For industrial properties, you follow the highways,” Raine & Horne International Zaki + Partners Sdn Bhd associate director James Tan Keen Meng told attendees of a webinar called “Solidarity Beyond 2021”, organised for real estate practitioners on July 12.
He was explaining to the more than 150 participants how the highway network in general had positively impacted industrial property values and that, despite the pandemic, the industrial property sector had been the least affected compared with other real estate sectors. “The least affected [sectors] have been logistics, online distribution, data centres, pharmaceutical, agriculture, industrial and landed residential property. This is what we have observed from the numerous requests made by bankers and others.”
According to him, the industrial and logistics sectors are likely to perform well, as the pandemic has accelerated the growth of the e-retail/e-commerce business, thus benefitting the warehousing and logistics sectors.
“According to GlobalData’s E-Commerce Analytics, Malaysia’s e-commerce market is estimated to register 24.7% growth in 2020. The market is expected to reach RM51.6 billion (US$12.6 billion) by 2024, increasing at a compound annual growth rate of 14.3% between 2020 and 2024,” said Tan.
“One of the key issues for industrial properties — or any developer-type properties for that matter — is accessibility, which is defined as the ease of access between two points measured by DCTC, which stands for distance, cost, time and convenience. I coined this acronym because it is easy to remember,” said Tan.
He went on to explain that these components would eventually “determine your profitability” and, as such, a buyer should take these factors into account when choosing a location or project in which to buy a property. And when it comes to industrial properties, the key to success is the highway network.
Tan highlighted several highways — both existing and new, including a bypass — to demonstrate how property values for industrial parks have benefitted or will benefit from this type of infrastructure. One example is the Kajang Dispersal Link Expressway, also known as the SILK Highway, which opened in 2004.
“[The SILK Highway] was a game changer. I used to do valuation in the Balakong area. Those days, in the 1990s, industrial land prices were already very high, at RM20 to RM30 psf. Then came the SILK Highway. All the industrial property values around these areas went through the roof. And even in areas like Bandar Teknologi Kajang, the Balakong industrial area and Cheras industrial park, their values shot up,” he said.
He pointed out that industrial lots at Bandar Teknologi Kajang were priced at RM15 psf in 2004 but had risen to RM150 psf in 2020. For Kawasan Perusahaan Ringan Balakong, the lots were priced at RM20 psf in 2004 and RM170 psf in 2020. Kawasan Perusahaan Cheras Jaya saw lots going for RM35 psf in 2005 and RM195 psf in 2020.
Tan expected the next growth areas to be near the West Coast Expressway (WCE), which he believed would affect many industrial properties along the 233km stretch from Banting, Selangor, to Taiping, Perak.
“There is a lot of activity along the WCE that will be a game changer for the West Coast of Peninsular Malaysia. It will awaken Banting and it is well connected to many expressways [and also an alternative to PLUS], and will affect future land development, employment growth, vehicle ownership, traffic growth and the potential for industrial and resort properties,” he said, adding that areas such as Kapar, Klang, Bukit Raja, Shah Alam, Telok Datok and Banting have development potential.
Furthermore, the WCE will open up the West Coast areas to further opportunities such as Lumut, being a port; Sitiawan as a commercial centre; Pulau Pangkor as a tourism venue; and Teluk Batik and Teluk Senangin as seaside resorts.
Prices of industrial properties along the WCE have appreciated over the last decade, according to Tan’s data. For example, at Kawasan Perusahaan Batang Berjuntai, lots were priced at RM5 psf in 2010 but had risen to RM35 psf in 2020. At another industrial park, North Port, the price was RM12 psf in 2010 and RM70 psf in 2020.
The Rawang Bypass project will also have a positive impact, said Tan. The elevated bypass will cut down travel time from the Serendah locality to Selayang and the KL city centre, avoiding the congested Rawang town. Serendah and the areas in its vicinity will greatly benefit from the bypass.
“Although this bypass will cut through the Serendah forest reserve, it will make this area very accessible. Investors looking for cheaper land to develop should look at this area … This will have a positive effect on the property market and the industrial properties in and around this area,” he said.
With better accessibility and a growing demand for logistics and e-commerce services, industrial properties are looking at a bright future.