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Knight Frank Malaysia capital markets executive director Allan Sim. Courtesy Photo

The revival of sizeable infrastructure projects last year like the East Coast Rail Link (ECRL) and Bandar Malaysia has restored investors’ confidence and this will most likely see an increase in manufacturing activities, paving the way for growth in the logistics and industrial sectors.

The Johor Bahru – Singapore Rapid Transit System (RTS) has also been given the greenlight and further to that, there is the possibility of the Kuala Lumpur-Singapore high-speed rail being revived this year.

Knight Frank Malaysia is positive on the outlook for Malaysia’s industrial sector this year.

According to a research report by the firm entitled “Real Estate Highlights 2nd Half of 2019”, the industrial sector is set to be the forerunner of the country.

The states which are likely to benefit the most are Selangor, Penang and Johor.

“We foresee Selangor and Johor garnering more interest from manufacturers and investors alike. Industrial players have a preference for the Shah Alam – Bukit Jelutong locale due to its strategic positioning with good accessibility and connectivity. However, due to scarcity of sizeable land and high land cost, we observed an overspill to other areas," said Knight Frank Malaysia capital markets executive director Allan Sim.

Sim noted that the on-going West Coast Expressway (WCE) has opened up new opportunities for the locality, attracting the attention of major logistics and industrial players.

He said, growth in the manufacturing sector is expected to regain momentum moving into 2020 after slowing to 3.6 per cent in 3Q2019 against 4.3 per cent in 2Q2019.

"Malaysia’s readiness as a regional logistics hub is materialising with impactful on-going projects and initiatives such as the Digital Free Trade Zone (DFTZ), the Regional E-commerce and Logistics Hub at KLIA Aeropolis, the ECRL, and the WCE. The National Budget 2020 also supports the logistics sector with the allocation of RM50 million for the repair and maintenance of roads leading to Port Klang.

"Underpinned by increasing global e-commerce trade and consumer spending, logistics services are poised for growth and this will translate to higher demand for logistics and warehousing space," said Sim.

Penang has garnered RM13.2 billion in total approved manufacturing investments in the first nine months of 2019 from 113 projects, surpassing the RM5.78 billion achieved for the entire year in 2018.

Knight Frank Penang resident director Tay Tam said that this is a tremendous boost to the state and augurs well for the short and medium-term growth of the sector.

“The outlook for 2020 is very positive. In tandem with the robust performance of the manufacturing sector and the e-commerce platform, demand for logistics and warehousing facilities is set to grow in the coming year too,” he added.

Johor has also seen significant industrial transactions in the Port of Tanjung Pelepas (PTP) and Nusajaya Tech Park.

According to Iskandar Regional Development Authority, the manufacturing sector was leading the numbers among the sectors and contributed 24 per cent to the total cumulative investment for the region as of June 2019.

Knight Frank Johor branch head Debbie Choy said the outlook for the industrial market is one of optimism with 2019 witnessing the listings of two Johor-based industrial players, namely AME Elite Consortium and Spring Art Holdings Sdn Bhd, in Bursa Malaysia.

"This is a positive sign that industrial players in the state have the potential to grow further in future,” she said.

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