High demand for factory lots could push up space price

Prices of factory space could be on an uptrend by next year, spurred by upcoming infrastructure projects outlined under Budget 2016.

CH Williams Talhar & Wong’s (WTW) managing director Foo Gee Jen said that several projects announced under the budget would boost demand for factory lots in the country.

“The industrial property sub-sector is poised for good growth. The various infrastructure projects lined up for Sabah and Sarawak, for instance, will open up opportunities for the (industrial) sector,” he told StarBiz.

Among the notable highlights was the RM12.8bil funding for the Pan Borneo Highway, beginning with the construction of the route linking Sindumin in the west coast to the east coast of Tawau.

A proposed rapid bus transit system had also been announced for Kota Kinabalu. Also outlined were the proposed highways of DASH and West Coast and light rapid transit line 3.

Foo believed that the industrial property sector was underrated as buyers and investors preferred to look to the residential and commercial sub-sectors.

“Over the past five years, selected lots within the Klang Valley that ranged between RM1 and RM1.40 are now more than RM2.

“There has also been good growth in Johor and Penang. Yields growth in some places has been better compared with the residential and commercial sub-sectors,” he said.

Midas Properties negotiator Justin Tia said that the industrial sub-sector was attractive to investors.

“There are buyers. If it’s a good buy, people are willing to pay. However, there are owners that are able to hang on to a property even if there are no tenants.”

Tia said prices of factory space within the Klang Valley had dropped slightly, as some buyers held back purchases following the implementation of the goods and services tax on April 1.

According to him, prices for old buildings in Shah Alam had dropped to RM1.40 per sq ft from RM1.60 per sq ft previously, while prices of new buildings hovered around the RM1.80-mark.

Tia added that the average price of factory space in Klang had dropped to 88 sen from 98 sen previously for old buildings; while prices of new ones were down to RM1.15 per sq ft from RM1.30 per sq ft initially.

According to WTW’s industrial property report there are 119 units of factories in the first half of 2015, bringing a cumulative supply of 41,387 units in the Klang Valley.

“Rental rates in general remained stable in the first half of 2015 between RM1.10 per sq ft and to RM2.80 per sq ft.” - by Eugene Mahalingam (The Star)