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Monday, August 5, 2013

Penang Property Guru | Factory rental price seen flat?

PENANG: Average price of factories space at FIZ and Technoplex in Penang Island has been hovering at RM2 per sq ft. I've one customer that has been rented three years ago at FIZ Phase 1 at RM1.30 per sq ft and I advise them to continue with their tenancy as it expires soon even at 10% increment rate for next three years. 
In addition to buy new factory besides purchase price tenant might be facing with incoming power as typically they need about 600 mA besides floor loading to withstand machine weight for certain use, example stamping machine and also ceiling height.
PETALING JAYA: The rental price for factories space is expected to remain flat this year despite stable demand for industrial buildings, say experts.
There was steady demand for factory space within the Klang Valley.
“Demand is still there, but mostly for rental space rather than for purchase. Prices are considered high and many people are maintaining a wait-and-see approach,"
Buying into industrial buildings meant high renovation costs would have to be incurred by the purchaser.
“There is a lot of renovation cost to be incurred when the property is for their own use, and it usually takes a while to recover (that cost). So, many prefer to just rent.”
The average price of factory space at Westports (Klang) was RM1 per sq ft and RM1.30 per sq ft for old and new buildings, respectively.
“In Shah Alam, it’s RM1.20 per sq ft (old buildings) and RM1.80 (new buildings). We believe that rental prices of factory space would remain flat this year.”
One industry observer concurred, saying: “With tighter credit control from banks, many choose to rent rather than buy.”
According to CH Williams Talhar & Wong’s 2013 Property Market Report, the asking monthly rentals for detached factories in the Klang Valley ranged between RM1.20 and RM2.50 per sq ft, while industrial land prices ranged from RM55 to RM85 per sq ft.
It said rentals had remained stable for properties in prime locations in the Klang Valley in 2012, with the bulk of the demand leaning towards warehousing as well as logistics facilities.
“In the future, the industrial property market, especially on semi-detached factories, is expected to further bustle due to the continuous active transactions.
“Semi-detached factories are moving towards more modern and contemporary designs which include modern façade elements, bold and distinct image presence as well as a smart and intelligent interior layout.”
It noted that industrial properties located within prime locations such as Subang Jaya, Shah Alam, Kota Damansara and Puchong were expected to continue enjoying high demand in the second half of 2012, made even more attractive by government incentives.

No let-up: Demand for factory space is still there, but most operators will prefer to rent rather than purchase the property. Last year, rentals had remained stable for properties in prime locations in the Klang Valley.

This article has been written by VULCAN INT'L Real Estate Research Institute http://www.vulcanresearch.blogspot.com for VULCAN INTERNATIONAL Real Estate Investors Club http://www.vulcaninternational.blogspot.com .

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