Malaysia, such as:
• the State Economic Development
Corporations (SEDCs)
• Regional Development Authorities (RDAs)
• Port authorities and
•Municipalities
He adds that state authorities have land in
poor locations. “There are very fewprivate
developers venturing into building of
industrial estates because of poor use of
land. Many prefer to build houses, offices or
condominiums. If they do decide to venture
into industrial estates, the norm is to divide
industrial plots into small units and sell
themoff to investors or build semi-detached
units for sale to investors”.
Labrooy identifies three industrial
hotspots which are known to have
knowledgeble workers and superb
infrastructure. These include Iskandar in
Johor; Penang and Selangor.
Aye or nay to industrial
property investments
Sowill the year be kind to investors in
industrial real estate? A report by Business
Monitor International on real estate in
Malaysia for the first quarter of 2014 says that
slowly but surely, industrial real estate is
growing in its portfolio of investments. It is
the way to go, in terms of property investment
inMalaysia.
The recent announcement on the
National Automotive Policy (NAP) 2014
promoting
Malaysia as a single
production base
andmarketing hub
for energy efficient
vehicles (EEV)
is also likely to
see industrial
production expand
and improve. This
will obviously have
a positive impact
on the industrial
property sector.
While the Ringgit has weakened, Labrooy
affirms that the country’s superior
infrastructure has placedMalaysia on the
reckoning frame of industrialists exploring
relocation options. This is likely to further
propel industrial property investments.
Labrooy has recently announced his
company’s intention to acquire various
industrial buildings and facilities located in
Johor, Penang, Shah Alam, Petaling Jaya and
Klang. “Remember that China is getting
expensive and has serious IP issues, while
Thailand is in political turmoil, and the
Philippines is still reeling fromnatural
disasters. Fromnews reports, we have also
seen that manymajor multinationals are
setting up operational units inMalaysia.
This list includes Coca Cola, Hershey’s
and Kellogg’s and other prominent Fortune
500 companies.
“These factories require relevant
supportive infrastructure, supply lines
and channels to be set up. For instance,
Coca Cola needs speedy access to existing
and potential distribution centres,”
Labrooy informs.
A dotcommarket research company also
reported that in 2014, theMalaysian real
estate sector will showmore positive
demographic trends, with increasing income
earning and strong FDI levels. It also states
that the government’s plan to increase the
population in Kuala Lumpur to 10million
(from the current 6million) by the year 2020,
will also spur greater property demand.
Even though industrial property
investments is a less popular asset class
option inMalaysia, please followour column
next week, to gather more information, tips,
insights and guidelines.
Industrial property investment might just
emerge as a dark horse in the year 2014.
CUT AND KEEP
JAN 24, 2014
> Investment outlook for 2014
Considering
industrial
real estate
Axis Business Campus (South Block)
Wisma Academy Annex Re-development
Please email your feedback
and queries to:
Price
hikes, fuel subsidy cuts, increased
toll rates, taxes andGST are postulating a
bleak 2014with amajority of Malaysians
assuming the wait-and-watchmode. This is
also beingmirrored in the property investment
field, as themarket remains unsure.
OVERALL INVESTMENT OUTLOOK
However, theMinistry of Finance
recently released the Economic Report for
2013/2014. Forecasting between 5%
and 5.5% improvement in the local economy
propeled by stronger domestic demand
and likely increase in exports.
Growth in the construction and service
sectors are expected to drive economic
fortunes in 2014. This is likely to increase
Malaysia’s gross domestic product (GDP).
Since industrial activity contributes
almost 50%of the GDP, 2014 should be a
good year for investors, especially those who
are exploring industrial property.
TheSun interviewedDatuk Stewart
Labrooy, a recognised expert onMalaysian
industrial property. He is the CEO and
executive director of Axis REITManagers
Berhad, who is also a boardmember of the
Asia Pacific Real Estate Association
(APREA) and chairman of theMalaysian
REITManagers Association (MRMA).
Industrial estate
landscape
“InMalaysia, investing in
industrial real estate is not as
popular as residential or
commercial. Reason being, the
development of industrial
estates has been largely left to
the government to undertake.
Fewprivate groups have
ventured into the industrial
asset class because it requires
more work, especially in its
approach tomarketing,”
says Labrooy.
“Industrial stock has
always been low, and end-
users have to go about building
their own facilities to operate,
often leading to disjointed developments,”.
While industrial property investments “...are a
lower priority inMalaysia compared to
residential and commercial investments, such
lowhanging fruits do not always translate into
stellar profits”, he adds.
Sharing relevant extracts fromhis treatise
on “The Demise of Industrial Estates in
Malaysia”, Labrooy states that there are over
200 industrial estates/parks which are
developed by government agencies in
INDUSTRIAL VS RESIDENTIAL AND COMMERCIAL PROPERTIES
Industrial properties Residential properties
Commercial
properties
Cost psf
low
high
high
Title security
landed
landed/strata
landed/strata
Tenancies
long
short
short
Buyer
tenant
open market
open market
Finance
bank lending available
difficult
difficult
Land areas
large
small
small
* Information table provided by Datuk Stewart Labrooy/Axis REITManagers Bhd
