KUALA LUMPUR: Olive Tree Property Consultants Sdn Bhd’s CEO, Samuel Tan, has revealed that there are more than 50 data centres at various stages of development across Johor, indicating a burgeoning sector. The introduction of the Forest City Special Financial Zone (SFZ) is expected to bolster foreign direct investments (FDI) and enhance the existing Johor-Singapore Special Economic Zone (JS-SEZ).
Despite a significant number of data centres being established across Malaysia last year, Tan pointed out a continuous demand for new facilities in Johor from operators. Local developers are increasingly forming partnerships with major data centre operators to serve as anchors for their industrial projects.
Although challenges related to power and water resources remain, Tan expressed optimism about the future. He anticipates that data centre development will stimulate innovations in renewable energy solutions and water management.
“We expect to see a rise in solar farms and water desalination initiatives, creating numerous job opportunities for local residents,” he stated in an interview with NST Property.
The growth of data centres is expected to have a positive impact on various industries, including electrical and electronics (E&E), semiconductors, and pharmaceuticals. Tan projects a corresponding increase in demand for housing, office spaces, retail locations, and accommodations for workers.
As Johor’s industrial landscape evolves, Tan foresees a flourishing sector through 2024 and beyond, driven by robust investments in both data centres and the E&E sector. “We believe there will be an influx of companies, particularly from Singapore, establishing manufacturing units in Johor, utilizing the advantages of the JS-SEZ and SFZ,” he commented.
Tan also emphasized the vital role that small and medium enterprises (SMEs) play in the economy, stating, “SMEs are crucial for job creation and economic stability. Supporting their growth through incentives and assistance in digital transformation is essential.”
Knight Frank Malaysia highlighted that the industrial property market is likely to remain resilient through the rest of the year, driven by increased investments in data centres and the E&E sector. Their report forecasts a 3.5% growth in the manufacturing sector, buoyed by the recovery of export-driven industries and sustained domestic demand.
The E&E sector, responsible for around 40% of Malaysia’s exports, is set to experience a rebound driven by advancements in technology such as digitalization, IoT, 5G, and electric vehicles.
The Klang Valley region has shown strong industrial market activity at the start of 2024, with increased transaction volumes and values in the first quarter. Knight Frank observed heightened interest from institutional investors seeking to invest in the industrial sector, indicating a growing demand for manufacturing and logistics properties.
The firm noted that industrial assets in prime locations remain highly sought after as investors aim for stable returns. Rental rates for prime industrial spaces in Klang Valley are expected to stay strong throughout 2024, supported by limited availability of both existing and new supply.
Moreover, the ongoing development of high-specification logistics facilities, while linked to higher costs, is expected to drive rental growth in the medium term.