Push for more industrial parks

PETALING JAYA: A shortage of industrial properties and absence of new industrial park projects in the Klang Valley have resulted in higher prices and opened up opportunities for developers with large landbank, especially those near highways, to venture into industrial park projects.


James Wong

Property consultancy, VPC Alliance (KL) Sdn Bhd managing director James Wong said over the past six years, vacant industrial land in premier industrial parks such as Bukit Jelutong, Glenmarie and Section 23 Shah Alam had seen substantial price increases of between 60% and 100% in 2010, or an annualised increase of 10% to 17% a year.

Average prices of industrial units rose by 8% to 18% in the first half of 2010 over the same period in 2009.

Currently, industrial property is still a small sector of the overall property market, accounting for 2.5% of the total property transactions and about 10% of the total value of property transactions. The average yearly transaction of industrial properties is only about 8,000 units.

“The industrial property market is considered quiet for the past few years as developers are concentrating on residential and commercial developments and there is hardly a developer that concentrates on industrial development,” Wong told StarBiz.

“With the Government's big push to transform the country's economy under the Economic Transformation Programme and with the industrial sector as one of the main drivers of the economy, it is timely and ripe for developers to come forward to develop more industrial parks and estates to cater to the increasing demand.”

Wong said last year, the manufacturing sector attracted RM47.2bil of approved investments, compared with RM32.6bil in 2009, a jump of 44.8%. This will translate to more demand for industrial properties.

In the past decade, the majority of new industrial parks in the Klang Valley were developed by the Selangor State Development Corp and there were no new industrial parks by private developers.

Many of the private industrial parks are fully developed and sold, and they are only available in the secondary market.


“There are opportunities to develop modern three-storey semi-detached factories in pockets of prime industrial parks and with easy access to highways,” he added.

The development of SME parks to cater to the SMEs was still a neglected sector, Wong said, adding that although the SMEs' contribution to the national gross development product was more than 30%, many of them were still located in illegal buildings and squatter areas.

“Developers should develop parks for the SME industries of similar trades to group them together, such as shoe-making SMEs industrial parks with amenities such as common canteen, food courts, and also staff housing for the workers,” he added.

According to figures provided by the National Property Information Centre, the value of industrial property transactions grew by 44% from RM3.06bil in the first half of 2009 to RM4.4bil in the same period of 2010, while the volume of transaction increased by 29.3% from 3,596 to 4,648.

The rise was mainly due to demand from SMEs seeking small-sized industrial buildings with good concepts in strategic locations with excellent accessibility.

Wong said Mah Sing was the pioneer in the new generation of semi-detached factories for multi-purpose use.

According to Mah Sing Group Bhd group chief executive and managing director Tan Sri Leong Hoy Kum, there is pent-up demand for three-storey semi-detached corporate factories.

He said the shortcomings faced by the sector were that generally the older units were either detached (with too large built-up) or linked (small built-up), and did not have the capacity for multi-purpose use.

“Our research shows that semi-detached factories currently make up about 10% of the total supply of industrial units in the Klang Valley. We foresee there will be strong demand from the SMEs, halal food industries, light manufacturing, distributive trade and those who need to upgrade to industrial properties which can serve multi-purpose functions such as integrating their logistics, warehousing, showrooms and offices under one roof,” Leong added.

Mah Sing is undertaking three i-Parc industrial projects comprisingthree-storey semi-detached corporate factories which have 4-in-1 centralised function as a factory, corporate office, showroom and warehouse.

“Our buyers are mainly local companies looking to integrate their corporate headquarters with operations and warehousing facilities as well as multinational corporations from various industries which see the commercial potential of locating in these schemes,” he added.