provides clear environmental benefits.

“Green warehouses are gaining traction in the region, especially if we consider that the industrial sector consumes over half of the world’s energy. High energy usage is not only costly to the global environment due to rising carbon emissions, but also prevents companies from maximising profits, with high utility bills eating into company revenue.”

Citing the Harvard School of Public Health study, CBRE says workers in green building conditions performed better, with higher cognitive brain scores and improved performance.

“Some features that occupiers can consider implementing within their projects to support and improve worker comfort include insulation, which can save energy and improve working conditions.

“Materials that have lower polluting properties like specialised paints, adhesives, wood products, sealants and carpeting can improve the building’s air quality to ensure the long-term safety of workers in an otherwise hazardous or pollutive environment.”

Additionally, CBRE notes that cooling and heating systems can be less efficient in warehouses, which are vast, open spaces.

“Fortunately, these systems are not needed in every climate or season.

“Some warehouses find that high volume low speed fans are efficient at moving cool or warm air around the facility, to keep workers comfortable while decreasing energy use. They can be helpful even in climates requiring air conditioning or heating.”

Growing steadily

On the global front, Forbes, in its paper “Commercial Real Estate Predictions For 2022”, says industrial real estate will keep growing.

“Industrial real estate has blown up over the past year thanks to the rise of eCommerce.

“Online retailers such as Amazon are driving the construction of warehouses to house their products, while retailers like Walmart and Kroger are snatching up distribution facilities left and right.

“Manufacturers are also going to keep investing in commercial real estate as they increase the amount of inventory they keep onsite,” it says.