KUALA LUMPUR (Jan 6): The industrial and logistics sectors will continue to be the top performing sector for 2021, predicts Savills Malaysia. It notes that Covid-19 has accelerated the growth in e-retailing businesses in both the warehousing and logistics sectors, and investors are actively looking at this strong asset class as an all-time favourite investment.
“Warehousing continues to be supported by the logistics sector and storage needs, and we see a strong pickup as e-retailing businesses continue to further improve. Brands continue to leverage on the infrastructure and capabilities of local and international e-commerce players. We also expect to see more deals flowing through in 2021 and the market to be more robust after a year of pandemic with slower action,” said head of agency Kevin Goh.
While 2020 has been a difficult year due to the Covid-19 pandemic, Savills Malaysia expects new norms to continue in 2021 and all businesses will have to continue to deal with the evolving market trends. It sees opportunities amid these changing markets.
Managing director Datuk Paul Khong expects infrastructure to continue to be the economic driver and the firm looks forward to the completion of MRT2 (Phase 1) in 2021 and LRT3 in 2022.
He opines that major infrastructure projects, such as MRT3 in Greater KL and Rapid Transit System Link in Johor announced in Budget 2021, will spur growth of construction projects and unlock values around the stations' vicinity.
When it comes to the property sub-sectors, he predicts that the residential market will be flat, with mid and mid-high landed properties in good locations to continue to hold well in current times.
“We have seen discounts in the past few years and the strata segment will continue to be competitive due to supply factors, with a 40% increase in high-rise residential properties in Greater KL by 2023. Overhang in this sector will continue into 2021 but good niche products will still see strong demand, particularly in locations close to train stations,” he said.
“Meanwhile, the office sector will continue to see a flight to quality with well-specified new buildings attracting tenants. We also see the social distancing theme taken into fitouts in new projects. Flexible work arrangements will continue, with slow but sure trends towards partial office occupation again. The flexibility offered by co-working spaces will become more popular. It will be a challenging year ahead as a new supply of 15 million sq ft is expected to enter the Greater KL market in the next three to four years.”
He added that agriculture lands will continue to see a further uptick despite current market conditions, as cash-rich investors and listed companies will re-look into this sector again with the possibility of increasing their landbanks for future developments while venturing into agricultural businesses now.
Deputy managing director and head of capital markets Nabeel Hussain noted that the investment market will see some deals coming through this year, driven by long-awaited completion of deals from the last few years post the 14th General Election.
“There will be flight of capital where investors look to park funds on safer shores. We also expect accelerated investments into quality logistics and out of less pandemic proof sectors. Many more distressed sellers and investors simply need the cash now, for example, even government-linked companies such as Permodalan Nasional Bhd and Lembaga Tabung Angkatan Tentera are seen to be rationalising now,” he observed.
According to executive director (Valuations) Marcus Chia, distressed property auctions will come through in 1H2021 as the loan moratorium ended last year and the real impact of the pandemic can now be seen and felt on the ground.
“Property prices will still be under pressure into 2021 but well-cushioned by the low interest rate environment. Cash is king and it is a good time to buy. There are still many niche sub-markets around which can still do well,” he added.
Head of retail Murli Menon commented that online business will continue to grow across all categories and that there should be more emphasis on data analytics and machine learning whether it is for supply chain management or digital marketing. Retailers, he said, need to focus on digital first and then continue the consumers’ journey into the physical stores.
“Shoppers and diners look forward to the actual ‘experience’ of physical shopping and the ‘touch & feel’ factors. Brands will rethink physical space to make it more dynamic and to keep the consumers coming back to the stores,” he added.
“Greater allocation and emphasis on F&B and other services will continue as a trend. With the new normal, overall expectation of consumers for safety/hygiene etc will definitely be at a higher level as compared to pre-Covid-19 days. Retailers and malls have to up their overall standards for that added assurance. Athleisure sports and health related activities are expected to see continued growth," said Murli.