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PETALING JAYA: The reopening of the country’s economy is spurring demand for industrial real estate in the short to medium term, as evident in the improved transactional activities in the second half of 2021, according to Knight Frank Malaysia.

With large investments in industrial and manufacturing facilities coupled with the enforcement of Act 446 (The Workers Minimum Standard of Housing & Amenities), planned and upcoming industrial parks are set to incorporate amenities related to employee accommodation, and this will lead to growth in this class of asset (workers’ dormitories).

With global growth and support for a sustained policy, the improving market trajectory is expected to continue to accelerate moving into 2022, backed by gradual normalisation of economic activities as well as positive spillover effects from continued improvement in external demand.

“Aside from the infusion of digital tech in the sourcing of raw materials to the deliverance of finished products to customers, more organisations are dedicated to redesigning their supply chain around sustainability initiatives with a focus on efficient energy consumption and corporate responsibilities. The evolving landscape of environmental, social and governance (ESG) compliance, especially among MNCs from countries that mandate disclosure for more non-financial matrices, will certainly bring new bearing on industrial real estate and demand attention of developers to modern industrial parks in 2022 and beyond,” executive director of capital markets, industrial, Allan Sim (pix) said.

“We expect to see positive demand in well-planned and mature industry developments. Industry land prices are likely to trend upwards driven by growth in the logistics and e-commerce sector, supported by new requirements and space expansion from e-commerce players as well as last-mile logistics service providers. However, we believe all eyes should be on Regional Comprehensive Economic Partnership (RCEP), ESG and smart manufacturing which are anticipated to bring about a paradigm shift to the industrial landscape as we know it,” he added.

The Covid-19 pandemic has accelerated growth in the e-commerce market, and coupled with rapid digital adoption, products relating to food, fast-moving consumer goods, health and pharmaceutical, has continued to spur demand for industrial real estate, Sim said.

The prolonged periods of Covid-19-related lockdowns and restricted movements have triggered digital transformation and e-commerce boom.

“The country’s industrial market has seen steady growth in recent years largely due to a higher e-commerce penetration rate resulting in additional warehousing/ logistics space requirements to meet the surge in last-mile delivery as well as the structural shift towards omnichannel retailing. It is anticipated that the momentum gained will continue into 2022 and beyond as demand continues to remain resilient. Additionally, Budget 2022 has a RM250 million allocation for the Shop Malaysia Online and the Go-eCommerce Onboarding campaigns.”

“With the economy entering recovery phase from the height of the pandemic, the industrial realm within Malaysia and its neighbouring countries is entering a new chapter of revolution. Whilst e-commerce growth will continue to underpin the thriving industrial real estate market performance, the new growth areas will be heavily influenced by factors driven by the RCEP, automation as well as ESG agenda,” said Sim.

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