KUALA LUMPUR: Effects of the Covid-19 has been far-reaching in the property market, especially in the industrial segment. Stakeholders are expected to practise more caution in formulating their plans as they navigate through this challenging operating environment.

“For larger industrial park projects within the Greater Klang Valley, we foresee developers relooking at plans involving speculative builds of smaller industrial products,” said Knight Frank Malaysia executive director for capital markets Allan Sim.

“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,” he added.

This is largely spurred by attractive tax incentives for overseas manufacturers under the government’s recently announced short term Economic Recovery Plan (Penjana), he said, when commenting on the Real Estate Highlights 1st Half of 2020.

The report reviewed the property market performance across Klang Valley, Penang, Johor Bahru and Kota Kinabalu.

On a separate front, mature industrial parks within 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.

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,” he explained.

Sim said that there are more redevelopment planning activities 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 traffic during the MCO period,” Sim said.

Post-MCO, online trading will be central to more businesses. Notable upcoming redevelopment projects within Shah Alam include the former site of Advance Synergy by Mapletree, and the 4.37-acre Xin Hwa site, both at Section 22. Then, there is the former FEC Cable site at Section 16.

“To date, the largest redevelopment site in the locale encompasses the 71-acre former Chemical Company of Malaysia Bhd (CCM) facility,” he added.

“Penang continues to see positive demand for industrial land at mature areas such as Batu Kawan Industrial Park and Penang Science Park,” said Knight Frank Penang executive director Mark Saw.

There is a higher demand for industrial land in Penang, said 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 (SPU) with focus on light industrial developments,” he said.

Outlook in the face of the Covid-19 pandemic, the industrial real estate market remains resilient. The much-lauded efforts by the government in providing generous tax incentives for foreign manufacturers under the recently unveiled Penjana plan will help to position Malaysia as a strong contender to attract more relocations and shoring of overseas manufacturing operations to Malaysia. 

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. 

“Moving forward, the outlook for Malaysia’s industrial property market is looking favourable as we expect to see more active enquiries led by manufacturers looking to take advantage of the tax incentives as well as international e-commerce operators riding on the surge of demand for their services amid consumers’ shift towards digital channels and online shopping.

“We also foresee more international e-commerce operators considering Malaysia as an important regional distribution hub within their network”, Sim concluded.