Malaysia’s industrial property sector to witness substantial growth in 2020

This underrated sub-sector of the real estate industry is slowly making its way into the spotlight

The previously underrated industrial property market in Malaysia has substantially risen and will continue to do so in 2020, the managing director of CBRE|WTW Malaysia Foo Gee Jen told the audience at The Edge Real Estate Investment Forum 2019.

In Klang Valley, their data showed strong growth particularly with warehousing and logistics, which supports the country’s potential as a distribution hub.

“You can tell the growth of the industrial sector from the returns from REITs (real estate investment trusts) that focus on industrial [properties]. Currently, industrial properties can get a [rental] yield of nine to 10 percent. The sector has been underrated,” Foo revealed.

In Penang, multinational firms will opt for ‘sale and leaseback’ agreements to rationalise their daily processes. Meanwhile, factories that are privately-developed and purpose-built will depend on the developments of small and medium enterprises (SMEs). Overall, rentals and prices are expected to remain stable throughout the year.

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In Sabah, logistics takes the lead, with warehousing activities expected to reign in more opportunities for the industrial sector. Just a month ago, the local government has started to promote Palm Oil Industrial Cluster’s new port facility to Japanese firms since the Lombok-Makassar Straits shipping route has increasingly become popular.

“We are alongside the Lombok-Makassar Straits shipping route, which is emerging as an important shipping route in Southeast Asia. This makes the east coast of Sabah a prime location for a logistics hub that can tap into the growing number of ships plying the straits,” chief minister Datuk Seri Mohd Shafie Apdal informed The Star Online.

His recent visit to Japan has led to a couple of investment interests from massive enterprises for up to MYR230 million (USD56.6 million).

Among the industrial projects that are set to take advantage of the growth potential throughout Malaysia include The PropertyGuru Asia Property Awards (Malaysia) 2019 winners for Special Recognition for Industrial/Logistic Development: Area Logistics Hub @ Ampang in Kuala Lumpur, i-Park@Indahpura in Johor, and Sendayan Tech Valley in Negeri Sembilan.

Moreover, 2019 data from CBRE|WTW reveal that advancements in technology have also encouraged this sub-sector to expand. Through e-commerce, the demand for last-mile deliveries, warehouse, and logistics services have grown.

The virtual gala dinner and awards ceremony for the 7th PropertyGuru Asia Property Awards (Malaysia) has been postponed due to technical difficulties. We will be announcing a new date soon. For more details, visit asiapropertyawards.com/award/asia-property-awards-malaysia.