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Knight Frank Malaysia Weighs In on The Klang Valley, Penang, Johor Bahru and Kota Kinabalu Property Market for Second Half of 2019

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Knight Frank Malaysia released its 2H 2019 report today which reviews the performance of the Malaysia property market across the Klang Valley, Penang, Johor Bahru and Kota Kinabalu.

The report adds that the 2019 revival of two notable mega infrastructure projects, namely the East Coast Rail Link (ECRL) and the Bandar Malaysia project that will be home to the Kuala Lumpur – Singapore High Speed Rail (HSR) station will improve market sentiments and restore investor confidence.

It further adds that in the Southern region, the long-awaited Johor Bahru – Singapore Rapid Transit System (RTS) has also been greenlit.

According to Allan Sim, Executive Director of Capital Markets, Knight Frank Malaysia, these revived projects point to more clarity in Government policies and are a boon to the country’s economy and construction sector.

“Growth in the manufacturing sector is expected to regain momentum moving into 2020 after slowing in 2019 to 3.6% in the third quarter against 4.3% in the second quarter,” he says.

“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 East Coast Rail Link (ECRL) and West-Coast Expressway (WCE).”

He adds that 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 the 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. We foresee Selangor and Johor garnering more interest from manufacturers and investors alike,” he adds.

Sim continues by saying that industrial players have a preference for the Shah Alam – Bukit Jelutong area due to its strategic positioning with good accessibility and connectivity.

“However, due to scarcity of sizeable land and high land costs, we observed an overspill to other areas. The on-going West Coast Expressway (WCE) with an interchange at Banting to be completed by early 2021 has opened up new opportunities for the locality, attracting the attention of major logistics and industrial players. Nestle’s distribution centre being phase one of Axis Mega Distribution Centre and the upcoming development of The COMPASS @Kota Seri Langat are both located here.”

In Penang, according to Tay Tam, Resident Director of Knight Frank Penang, the state was the top recipient of foreign direct investment (FDI) inflow into Malaysia.

“For the first time in six months of 2019, the state garnered RM13.2 billion in total approved manufacturing investments (RM12 billion FDI and RM1.2 billion domestic investments) from 113 projects, surpassing the RM5.78 billion achieved for the entire year in 2018.”

Tam adds 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 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.”

For Johor Bahru, Knight Frank mentions that according to Iskandar Regional Development Authority (IRDA), as of June 2019, the manufacturing sector was leading the numbers among the sectors and contributed 24% to the total cumulative investment for the region.

Debbie Choy, Branch Head of Knight Frank Johor says that they have seen significant industrial transactions in the Port of Tanjung Pelepas (PTP) and Nusajaya Tech Park, proof that these areas are popular among investors and industrialists due to their established facilities and infrastructure.

“We are also pleased to share that Knight Frank successfully facilitated the concluded deal of the specialised Technology Resource (Malaysia) Sdn Bhd’s factory in PTP.”

Choy adds, “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 Sprint Art Holdings Sdn Bhd, in Bursa Malaysia.”

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

Additionally, Knight Franks adds that moving into 2020, Malaysia’s industrial sector remains promising, supported by various initiatives as announced in the National Budget 2020. All in all, we foresee the industrial sector to be the forerunner of the country, particularly in the states of Selangor, Penang, and Johor which are the primary destinations for investment.

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