This article first appeared in The Edge Malaysia Weekly on November 30, 2020 - December 6, 2020

IS Sungei Way back on the radar screen of investors? Recent real estate transactions appear to suggest a renewed interest in the once-popular area of Petaling Jaya, Selangor.

So far this year, three deals have been completed and two others are being negotiated, underscoring strong interest in the long-established industrial and commercial area.

What is interesting is that two of the property deals inked are with foreign-listed entities. One is a purchase in October by Taiwan Stock Exchange-listed Wistron Corp and the other, a lease agreement entered into a month later by Singapore Exchange- and Hong Kong Stock Exchange-listed Centurion Corp Ltd.

Knight Frank Malaysia’s managing director Sarkunan Subramaniam believes the recent developments in the Sungei Way Free Trade Industrial Zone (FIZ) augur well for the area. He says they will act as “a catalyst in reviving Sungei Way to its former glory as a key industrial area for multinational companies”.

Sarkunan, whose real estate agency brokered both deals, adds, “With the entry of new international players into Sungei Way, we foresee there may be more manufacturing and manufacturing-related activities and renewed interest in this locality.”

In the Wistron transaction — a global leader in state-of-the-art design, manufacturing, services and systems for information and communications products — bought a factory owned by Western Digital (M) Sdn Bhd for RM120 million. The plant, located in Sungei Way FIZ and sitting on an 11-acre parcel, has a built-up of 500,000 sq ft and will be used to manufacture Internet of Things (IoT) products. Operations are expected to commence in the first half of 2021.

Previously, Western Digital used the plant as a hard disk drive (HDD) manufacturing facility, but it ceased operations at the location at end-2019 following deliberations regarding its staff, production and ongoing business in Malaysia. The company also wanted to rationalise its HDD manufacturing operations globally because of declining long-term demand.

A stone’s throw away, Centurion Corp secured a master lease from the Selangor State Development Corporation (PKNS) to manage a purpose-built workers’ accommodation.

Last July, The Edge reported that PKNS had placed two blocks of completed hostels up for sale at a reserve price of RM212.3 million. The buildings, both 11 storeys and with two levels of basement parking, occupy a 3.65-acre leasehold site on Jalan SS 8/6. However, it appears that the sale did not materialise and the buildings are now being leased out instead.

Centurion, which owns and manages specialised accommodation assets globally, including purpose-built students’ accommodation, has signed a 21-year lease with an option to extend for another nine years. The lease is expected to commence on Dec 1 and will be operated under Centurion’s Westlite Accommodation brand and management platform. The dorm will offer more than 5,000 beds, adding to the company’s seven other Westlite Accommodation properties in Johor and Penang, which have a total of 30,000 beds.

Sarkunan observes that there has been growing awareness of workers’ housing and the importance of better living conditions for workers in Malaysia. He expects professional firms such as Centurion to take cognisance of this trend and adhere to the new laws prescribed by the Workers’ Minimum Standards of Housing and Amenities Act 1990, which came into effect on Sept 1.

The third deal in Sungei Way was executed in February and facilitated by LaurelCap Sdn Bhd. It involved the sale of a vacant 1.6-acre parcel on Jalan SS7/2 by Ideal Strata Sdn Bhd to Mediaraya Sdn Bhd for RM15.5 million. The site is a stone’s throw from the Nanyang Siang Pau office building.

Stanley Toh, executive director of LaurelCap, says Western Digital’s exit, Nanyang Siang Pau vacating its building and the empty PKNS dormitory had set a worrying trend. “The recent entry of new players will restore some confidence and allay concerns about the market in the area.”

It is noteworthy that the Nanyang Siang Pau building, located outside the FIZ, is ready to be leased and is seeking a tenant. The building sits on a freehold site measuring 5.68 acres and comprises a 4½-storey office and 2½-storey warehouse with built-ups of 136,994 and 99,780 sq ft respectively. The asking rent is said to be RM2.50 psf.

At the same time, a smaller factory owned by Western Digital is also up for sale. The asset, comprising a double-storey building and a five-storey building with two basement levels, has a total built-up of 500,000 sq ft and is located on 3.6 acres of land.

Sarkunan points to other projects in the pipeline, including a mixed-use development on a plot of land facing the Federal Highway-SS 2 interchange. “Beyond the FIZ boundary, a joint venture commercial project development between PKNS and Melati Ehsan [Holdings Bhd] is being planned on a plot immediately adjacent to the Sungai Way FIZ,” he says (see map).

The mixed-use project will have six components, including commercial/retail units, serviced apartments and workers’ hostel.

“Nanyang Siang Pau, located next to the PKNS plot, is moving to and consolidating its operations at Sin Chew’s premises on Jalan Professor Khoo Kay Kim in Petaling Jaya. This is seen as a move to unlock the site’s redevelopment potential,” says Sarkunan.

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