Guide in Industrial Property Investment in Malaysia | Industrial Malaysia
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Guide in Industrial Property Investment in Malaysia

Guide in Industrial Property Investment in Malaysia

Malaysian are known for their love of real estate. With many property mentors and experts sharing their success stories, there is a mutual belief that property is a lucrative investment. The obsession is always on residential properties, however many seasoned property owners and investors are eyeing commercial real estate to diversify their property investment.

Under commercial real estate, industrial property can include warehouses, factories, depots, manufacturer’s storage, logistics & distributions and showrooms. It is often inexpensive to own and operate and typically provides stable cash flow with long term tenancies compared to other real estate sectors such as office and retail.

As with any asset, it is important to carry out careful due diligence and be fully aware of the risks associated prior to investing. Industrial property is no different. With that in mind, here are the steps and approaches one should take when investing in industrial property in Malaysia.

1. Define your investment purpose
First of all, what is the purpose of your industrial investment? Do you occupy the property yourself? Do you want to find a long-term tenant? Or do you want to upgrade and sell the property? With the range of options, you must think of your intentions clearly to vendors, agents and most importantly to yourself.

By doing so it would facilitate a smooth investment process, with all parties fully aware of the end goal.

2. Investment Site Attributes 
Industrial properties located near key transport nodes are more desirable to occupiers and to the tenant supply chain. The top 5 areas with good transport link in Malaysia are Shah Alam, Ampang, West Port, Klang and Rawang. For example, automobile and electrical manufacturers located at factories in Shah Alam area as the accessibility and convenience help to further drive costs down. With the rise of e-commerce in the 21st century, industrial property located nearer to residential areas is of an advantage in servicing shorter delivery times for customers. 

Nonetheless, major highlights in the Klang Valley’s industrial market would be the West Coast Expressway (WCE) that will boost connectivity and increase logistics activities. The ongoing development of Digital Free Trade Zone (DFTZ) in Sepang is anticipated to stimulate higher growth in air logistics activities.

Industrial properties with optimal office space to factory ratio (circa 30:70) and a simple configuration where units can be split or divided easily are most desirable as these spaces can cater to a range of tenants. This makes the flexibility of space is key when appealing to a wider tenant mix and reducing the risks of having the space vacant for a long time.

According to Edgeprop, the top 10 preferred industrial property features include gated and guarded facility, ample and stable utility supply, 24/7 security, good data and internet access, near to ports and other transportation centers, good neighborhood, close to supply chain, close to workers dormitory, near public transports and near to workers homes.

3. Staying ‘Active’ in the Industrial Property Market
Next, one needs to be active in the industrial property market in Malaysia. There are many ways to do this. For example: speaking to property agents, viewing listings online, reading market research reports & news as well as attending auctions (even though you are not bidding!). These measures help to keep all information on your fingertips and thus make you stay on track with the industrial property market in Malaysia. There are several articles from Industrial Malaysia to keep you informed and updated about the industrial property market in Malaysia, you should check it out

4. Secure Your Income
You must carefully review your potential tenant’s past payment and financial history if you’ve successfully acquired an industrial property and are now looking to establish a tenancy in your property. This could ensure your tenants continuously paying rental without any danger.

It is important to understand the needs of your tenants and their businesses in ensuring their space they occupy not only complements their business needs but is affordable to them. It is advised to hold a security deposit (usually 3 months rent) to mitigate any damage the tenants bring to the property.

Industrial property tenants usually signed leases ranging from 3 to 10 years. Longer leases provide a more secure income throughout the investment horizon. This helps to reduce the risk of future income being eroded through void periods.

According to CBRE Real Estate Market Outlook Report 2020, the industrial sector continues to be the bright spot as approved investments for manufacturing from January to June 2019 in Klang Valley was RM5.99 billion of which 63% was contributed by foreign investment. It is to believe that Malaysia’s industrial property sector would set to continue to grow in the years to come. Hence, little did we know that this underrated real estate industry sub-sector is slowly making its way into the spotlight.

When it comes to investing in industrial property in Malaysia, information is key. It is important for you to speak with your local property agents to be fully informed about the property market in Malaysia. To find out more, speak to one of our helpful property agents from . You can acquire about a specific location and industrial property type, and receive market insights as well as price comparison free of charge.