KUALA LUMPUR: Malaysia remains an attractive destination for high-value manufacturing and global services in Asia due to its favourable investment environment, according to Knight Frank Malaysia's latest publication, the Real Estate Highlights First Half of 2021 (REH).
Knight Frank Malaysia executive director of capital markets, industrial Allan Sim said in the manufacturing space, the company particularly sees more interests surfacing in the electrical and electronics (E&E) sector driven by the global shortage of semiconductors and the 5G network roll-out.
"The E&E sector is amongst the top performers amongst key indices, such as manufacturing output, export as well as manufacturing sales.
"Growth in the logistics sector is supported by more new requirements and space expansion from e-commerce players as well as last-mile logistics service providers.
"The accelerated shift from traditional retail to online order fulfilment will continue to generate strong demand to propel sustainable growth into the future," he said in a statement today.
Malaysia recorded a total of RM80.6 billion worth of approved investments in the manufacturing, services and primary sectors in the first quarter (Q1) of 2021, a surge of 95.6 per cent from RM41.2 billion recorded in the same period last year.
According to the Malaysian Investment Development Authority (MIDA), the total investments in foreign and domestic investments into the E&E industry doubled in 2019 compared to the previous year.
"We anticipate significant interests and growth potential in the E&E space moving forward, bolstered by current global demand for sensors, semiconductor, solar, internet of things (IoT) products, as well as further investments into artificial intelligence (AI), smart machines of the future," Allan said.
Knight Frank Malaysia also noted that Penang, ranked third in the country with a total manufacturing investment of RM14.1 billion in 2020, garnered RM1.08 billion worth of approved manufacturing investments from 40 projects in Q1 2021.
Executive director of Penang branch Mark Saw said the industrial sector continues to remain as the state's economic anchor in promoting high-tech industries, such as E&E, machinery and equipment (M&E) and medical technology industry.
"Penang state government aims to promote its global business services (GBS) and to continue expanding its industrial land bank following the encouraging take-up at the Batu Kawan Industrial Park.
"Penang's medical and logistics industries are seen to be up and coming – and once the pandemic is brought under some semblance of control, there should be more investment
activities returning to Penang," Mark said.
Elaborating further on the logistics sector, Knight Frank Malaysia Johor branch director Debbie Choy said a shift in the need for larger storage and efficient logistic services are seen in the Johor market.
She said this increases the demand for industrial properties, where some may consider shifting to smaller shop fronts or moving towards digital platforms.
"There were also recent significant announcements for the agriculture sector in efforts to incorporate more technology into modern farming methods.
Further, she said strict containment measures to curb the spread of the coronavirus, such as travel restrictions, have resulted in limited new foreign entries to the market.
Amid the uncertainties, developers, investors, and local prospective buyers adopt the wait-and-see approach and conserve cash.
Nonetheless, Malaysia remains an attractive destination for high-value manufacturing and global services in Asia due to its favourable investment environment with the availability of excellent infrastructure, telecommunication services, financial and banking services, supporting industries and skilled workforce, among other factors, Debbie said.
As Malaysia grapples with the alarming spike of Covid-19 infections, its growth momentum, which is initially expected to continue into the second half (2H) 2021 and beyond, will be derailed.
Executive director of research and consultancy Judy Ong said the strict containment measures currently in place continue to disrupt supply chains severely.
"The Covid-19 crisis, however, has a silver lining for the logistics industry.
"With prolonged periods of lockdowns and restrictive movements, there is a structural shift towards omnichannel retailing.
"The pandemic is driven e-commerce boom augurs well for the industrial property market due to growing warehouse space requirements to cater to the surge in last-mile delivery cum collection," she said.
Moving forward, Judy said there is sustained interest in the logistics industry supported by strong demand for warehouse and distribution facilities.
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