by 
4th July 2024
Guide to Industrial Property Investment in Malaysia
If you are considering investing in real estate and are interested in commercial properties, industrial property is a lucrative field to explore!
Comprehensive Guide to Industrial Property Investment in Malaysia
Understanding Industrial Property
Industrial properties include warehouses, factories, depots, manufacturer’s storage, logistics and distribution centers, and showrooms. These properties are often inexpensive to own and operate, providing stable cash flow with long-term tenancies, unlike residential properties.
Steps and Approaches for Investing in Industrial Property
1. Define Your Investment Purpose
Understanding the purpose of your industrial investment property is crucial. Ask yourself the following questions: Will you occupy the property yourself? Do you want to find a long-term tenant? Or do you want to upgrade and sell the property? Communicating your intentions clearly to vendors, agents, and most importantly, to yourself, facilitates a smooth investment process.
2. Investment Site Attributes
ndustrial properties near key transport nodes are more desirable to occupiers and the tenant supply chain. Greater KL, Shah Alam, Klang, and Petaling Jaya are top areas in Malaysia with good transport links and strong attractions for reputable businesses. These areas benefit from the availability of infrastructure, labor force, market accessibility, and proximity to financial services and regulatory bodies.
Properties with an optimal office space to factory ratio (circa 30:70) and a simple configuration are most desirable. Space flexibility is key to appealing to a wider tenant mix and reducing vacancy risks.
According to Edgeprop, the top 10 preferred industrial property features include:
- Gated and guarded facilities
- Ample and stable utility supply
- 24/7 security
- Good data and internet access
- Proximity to ports and transportation centers
- Good neighborhoods
- Close to supply chains
- Near workers’ dormitories
- Accessible public transport
- Proximity to workers’ homes
3. Staying Active in the Industrial Property Market
To stay informed about the industrial property market in Malaysia, engage property agents, view listings online, read market research reports and news, and attend auctions. These measures help keep all information at your fingertips and keep you on track with the industrial property value in Malaysia.
4. Secure Your Income
Carefully review your potential tenant’s payment and financial history to ensure continuous rent payments. Understanding the needs of your tenants and ensuring the space complements their business needs is crucial. Holding a security deposit (usually 3 months’ rent) can mitigate any damage the tenants may cause.
Industrial property tenants usually sign leases ranging from 3 to 10 years, providing secure rental income throughout the investment horizon. According to the CBRE Real Estate Market Outlook Report 2022, the industrial sector remains active, with continued growth in eCommerce driving demand for warehouses, especially those with modern purpose-built facilities.
5. Understand Industrial Property Metrics
Familiarize yourself with key industrial property metrics, including the capitalization rate (Cap Rate). The Cap Rate indicates the percentage of annual return produced from the property, giving you an idea of how long your investment will take to pay off.
6. Set Your Parameters
Align your expectations and identify the stakeholders you will deal with, including rental spaces, business partners, lawyers, state authorities, property agents, and others. This ensures a smooth deal process.
7. Lifespan of the Industrial Property
If you purchase large and older warehouses or factories, set aside a budget for renovation and repairs, such as new electrical systems and roof repairs.
8. Environmental Considerations
Be cautious of potentially hazardous waste problems. Authorities can hold you accountable for issues caused by previous occupants, resulting in significant costs.
What My Industrial Specialist Can Do for You
Drawing on industry knowledge and leveraging an extensive agent network, we guide you through all processes in investing in industrial properties. From understanding your goal for the purchase, assessing investment site attributes, and closing the deal, our team provides sector-focused advice on transactions to achieve strategic growth objectives for your business. We are experienced in helping businesses evaluate strategic alternatives in the context of property transactions.
Reach out to us at myindustrialspecialist.com for more insights and support in achieving your investment objectives.
