Despite concerns over rising inflation, the industrial real estate sector continues to flourish amidst other sectors which are still in recovery mode.
Independent global property consultancy, Knight Frank, expressed this as their standpoint in their latest Real Estate Highlights 1st half of 2022 (“REH”) which features the findings of property market performance across Klang Valley, Penang, Johor Bahru and Kota Kinabalu.
Within the industrial sector, their findings show that the logistics sector is continuing to grow, with 3PL and e-commerce as key players expanding their operations, leading to higher demand for logistics and warehousing space.
Knight Frank Malaysia Senior Executive Director of Research and Consultancy Judy Ong said: “The industrial property sector in the Klang Valley saw a rebound in market activity with 2,050 industrial properties worth RM9.21 billion changing hands in 2021, reflecting annual increments of 20.2% and 23.0% in transacted volume and value respectively.”
Echoing this, Executive Director of Land and Industrial Solutions Knight Frank Malaysia Allan Sim said: “The main concerns among manufacturers and logistics players are rising transportation costs, shortage of labour and disruption in supply chain.
“With more multinational companies setting up new businesses and facilities within the ASEAN region, Malaysia is expected to benefit from this diversification and reshaping of global supply chain strategies.”
Unsurprisingly, the number of institutional investors and real estate investment trusts chasing after industrial and logistics real estate in Malaysia continues to increase, evidenced by entry of new investors – the first industrial-related acquisition by KIP REIT consisting of a mixture of industrial facilities and industrial land in Pulau Indah amounting RM78 million and Capitaland Malaysia Trust’s first industrial purchase of a 5.11-hectare freehold industrial warehouse for RM80 million in Batu Kawan, Penang.
Additionally, developers are observed to be venturing into large industrial and warehousing developments, such as Titijaya Land Berhad with its recent RM200 million build-to-suit arrangement of a logistic commercial complex for DHL Properties in Penang, and IJM Corp partnering China Harbour Engineering Company Ltd (CHEC) for their first industrial and logistics development in Kuantan, Allan further added.
At the same time Knight Frank Penang Executive Director Mark Saw believes that the industrial segment is the silver lining in Penang’s property market as there is encouraging demand for logistics facilities to serve the expanding e-commerce and logistics sector.
Batu Kawan Industrial Park will continue to be the main hotspot over the next three years, and as reported Penang Development Corp (PDC) plans to develop between 100 acres and 150 acres of industrial land annually in Batu Kawan in addition to a new industrial park in Kepala Batas.
This will become a smart and high-tech industrial park with the best infrastructure for 5G internet access, in order to attract more interest especially from foreign investors.
Similarly, Knight Frank Johor Associate Director Tan Lih Ru also highlighted that the logistics sector in Johor is thriving, with Port of Tanjung Pelepas (PTP) recording growth in its yearly volume and its
current expansion of Free Zone expected to be completed in 2023. This is just one of many other notable industrial projects developments taking place, keeping the industrial sub-sector the bright spot in the state’s property market.
