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Greater Kota Kinabalu leads industrial property mart
Published on: Friday, September 08, 2023
By: David Thien
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Greater Kota Kinabalu leads industrial property mart
An industrial zone with gas landing facility jetty near KKIP.
Kota Kinabalu: When PropNex, a Sabah real estate agency won the “Industrial Real Estate Firm of the Year” organised by the Malaysian Institute of Estate Agents (MIEA) in April, it shows that the property market for industrial property is vibrant as more investors set up shops.

Sabah’s most active secondary market for industrial lands and buildings for Small and Medium Enterprises or SMEs and logistics is in the State Capital and its Greater Kota Kinabalu satellite districts of Penampang, Putatan and Tuaran.

This is because Greater Kota Kinabalu is the main goods distribution hub for Sabah, maintaining that industrial properties with good accessibility and in proximity to centres of activities will continue to be in demand.

Demand for industrial properties mainly comes from SMEs with requirements for factories, workshops, showrooms, and warehouses, notwithstanding big investments like the RM4.2 billion landed at the Kota Kinabalu Industrial Park (KKIP) from South Korea’s SK Nexilis Malaysia Sdn Bhd, building a copper foil manufacturing facility with an annual production capacity of 50,000 tonnes.  

This is also in anticipation of improving business prospects when the on-going Pan Borneo Highway project upon completion, will link Sabah and Sarawak with a proper land transportation route.

It is expected to boost the socio-economic activities as well as the property market for both states.

In Sabah, the Pan Borneo Highway project commenced construction in the midst of 2016 by phases from Sindumin to Kota Kinabalu, Sandakan, Kudat, and Tawau.

The highway construction comprises partially new roads and the rest are to upgrade existing roads into two to four lanes. It has a total distance of 760km and the work construction is still in progress and expected to be completed by the end of 2025.

The East Malaysia Region recorded 6.80 million populations. Population distribution by state in Q2 2019 indicated that Sabah was the most populous state (3.90 million), followed by Sarawak (2.81 million) and Labuan (0.10 million).

The population share of this region accounts for 20.9 per cent of the total Malaysia population.

Sub-sales of industrial properties within the Kota Kinabalu-Penampang-Putatan area from Jan to Sept 2022 recorded an increase from 72 to 137 transactions with a transacted value up by 30 per cent from RM201.4 million to RM261.42 million.

Terraced light industrial buildings had the most transactions (64 per cent), although the bulk of transaction value comprised detached factories (49 per cent).

The average value per transaction for terraced, semi-detached, and detached factories was analysed to be about RM982,000, RM1,830,000 and RM8,500,000, respectively.

The Gallery Industrial Centre, comprising 31 lots of 3-4 storey terraced light industrial buildings in Inanam was opened for sale in 2022.

Overall, industrial properties, particularly industrial premises with good infrastructure would remain in demand given limited new supply.

Meanwhile, in Tawau, the industrial sector remains stable with limited activities. Most of the demand is for light engineering, storage and light manufacturing for local demand and consumption. 

There is also an emerging trend for premises for parcel collection and delivery for e-commerce.

Bina Puri Holdings Bhd signed a power purchase agreement (PPA) with Sabah Electricity Sdn Bhd (SESB) to develop a five-megawatt alternating current (MWac) large scale solar photovoltaic (PV) plant in Kunak.

Demand is observed for 1.5-storey terraced and semi-detached units, with smaller built-up but bigger land areas making them suitable for open storage and future extension to suit individual needs.

However, these are limited in supply. 1-Kuhara Centre, a light industrial business, is fully leased out after its launch in 2022.

The project is located within the town centre, easily accessible from all parts of town. Scarcity of suitable land at strategic locations with access to the town centre hinders the industrial sector’s expansion.

Apart from that, this sector is anticipated to be stable in terms of transactions, prices, rents and yields. No new development projects are anticipated for 2023.

In Lahad Datu, vacant industrial land is abundant, without matching demand. The lack of skilled and experienced workers also poses a challenge to the industrial sector.

The supply side has maintained at 6,212 industrial units with an additional 301 new units being in the pipeline to complete in the next few years. By locality, districts aside from Kota Kinabalu with a stock higher than 500 units are Lahad Datu, Penampang, Sandakan and Tawau.

Labuan’s industrial sector remains stable with limited activities through transaction activities and take-up is expected to improve in 2023. Demand for industrial premises mainly comes from oil and gas-related companies and offshore companies.

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