INDUSTRIAL real estate, which has proven a resilient sector during the pandemic, is likely to remain on investors’ radars.
At the local level, several companies have announced their expansion in the industrial sector as the country enters the endemic phase.
Sunway Real Estate Investment Trust (Sunway-REIT) announced that it will acquire industrial properties in Petaling Jaya for RM60.05 million.
According to Datuk Jeffrey Ng, Chief Executive Officer of Sunway-REIT Management Sdn Bhd, the acquisition is in line with the REIT’s strategic direction to expand its asset portfolio in the industrial segment.
The proposed acquisition will enhance its efforts to increase property value to between RM14 billion and RM15 billion.
“The proposed acquisition will further strengthen our position as the second largest REIT in Malaysia by property value,” he said.
Main Market listed Dynaciate Group Bhd also announced that it will acquire 7,689.62 sqm commercial land in Seremban, Negri Sembilan for RM15 million.
Earlier this month, Dynaciate announced plans to acquire a 14-acre commercial property in Bentong, Pahang for RM12 million.
According to Executive Director Melvin Lim, the acquisition of the Bentong property is part of its ongoing strategy to identify, invest and develop potential commercial sites and buildings and the acquisition will positively contribute to the Group’s future results.
“This is reflected in the strategic location of the Bentong property as well as the provision for its future value enhancement in its vicinity,” he says.
TF-AMD Microelectronics Sdn Bhd, an assembly and testing service provider of high-performance computing and communications solutions, has also announced plans to expand its Penang manufacturing facility by building a second site in Batu Kawan Industrial Park.
With a capital investment of nearly RM2 billion, the new manufacturing facility is expected to create more than 3,000 new jobs in advanced semiconductor, design and process technologies for high-performance computing solutions.
The new 1.5 million square foot, 14 hectare facility will manufacture advanced integrated circuit technology and is scheduled for completion in 2023. Upon completion, the facility will bring TF-AMD’s total manufacturing capacity to over 2.3 million square feet.
Separately, integrated industrial space solutions provider AME Elite Consortium Bhd says its industrial parks in Johor still attract foreign direct investment as global players continue to diversify their supply chain to mitigate macroeconomic uncertainties.
Nasdaq-listed medical device giant Insulet Corp is building a manufacturing facility in AME Elite’s i-TechValley in Johor’s southern Industrial Logistics Cluster.
The new purpose-built 400,000 square foot facility is Insulet’s first presence in Southeast Asia, according to AME Elite, and complements existing manufacturing capabilities in the United States and China.
The production facility is scheduled to go into operation in mid-2024.
Zerin Properties, in a paper on the performance of the industrial sector in Greater Kuala Lumpur in the first quarter of 2022, says the country’s industrial sector has remained resilient.
She adds that the sector will be a key driver for the real estate market, despite facing a variety of challenges due to the pandemic.
“Greater KL metropolitan area demand for industrial real estate is mainly concentrated in the established Petaling and Klang districts, such as in Port Klang, Klang, Shah Alam, Subang and Petaling Jaya.
High demand for electrical and electronic goods, rubber gloves and medical equipment due to the pandemic has contributed to a robust manufacturing sector.
With e-commerce revenue of RM1.1 trillion in 2021, Zerin Properties expects the industrial sector to continue to thrive.
The rise of e-commerce in the wake of Covid-19 has fueled demand for express delivery and warehousing space.
Run-up warehouses are gaining in importance in urban logistics.
It adds that the growth in digitization such as automation, robotics, the Internet of Things, big data analytics, cloud-based computing and internal software systems in day-to-day operations will help boost the local industrial sector.
Zerin Properties says that strategically located industrial properties with excellent connections to seaports and airports and high visibility will continue to outperform the industrial real estate market.
“Increasing demand for factories and warehouses in other industrial hotspots like Rawang, Serendah, Ijok, Banting and Sepang has also been observed.
“Custom facilities are also becoming increasingly popular. These can be seen in areas such as Bandar Bukit Raja Industrial Gateway, COMPASS @ Kota Seri Langat and Subang Aerotech Park.”
Regional and global trends
On a regional level, CBRE says in its recent article “What’s in Store for Industrial and Logistics Project Management?” that 2022 looks set to be another robust year for the industrial real estate sector in Asia Pacific.
“Across Asia Pacific, we have seen how the massive movement of consumers towards online retail during the pandemic has translated into a demand for logistics space, fueled by the expansion of e-commerce operations and omnichannel sales spaces is advanced.
“In addition to robust expansion demand, we foresee an increase in flight-to-quality requirements as more users seek modern logistics facilities to increase operational efficiencies and install automation and other logistics technologies such as automated stacking systems and sufficient loading/unloading zones and emergency power equipment for cold storage warehouses.”
CBRE notes that the biggest trend for the future is the continuing drive to build greener, safer and more hygienic warehouses and industrial facilities that offer clear environmental benefits.
“Green warehouses are gaining momentum in the region, especially given that the industrial sector consumes more than half of the world’s energy. High energy consumption is not only costly to the global environment due to rising CO2 emissions, but also prevents companies from maximizing their profits as high electricity bills eat away at company sales.”
Citing the Harvard School of Public Health study, CBRE says workers perform better in green building conditions, with higher cognitive brain scores and improved performance.
“Among the features that users can implement in their projects to support and improve working comfort is insulation, which can save energy and improve working conditions.
“Materials with less environmentally harmful properties, such as specialty paints, adhesives, wood products, sealants and carpeting, can improve building air quality to ensure the long-term safety of workers in an otherwise hazardous or polluting environment.”
Additionally, CBRE advises that cooling and heating systems in warehouses, which are large, open spaces, can be less efficient.
“Fortunately, these systems are not needed in every climate or every season.
“Some camps are finding that high-volume, low-speed fans efficiently move cool or warm air through the facility to ensure worker comfort while reducing energy consumption. They can even be helpful in climates where air conditioning or heating is required.”
On a global scale, Forbes says in its paper “Commercial Real Estate Predictions For 2022” that commercial real estate will continue to grow.
“Industrial real estate has exploded in the past year thanks to the rise of e-commerce.
“Online retailers like Amazon are driving the construction of warehouses to house their products, while retailers like Walmart and Kroger are grabbing distribution facilities left and right.
“Manufacturers will continue to invest in commercial real estate as they increase the amount of inventory they keep on-site,” it said.