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Knight Frank: Rosy outlook on industrial property sector, supported by robust e-commerce activities

PETALING JAYA (July 22): The industrial property market remained attractive, thanks to the booming e-commerce activities amid the pandemic, said property consultancy firm Knight Frank Malaysia.

According to its latest publication titled "Real Estate Highlights 1st half of 2021", which covers the findings of the property market performance across the Klang Valley, Penang, Johor Bahru and Kota Kinabalu, the robust growth of e-commerce would also be a boon to the logistics industry, supported by strong demand for warehouse and distribution facilities.

Coupled with the RM300 million allocation under the PERMAI assistance package (announced in Jan 2021); this would eventually translate to higher demand of logistics/warehousing space within the region, especially in strategically located centres.

Growth in the logistics sector is supported by more new requirements and space expansion from e-commerce players as well as last-mile logistics service providers.

"The accelerated shift from traditional retail to online order fulfilment will continue to generate strong demand to propel sustainable growth into the future," said Knight Frank Malaysia executive director of capital markets, industrial Allan Sim.

He noted that there is significant growth potential and interest for the electrical and electronics sector moving forward.

In Penang, Knight Frank's Penang branch executive director Mark Saw observed that Penang’s medical and logistics industries are seen to be up and coming.

He stated that the Penang state government aims to continue expanding its industrial land bank following the encouraging take-up at the Batu Kawan Industrial Park.

"A shift in the need for larger storage and efficient logistic services are seen in the Johor market. This increases the demand for industrial properties where some [retail shops] may consider shifting to smaller shop fronts or moving towards the digital platforms," said Knight Frank's Johor branch executive director Debbie Choy.

"Manufacturers that will benefit from the surge of demand for their goods during this time are also actively in search of appropriate sites for their expansions," noted Choy.

Meanwhile, the report said the country recorded a total of RM80.6 billion worth of approved investments in the manufacturing, services and primary sectors in 1Q2021, a 95.6% increase from the same period last year (RM41.2 billion).

“Malaysia remains an attractive destination for high-value manufacturing and global services in Asia due to its favourable investment environment with the availability of excellent infrastructure, telecommunication services, financial and banking services supporting industries and skilled workforce, among other factors,” said the report.

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