KUALA LUMPUR: Experts from Olive Tree Property Consultants Sdn Bhd have reported that there are currently over 50 data centres in various stages of development in Johor, with many more anticipated to follow. According to CEO Samuel Tan, the establishment of the Forest City Special Financial Zone (SFZ) is likely to attract additional foreign direct investments (FDI), complementing the existing Johor-Singapore Special Economic Zone (JS-SEZ).
Despite the surge in data centre establishments across Malaysia last year, Tan highlighted a persistent interest from operators looking to launch new facilities in Johor. Local property developers are increasingly partnering with major data centre operators to serve as anchors for their industrial developments, creating a symbiotic relationship.
While acknowledging the existing challenges, such as the availability of power and water resources, Tan is optimistic about the future. He anticipates that the growth of data centres will drive innovations in renewable energy solutions and water management systems.
“We foresee an uptick in the establishment of solar farms and water desalination plants, which will ultimately generate a multitude of job opportunities for the local workforce,” he stated during an interview with NST Property.
The expansion of data centres is expected to benefit numerous sectors, including high-end electrical and electronics (E&E), semiconductors, pharmaceuticals, and real estate. Tan predicts that there will be a significant rise in the demand for housing, office space, retail locations, and accommodations for workers.
Looking towards the future, Tan is confident that Johor’s industrial landscape will thrive through 2024 and beyond, driven by robust investment activities in both data centres and the E&E sector. This is expected to entice more businesses, particularly those based in Singapore, to establish manufacturing facilities in Johor.
Tan also underscored the critical role that small and medium enterprises (SMEs) play in the economy, highlighting their ability to generate consistent employment opportunities. “Supporting SMEs through incentives and assistance in digitalisation, market growth, and global integration is crucial for their sustainability,” he added.
According to Knight Frank Malaysia, the industrial property market is poised to remain strong for the remainder of the year, bolstered by increased investment in data centres and the E&E sector. The firm projected a 3.5% growth in the manufacturing sector, supported by the recovery of export-oriented industries and sustained domestic demand.
Their report indicated that the E&E sector, which constitutes about 40% of Malaysia’s exports, is set for a resurgence, driven by advancements in global technology, including digitalisation, the Internet of Things (IoT), 5G, and electric vehicles.
In the Klang Valley region, the industrial market has demonstrated robust activity at the start of 2024, characterized by rising transaction volumes and values during the first quarter. Knight Frank observed heightened interest from institutional investors seeking assets that cater to the digital economy, alongside sustained demand for manufacturing and logistics spaces.
The firm noted that industrial properties in prime locations continue to be highly sought after as investors aim to leverage stable returns. Rental rates for prime industrial spaces in Klang Valley are expected to remain strong throughout 2024, supported by the limited availability of both existing and new supply.
Moreover, the ongoing construction of high-specification logistics facilities, while associated with higher costs, is projected to contribute to rental growth in the medium term
