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Darling of the market

TheStar

THE surge in e-commerce, prompted by the global Covid-19 pandemic, is expected to spur the demand for industrial property space in 2021.

Rahim & Co International Sdn Bhd real estate agency chief executive officer Siva Shanker says while there will still be uncertainty that will carry over from 2020, he affirms that the industrial sector will remain the “darling of the property market”.

“I expect to see e-commerce notching up further in 2021 and this will translate into demand for more industrial property space, ” he tells StarBizWeek.

Siva notes that in the past few years, there had been steady demand for warehouse space within the 100,000 sq ft range.

“The pandemic will usher in demand for smaller warehouses, especially those within the 10,000 sq ft to 30,000 sq ft range.

“This is because as demand for e-commerce grows, there is going to be a need to fulfill the last mall connectivity. Logistics firms are going to need warehouses that are located in as many places as possible, so that they can serve customers better and faster.”

Siva adds that 2021 could also see the rise in demand for cold chain logistics infrastructure once the Covid-19 vaccine begins its rollout in Malaysia.

Cold chain logistics refers to the process of allowing the safe transport of temperature-sensitive goods and products along a supply chain.

“When they start rolling out the vaccine, there is a need to keep it refrigerated. To be able to distribute it effectively, you’re going to need strategically and widely-placed cold-room warehouses across the country if you’re going to want to vaccinate 33 million people.

“You can’t just have a cold room warehouse in Kuala Lumpur. You’re going to need them practically all over the country.”

CBRE, in a recent report on Asia Pacific Industrial and Logistics Trends, says while e-commerce platforms and related third-party logistics will retain a healthy appetite for space, they will display a preference for prime-located, high-specification warehouses, leading to weaker performance in non-prime assets.

“Robust demand for groceries and pharmaceuticals will drive additional demand for cold storage. This will spur both speculative new supply and build-to-suit developments.”

CBRE says new speculative supply will feature high specifications and be high-rise and/or conversion-friendly to meet occupier demand for warehouse automation and mixed usage.Meanwhile, on the local front, the National Property Information Centre (Napic) says the industrial sub-sector recorded 1,980 transactions worth RM5.41bil in the first half of 2020.

Prices of industrial property showed a more stable trend across the states with downward trend witnessed for terraced factory. In Selangor, single-storey and one-and-a-half storey terraced dropped by 2.1% to 18%.

Compared with the first half of 2019, Napic says market activity within the industrial sub-sector decreased by 36.9% in volume and 23% in value in the first half of this year.

Selangor continued to dominate the market with 34.3% of the nation’s volume, followed by Johor and Sarawak, each with 12.7% and 10.5% market share, respectively.

By state, Johor held most of the overhang, with a 42.6% share. By type, terraced units formed the bulk of the overhang (41.6%), followed by semi-detached (36.8%).

On the construction front, Napic says the industrial sub-sector remained on a low tone as completion, starts and new planned supply declined.

Completions were down by 47.4% to 159 units (first half 2019: 302 units). Starts and new planned supply declined by 20.4% and 59.9% to 292 units and 138 units, respectively.

As at end-June 2020, there were 117,526 existing industrial units, slightly more than 4,000 units in the incoming supply and slightly more than 7,000 units in the planned supply.

https://www.thestar.com.my/business/business-news/2021/01/02/darling-of-the-market

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