Industry 5.0 is an emerging trend connecting humans and machines in manufacturing processes and the logistics chain. Singapore is one of the countries in South-East Asia that saw the highest number of industrial robot installations over the past few years, and despite Malaysia having double-digit growth, it was at a much slower pace.
RHB believes the revolution will increase high value-add jobs in this process, which is particularly crucial when the region is facing severe labour constraints post-pandemic. Impact on labour participation and demand for industrial space. While the number of workers required for a manufacturing plant may be reduced, the demand for factory floor space may not necessarily be lowered as additional space (per worker) may be required especially after the COVID-19 pandemic. Companies will also need to consider the space needed for alterations in the supply chain, inventories and facilities needed for repair, as well as installation or modification of the robots over time.
The research company also states the industrial REIT players will need to upkeep asset quality to stay competitive. In the coming years, we expect many REIT players and asset owners to upgrade their existing properties by incorporating new features so that their assets can keep up with market demand. While some industrial S-REIT players are busy re-positioning their assets to capture the demand from new economy industries, Axis REIT has started to embark on developing more modern industrial facilities by providing flexibility in the warehouse space of its greenfield development projects, so that it can cater to the demand of a different scale.
As Malaysia has a limited number of listed industrial REITs, Axis REIT is the Top Pick for MREITs, likes CapLand Ascendas REIT, ESR LOGOS REIT and AIMS APAC REIT in Singapore. These three S-REITs have a good quality of industrial assets in the portfolio, with sustainability features and relatively modern facilities that can keep up to the changing market dynamics
