Subscribe:

Pages

Wednesday, 30 May 2018

(The Star) Better sentiment seen for industrial property

PETALING JAYA: Renewed market confidence following the general election and rising demand for general consumer goods and e-commerce are expected to bolster the local industrial property market.

Savills Malaysia managing director Datuk Paul Khong said improved market sentiment would certainly boost foreign direct industrial investment into Malaysia.

“Coupled with surging domestic consumption, the prospects for the industrial and logistics market are very positive,” he said in a statement, adding that the segment should see rising rental rates that have lagged behind recent strong increases in industrial land values.

“Good news for real estate investment trusts and other funds which are focused on this market sector,” said Khong.

An analyst said the industrial property sector was “more stable”, although not “as exciting” as other property sub-sectors like residential or commercial.

“The industrial property market, unlike the residential or commercial segments, does not attract speculators. The people that invest in these units or lots buy to own or rent – not sell for a higher price.

“Therefore, it’s a lot more stable compared with other property sub-sectors.”

With the general election over, he said investors had a clearer picture ahead.

“At least for the next five years, there will be more clarity and less uncertainty among foreign investors. One example is the recent tie-up between Sime Darby Property Bhd and Japan’s Mitsui & Co Ltd and Mitsubishi Estate Co Ltd.”

Earlier this month, Sime Darby and Mitsui announced that they would develop industrial facilities on 39 acres at Bandar Bukit Raja in Klang with an estimated gross development value of RM530mil.

Mitsui, in a statement, said: “In Malaysia, with demand rising for general consumer goods and e-commerce, there has been an ongoing movement towards consolidating and/or upgrading business bases, such as leasing logistics warehouses and light industrial facilities.

“Such needs are expected to increase, in particular, on sites that are close to centres of consumption and are easily accessible by public transportation.”

The company emphasised that the Bukit Raja region was situated midway between Kuala Lumpur and Port Klang – the largest port in Malaysia.

“Not only is the region readily accessible by existing highways, but a new highway, which will connect the peninsula from north to south, is also planned to be opened to traffic along the site of the project in 2019, further enhancing the convenience of the area.”

According to the Valuation and Property Services Department’s Property Market Report 2017, the industrial property sub-sector has weathered the past couple of years well and is poised for good growth.

“The industrial sub-sector despite contributing the least to the overall property market, plays a significant role generating investments and employment opportunities.

“As Malaysia embraces the Industrial Revolution 4.0 and the digital economy, a different ball game is expected of the industrial property sub-sector,” it said.

The Industrial Revolution 4.0 refers to the paradigm that machines are now able to autonomously adapt and coordinate their tasks to meet human needs.

According to JPPH’s Property Market Report 2017, the industrial property sub-sector recorded 5,725 transactions worth RM11.64bil in 2017. As at the end of 2017, there were 113,173 existing industrial units, with another 5,675 units in the incoming supply and 7,513 units in the planned supply.