REIT ASIAPAC MAGAZINE REITASIAPAC 3Q 2018 ISSUE | Seite 10

REIT ASIAPAC
F E AT U R E
INDUSTRIAL ASSETS IN DEMAND
With the new government’s agenda of attracting Foreign Direct Investment as
well as its drive to move up the high-tech value chain, the industrial sector is
widely regarded to be best-positioned for growth. “This (demand support) stems
from the rising need for warehousing space on the back of e-commerce growth as
well as expanding industrial sectors such as consumer products and the aviation
parts industry,” says Axis-REIT CEO Leong Kit May.
“The rise in e-commerce is contributing to growing demand for logistics services
and warehousing facilities,” says Ng. “Rapid expansion in the technology sector is
also leading to higher demand for data centre space.”
Alibaba’s plan to establish a world trade platform (eWTP) hub in Malaysia, its
first outside of China, will help to set a new benchmark for domestic industrial
and warehouse facilities, Ng adds. The project, which is part of China’s Belt and
Road initiative, is aimed at easing trade between Malaysian and Chinese firms.
The eWTP, due to commence operations in 2019, will connect businesses, manage
cargo authorisations and assist with customs.
The emergence and
popularity of e-commerce
and digital platforms have
also added to the challenges
for the retail and hospitality
sectors.
Yong Su-Lin
CEO of MRCB-Quill Management Sdn Bhd
Jeffrey Ng
CEO of Sunway REIT
CHINA-LINKED
PROJECT REVIEW
However, Mahathir has said he will review
all China-linked projects in the country.
Under the previous government, Malaysia
became one of the largest beneficiaries of
investments linked to Beijing’s Belt and
Road initiative, securing some US$34.2
billion worth of deals as China sought to
open up international trade along the
New Silk Road.
The new prime minister’s concerns were
that some of these projects would benefit
foreigners and affluent Chinese nationals
at the expense of Malaysians. The impact
of the review remains uncertain. “As at this
juncture, the government is still making
its assessment of the various projects and
how to address the fiscal position of the
country going forward. There is a wait and
see approach by all parties and therefore
the impact on the REIT market is still
unclear,” says Yong. “We believe more
clarity on the government’s policies and
initiatives could emerge in Budget 2019.”
Axis Mega DC
Menara, Axis
For owners who are
supported by strong
balance sheets, buildings
may be converted to more
productive use with higher
yields to overcome the
vacancy in the office sub-
sector.
Malaysia’s 2019 Budget is set to be
announced in Parliament on 2 November
2018.
Menara, Shell
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S U N WAY R E I T: H O S P I TA L I T Y S E C TO R
IS CHALLENGING
“With increased supply, it will be a case of survival of the
fittest. The Average Daily Rate and occupancy will remain
challenging, mainly due to intense competition amidst weak
tourism growth and softer business sentiment and it is
important that the private sector proposes new strategies
to revive the hospitality sector,” says Jeffrey Ng, CEO of
Sunway REIT.
Under the previous government, tourism numbers declined,
and we lost our appeal in promoting Malaysia to tourists.
In view of the fact that tourism is in the top three revenue
contributors to the country’s economy, we hope that the
government will give priority to budget allocation that will
promote tourism activities.
AXIS REIT: DEMAND FOR
INDUSTRIAL SPACE IS ROBUST
“As demand for industrial space rises, logistics trends in the
established global market are starting to take hold locally,”
says Axis-REIT CEO Leong Kit May.
In the first quarter of this year, tourist arrivals declined by
1.7% to 6.61 million. The largest contributor, Singapore,
which accounted for 48.5% of total tourist arrivals,
experienced a drop of 17% year-on-year. However, China,
which ranked third in tourist arrivals, saw a 40.3% surge in
the first three months of the year.
Some examples of these trends are:
• higher ceiling heights especially for warehouses
equipped with automated sorting systems
• cross-docking in place of conventional loading bays
• customised racking systems
That said, the outlook for the hospitality sector is
increasingly challenging on the back of intensifying
competition from new supply in the Klang Valley and city
centre. Klang Valley will see nine new hotels this year with
an estimated room inventory of approximately 1,800. This
is in addition to the 1,900 rooms that became available in
2017.
• digital warehouse management systems
With about RM2.5 billion (US$600 million) in assets
under management, Axis Real Estate Investment Trust is
Malaysia’s first and largest listed Islamic business space and
industrial REIT. Warehouse logistics and manufacturing
facilities accounted for about 70% of its net leasable area as
at 31 December 2017.
The government has indicated that the tourism tax shall
be maintained. It has also fixed a standardised minimum
monthly wage of RM1,050 (US$252.80) with effect from 1
January 2019, which will impact costs.
In January 2018, Axis-REIT completed the construction of
a 515,000 square foot warehouse for Nestlé Malaysia . The
facility will serve as the company’s National Distribution
Centre. The next Axis-REIT build-to-suit project is a
178,000 square feet manufacturing facility for Senior
Aerospace Upeca, due for completion in December 2018.
Sunway REIT has 16 properties comprising four retail malls,
six hotels, four offices, a medical centre and an industrial
property. The property value stood at RM7.28 billion
(US$1.8 billion) as at 30 June 2018.
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