Areas with excellent road network in Klang Valley are hot spots for industrial property sector.
The performance of the industrial property sector will be led by demand for logistics cum warehousing facilities in specific areas in the Klang Valley.
According to CH William Talhar & Wong’s (WTW) first quarter 2009 property market report, these areas include Klang, Shah Alam and more recently, Kota Damansara that have an excellent network of roads and access to major highways – a prerequisite for international logistics providers.
“Some hot spots identified for the industrial property sector include Temasya Industrial Park in Glenmarie, Bandar Sultan Sulaiman Industrial Area in Klang, Port Klang, Section 15, Shah Alam and Selangor Science Park in Kota Damansara,” the report says.
Some notable industrial transactions that took place last year included a 2.6-ha industrial site at Seksyen U8 Shah Alam that was disposed at RM11.15mil and a 9.84-acre industrial site at Bandar Sultan Sulaiman in Klang was acquired at RM27.1mil.
“In 2008, a few manufacturing plants ceased operations including Ford Malaysia’s production and assembly facility in Seksyen 15, Shah Alam, Panasonic’s Sungai Way facility after the operations were moved to Seksyen 16, Shah Alam and the closing of Hitachi Consumer Products’ manufacturing facility in Bangi,” it says.
On its outlook for this year, the report notes that the Malaysian economy is not expected to be fully insulated from the global downturn.
“The full heat of the global crisis is expected to be felt in the second half of 2009 with the market continuing to remain soft. Consumer confidence is not expected to improve with the state of the economic outlook (eg: loss of jobs, pay cuts and reduction in manufacturing output),” it says.
A cautious mood will prevail in the market as property purchasers expect a reduction in prices while developers either opt to postpone, delay or not launch new projects or new phases.
However, with the reduction in interest rates, mortgage payments would be more affordable, it says.
Malaysian Industrial Development Authority in an overview on industrial projects approved from January to March reports a decrease on the number of new projects approved during the period at 128 compared with 548 new projects approved in the same period last year.
The total capital investment from January to March this year for new approved projects is RM4.34bil compared to RM41.99bil it recorded in the same period last year.
National Property Information Centre in its latest Industrial Property Stock Report Q1 2009 says that in the quarter under review, the number of industrial property overhang remains unchanged at 670 units recorded in the previous quarter but the overhang value increased by 2% from RM342.41mil to RM349.1mil.
On a quarter-on-quarter basis, industrial overhang units decreased slightly by 1.3% from 679 units while their value dropped by 0.7% from RM351.42mil.
These units remained unsold in the market for more than 24 months after their initial launch for sale.
Some 40% (269 units) of the overhang indurtrial units are priced between RM250,000 and RM500,000 a unit, while 25.1% (168 units) of them cost RM250,000 and below.
For industrial units that are under construction and remain unsold, the number increased 3.5% from 656 units in the previous quarter to 679 units. Likewise, it said compared to the corresponding quarter of 2008, the number of unsold units increased substantially by 48.9% from 456 units.
In the quarter under review, the number of unsold units that were not under construction remained unchanged at 711 units recorded in the previous quarter.
On the other hand, the quarter-on-quarter analysis shows that the unsold units in this category increased by 57.6% from 451 units.
“Approximately 56.5% (402 units) of the total number of the unsold and not constructed industrial units have been in the market for more than 24 months after their initial launch for sales,” it says.
From the national total, 45.9% of the units (326 units) were priced between RM250,000 to RM500,000 while 39.9% (284 units) were in the RM250,000 and below bracket, the report points out.