Industrial properties – the new frontier 

IT is often said that, other than with man-made reclamation work, we cannot create land.

At the same time, due to environmental concerns and towards ensuring climate goals are achieved in our quest towards net-zero, it is unlikely that we will take over forest areas, especially those under a permanent forest reserve.

Hence, in time, land prices can only move in only one direction as demand for it continues to rise, in line with the growth of the economy, population, industrialisation, and for commercial purposes.

Surging transactions

According to the National Property Information Centre (Napic), Malaysia recorded a total transaction value of approximately RM64.39bil in the third quarter of 2025 (3Q25) – a 14.3% increase quarter-on-quarter (q-o-q) and a 12.5% increase year-on-year (y-o-y).

While the residential and commercial segment carved out a 44.3% and 24.1% share of total market transactions, the industrial segment has shown significant growth in market transactions and accounted for some 14.6% of the total value of property transactions in 3Q25, worth RM9.43bil.

The industrial segment saw growth of 32.0% and a 31.7% jump on a q-o-q and y-o-y basis, respectively. Coming in strongly is also land for development purposes, which grew by 15.3% q-o-q but saw a significant leap of 71.2% y-o-y to RM6.83bil.

Although development would likely be for residential or commercial purposes, some land transactions are related to industrial development as well.

In its review of the property market for the first half of 2025 (1H25), Napic highlighted that demand for industrial properties has been driven by the e-commerce sector and data centres.

The demand is high for warehouses and vacant industrial land, with good access and infrastructure, incorporating green and sustainable elements.

The market hotspots for industrial property transactions remain concentrated in Selangor and Johor, with the two states alone taking up 52.1% of total transaction volume, followed by Sarawak with 17.2% of the market volume.

In terms of the value of transactions, Selangor and Johor states account for 73.3% of the market value transacted in the 1H25.

In terms of property types, according to Napic, the largest transactions are those related to terrace factory/warehouse, which accounted for 34.7% or 1,440 transactions of the total industrial transactions in 1H25.

This was followed by vacant industrial plots, which made up 27.6% or 1,146 transactions of the total.

Malaysia has 123,530 industrial units in current supply.

Incoming and planned supplies are not significant either, as there are only another 4,864 units and 3,529 units, respectively, that are in the pipeline, while the new planned supply is even lower at just 496 units.

Industrial demand

To meet Malaysia’s aspirations under the 13th Malaysia Plan as well as under the New Industrial Masterplan 2030, new industrial parks continue to gain traction.

Among them are landbanks that are developed by current property and plantation-based companies, as well as those large landbanks earmarked by the government for industrial purposes.

Within the property sector, landbank sales are common, not only for data centres, but also for other industrial uses.

AME Elite Consortium Bhd recently sold five industrial properties to Capitaland Malaysia Trust Bhd within its i-TechValley Industrial Park, in Iskandar Puteri, Johor, for RM220.8mil.

In another land deal, Mah Sing Group Bhd and Kuala Lumpur Kepong Bhd formed a 60:40 joint-venture to develop 419.15 acres of land located in Kulai and within the Johor-Singapore Special Economic Zone as an integrated industrial development project, with a potential gross development value (GDV) of RM2.26bil.

Eco World Development Group Bhd too has been at the forefront when it comes to industrial land development, and this includes its recent foray to jointly develop 1,195 acres located in Malaysian Vision Valley 2.0 with a GDV of about RM3bil.

As for data centres, key landbank sales were carried out by companies like Eco World International Bhd, worth some RM1.59bil, while Crescendo Bhd generated RM1.5bil in land sales.

Driving factors

As we see both transaction volume and value increase in industrial properties, be it in land or finished products like warehouses or detached factories, one thing is certain: the market dynamics are far superior to residential or commercial properties, which are saddled with overhang.

Demand continues to be driven by the government’s long-term measures to open new areas, attracting foreign and domestic investments as well as huge infrastructure expenditure, which creates confidence among investors.

Industrial properties are also a solid asset base for Real Estate Investment Trusts (REITs), as Malaysia’s first REITs, Axis- REIT, has shown.

The company, which was listed just over two decades ago, has grown rapidly, with its net asset value alone rising from RM279mil at the end of December 2005 to more than RM3.3bil at the end of September 2025.

Axis-REIT today manages total assets of more than RM5.2bil from just under RM340mil 20 years ago.

There are also other REITs that have industrial REITs in their portfolio of assets, as a diversified strategy within the REITs portfolio, as well as those purely focused on industrial properties.

There are typically three types of industrial properties in demand for e-commerce sector.

First are industrial properties that are positioned as mega distribution centres, followed by inner-city distribution centres, and finally, the last-mile delivery centres.

For manufacturing purposes, the demand is seen as strong in the terrace factories, semi-detached, and detached factories.

Large industrial complexes, flatted factories, and clusters too have strong market presence and are concentrated in states like Selangor, Johor, and Penang.

While residential and commercial properties are always seen as the pillars of the real estate market, increasingly, we are also seeing demand for industrial properties rising in line with the nation’s economic growth and industrialisation.

Diversifying away from the traditional investments in residential and commercial towards industrial properties is seen as more sustainable over the long term, with steady growth in both income and capital values. Industrial properties are now the new frontier for real estate investments.