Demand for Malaysia’s large industrial developments remain resilient, says KGV

As the real estate sector irons out the repercussions of the pandemic, the industrial subsector is expected to steadily hold on 

Aerial view of Rancha-Rancha Industrial Estate in Labuan,Malaysia. hkhtthj/Shutterstock

According to the market survey conducted by KGV International Property Consultants (M) Sdn Bhd, the industrial property sector is predicted to recoup within six months to two years, reported Free Malaysia Today.

In the study, they examined the behavioural patterns of industrial property investors after the lockdown restrictions were lifted.

“Although we have already seen some recovery in the third quarter, it will take a while before we get back to normal because the second quarter has taken a beating, with COVID-19 and the Movement Control Order. The entire property market has gone soft,” said Siva Shanker, the CEO of Rahim & Co International Sdn Bhd.

Yet despite the unpredictability of the property market’s future, he shared that the industrial sector has been stable because of supply and demand.

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“The industrial sector is as close to equilibrium as it can get, which means supply and demand are close to meeting. Of course, it is physically and economically impossible to meet, but there are fewer speculators in the industrial sector,” added Siva.

These speculations are in semi-detached and terraced factories measured below 10,000 square feet that are all being built to sell. He explained that investors are purchasing in hopes of flipping them or renting them out after completion, which leads to more supply than demand.

As a matter of fact, the demand can actually be found in larger units in the industrial sub-sector because of the growth of logistics and e-commerce warehousing sectors.

“To a large extent, the industrial sector has done well and, because of COVID-19 and the MCO, the rise in online shopping has increased the demand for warehousing and storage. The space for logistics has grown exponentially,” he concluded.