Property consultancy Knight Frank Malaysia expects to see more townships with industrial components being built by developers as an alternative to conventional projects where residential and commercial elements are facing a glut.
Knight Frank Malaysia capital markets executive director Allan Sim said developers need to look at other ways to make their township projects more attractive, especially to investors.
“If we look at the typical developer, they will just build residential, commercial or retail properties. But there is an oversupply situation for these properties,” he said at the launch of Knight Frank Malaysia’s “New Frontiers: The 2018 Report” here yesterday.
“So what next? What makes a township work? There must first be a population. A developer can no longer purchase expensive parcels of land and develop affordable range of houses. There also aren’t many large parcels of land in the city now.”
Sim emphasised that developers should build industrial lots to tap the rising need for such properties, especially among foreign investors from China.
“The industrial sector will also benefit from China playing a pivotal role in developing Malaysia’s digital economy, alongside the development in Malaysia’s logistics and warehousing sectors.
“In the longer term, we can also expect a flow-on effect to business activities, creating a demand for hospitality-related services. The Chinese developers may also bring in their partners from China and work together with local players and start developing a township together,” he said.
At the 11th Malaysian Property Summit 2018 last month, Rahim & Co International Sdn Bhd research director Sulaiman Akhmady Mohd Saheh said the outlook for the industrial property sector looked promising in light of the growth in e-commerce.
He said e-commerce has been recognised as a critical enabler to accelerate revenue growth for the economy, thus driving demand for logistics and industrial space.
Meanwhile, Knight Frank Asia Pacific’s head of research Nicholas Holt said the influx of Chinese developers into Malaysia, despite intensifying the level of competition for local players, is ultimately a “win-win” situation for both parties.
“It means more investments coming into Malaysia. More competition is good for the consumer and the economy. People will up their game, enter joint ventures and create opportunity for knowledge transfer.
“It could also see investments going into China and lead to bilateral trade and investments.”
The New Frontiers report is aimed at helping investors understand potential opportunities that China’s Belt and Road Initiative could generate.
The report’s Belt and Road Index assesses 67 countries considered core to China’s initiative.
Notably, Malaysia is one of the top recipients of Chinese outbound real estate investment into the Belt and Road countries, totalling US$10.2bil (RM40bil) over the last four years.