Industrial market remains strong
By Joseph Wong
At a time when most property market sectors are sluggish and uncertain, the industrial sector appears to have held up against the aftermath of the Covid-19 pandemic and its subsequent consequences. The Malaysian Investment Development Authority’s (Mida) statistics show that many existing manufacturing companies in Selangor are still expanding their operations.
It was also noted that industrial properties were moving towards sizeable scale with higher specifications. Some examples are Area Logistics @ Ampang at the Ulu Kelang Free Trade Zone and Century Logistics upcoming headquarters in Bandar Bukit Raja.
There is a trend where manufacturing and logistics players are looking at centralising their operations and improving their business capacities. Moreover, the government is still encouraging further industrial development in selected strategic locations with a focus on developing key industries, such as aerospace.
However, stakeholders are expected to practise more caution in formulating their plans as they navigate through this challenging operating environment due to the effects of the Covid-19. “For larger industrial park projects within the Greater Klang Valley, we foresee developers relooking at plans involving speculative builds of smaller industrial products,” said Knight Frank Malaysia executive director for capital markets Allan Sim.
“This strategy will bode well with current market sentiment and trend as we have been receiving more enquiries from industrialists who are keen to embark on such arrangements,” he added. This is largely spurred by attractive tax incentives for overseas manufacturers under the government’s recently announced short term Economic Recovery Plan (Penjana), he said, when commenting on the Real Estate Highlights 1st Half of 2020.
On a separate front, mature industrial parks within Shah Alam pose a rather distinct narrative. According to Sim, Shah Alam is entering into an early transformation and redevelopment phase from a manufacturing centric location to a modern urban logistics hub.
The scarcity of industrial land within the mature and well-connected locale coupled with increasing demand for higher specification logistics facilities have propelled many landowners to capitalise on the trend to redevelop their dated industrial premises.
“Despite rising land prices in Shah Alam, there are still factors incentivising logistics players to look into the locality. “These include Shah Alam’s central location providing opportunities for more delivery runs per day, as well as the advent of construction going into multistorey to balance the real estate costs,” he explained.
CBRE | WTW’s Asia-Pacific Real Estate Market Outlook 2020 says Klang Valley remained as top three regions for investment in Malaysia. From January to September 2019, Klang Valley attracted RM16.59bil of approved investments or 28.8% of total approved investments. “Foreign interest constituted RM11.17bil of the investments. Future industrial supply totalled 2,700 units as reported by the National Property Information Centre.
“Semi-detached units consists of 48% or 790 units of the planned supply. Located on a 7.15-hectare site, Area Logistics @ Ampang contributed 1.2 million square feet upon completion in 4Q 2019. It will be the first threestorey ramp up inner-city mega distribution hub, in line with fast-growing e-commerce needs for last-mile delivery,” it said. Despite the hiccup that brought many industries to a drastic slowdown, many companies providing essential products went into overdrive.
While the worse appears to be over, the industrial sector is undeniably still one of the main drivers of the economy and the Klang Valley remains the top pick for investment in Malaysia. Where Selangor is concerned, as of March 2019, a total of 9,097 manufacturing projects with investments of RM218.4bil in Selangor were approved by the Malaysian Investment Development Authority (Mida), creating more than 802,000 employment opportunities. Majority of the employment was in electrical and electronics, followed by transport equipment, rubber products and machinery and equipment industries.
The strong presence of multinational corporations (MNCs) and large local corporations (LLCs) in the state such as Spirit AeroSystems, Nestle, IKEA, Panasonic, Q-Cells, KL-Kepong Oleomas, Nippon Electric Glass, Perodua Global Manufacturing, Proton, Top Glove and Hartalega hold much promise for business collaborations and opportunities, according to Mida.