Manufacturers and international e-commerce operators are looking for industrial space to take advantage of the tax incentives and to ride on the surge of demand for their services amid consumers' shift towards digital channels and online shopping due to the Covid-19 pandemic.
Knight Frank Malaysia said considering this, the outlook for Malaysia's industrial property market remains favourable.
The firm expects there will be more active enquiries from the manufacturers and e-commerce operators.
"We also foresee more international e-commerce operators considering Malaysia as an important regional distribution hub within their network," said Knight Frank Malaysia executive director of capital markets, Allan Sim.
Sim said the much-lauded efforts by the government in providing generous tax incentives for foreign manufacturers under the recently announced short-term economic recovery plan (Penjana), will help to position Malaysia as a strong contender to attract more relocations and shoring of overseas manufacturing operations here.
"This is timely given the on-going major restructuring of global supply chains arising from the aftermath of the pandemic, as well as the on-going US-China trade war," he said.
Knight Frank Malaysia launched its latest research report, Real Estate Highlights 1st Half of 2020 which reviews the property market performance across Klang Valley, Penang, Johor Bahru, and Kota Kinabalu.
Sim said for larger industrial park projects within the Greater Klang Valley, the firm foresee developers re-looking at plans involving speculative builds of smaller industrial products.
He said more developers are expected to respond fluidly to current market demand, that is by securing interests of manufacturers or operators to engage in larger build-to-suit products.
"This strategy will bode well with current market sentiment and trend as we have been receiving more enquiries from industrialists who are keen to embark on such arrangements, largely spurred by attractive tax incentives for overseas manufacturers under the Penjana plan," he said.
The report shows that mature industrial parks in the likes of Shah Alam pose a rather distinct narrative.
According to Sim, Shah Alam is entering into an early transformation and redevelopment phase from a manufacturing centric location to a modern urban logistics hub.
He said the scarcity of industrial land within the mature and well-connected locale coupled with increasing demand for higher specification logistics facilities have propelled many landowners to capitalise on the trend to redevelop their dated industrial premises.
"Despite rising land prices in Shah Alam, there are still factors incentivising logistics players to look into the locality. These include Shah Alam's central location providing opportunities for more delivery runs per day, as well as the advent of construction going into multi-storey to balance the real estate costs".
"Even as the economy is going through the aftermath of the pandemic, we are seeing more redevelopment planning activity of industrial plots within Shah Alam. Unlike many traditional businesses, the end-users of these redevelopments are mainly e-commerce and logistics players who are beneficiaries of increased online shopping traffics during the MCO period," he said.
Sim said that post-MCO, online trading will be central for more businesses.
Notable upcoming redevelopment projects within Shah Alam include the former site of Advance Synergy Bhd (ASB) by Singapore-based Mapletree Dextra Pte Ltd and the 1.75 hectares (ha) Xin Hwa Holdings Bhd site, both at Section 22 and the former FEC Cable site at Section 16.
ASB sold its factory and warehouse in Shah Alam to a unit of Mapletree for RM124 million cash last year. Mapletree Dextra had previously acquired 15.52ha of leasehold industrial site in Shah Alam from UMW Holdings Bhd for RM288 million in 2018.
Sim added that to date, the largest redevelopment site in the locale encompasses the 28.5ha former Chemical Company of Malaysia Bhd facility.
In Penang, there is a positive demand for industrial land in mature areas such as Batu Kawan Industrial Park and Penang Science Park, said Knight Frank Penang executive director Mark Saw.
"In the short to medium term, we foresee further expansion southwards of mainland Penang and growing interest in the northern part of the state, in and around Seberang Perai Utara with focus on light industrial developments," he said.
Saw said in the face of the Covid-19 pandemic, the industrial real estate market remains resilient.
