E-com­merce drives de­mand for top grade in­dus­trial parks

New Straits Times - - News - SHAREN KAUR KUALA LUMPUR sharen@me­di­aprima.com.my

HIGH-END WARE­HOUS­ING: AREA Lo­gis­tics to be largest in­te­grated dis­tri­bu­tion cen­tre

GRADE A in­dus­trial parks are in de­mand in Malaysia as ecom­merce ex­pands, slowly tak­ing over the busi­ness of brickand-mor­tar re­tail.

E-com­merce is be­com­ing the most pop­u­lar method of pur­chase in Malaysia. More peo­ple are mov­ing to on­line buy­ing and put­ting prod­ucts into their shop­ping cart as there is bet­ter mo­bil­ity, im­proved In­ter­net and en­hanced se­cu­rity.

From 2010 to 2014, Malaysia’s ecom­merce mar­ket recorded a com­pounded an­nual growth rate of 31 per cent.

Ac­cord­ing to on­line sta­tis­tics por­tal Statista, the e-com­merce mar­ket in Malaysia is ex­pected to reach US$991.1 mil­lion (RM4.1 bil­lion) in rev­enue this year, ex­clud­ing e-ser­vices.

The global e-com­merce in­dus­try is pro­jected to sur­pass US$3.5 tril­lion (RM14.5 tril­lion) within the next five years.

But e-com­merce is not the only mar­ket for Grade A in­dus­trial parks. The in­dus­trial parks are at­tract­ing lo­gis­tics com­pa­nies, courier firms, man­u­fac­tur­ers, small and medi­u­menter­prises (SMEs) and multi-na­tional com­pa­nies (MNCs) as they look for bet­ter fa­cil­i­ties for stor­age, dis­tri­bu­tion and last mile de­liv­ery.

There are very few lo­cal de­vel­op­ers that can ac­tu­ally build a welle­quipped in­dus­trial park. A ma­jor­ity of them pre­fer to build res­i­den­tial and com­mer­cial prop­er­ties as there are less chal­lenges, com­pared with in­dus­trial park de­vel­op­ment.

See­ing the po­ten­tial in in­dus­trial park de­vel­op­ment, real es­tate pri­vate eq­uity and ad­vi­sory firm AREA Man­age­ment Sdn Bhd last year launched Malaysia’s first in­dus­trial de­vel­op­ment fund, AREA In­dus­trial De­vel­op­ment Fund 1 (AIDF-1).

The fund’s man­age­ment com­pany, AREA Ad­vi­sors Pte Ltd, had raised US$150 mil­lion from lo­cal and for­eign in­sti­tu­tional in­vestors.

The in­vest­ing part­ners are the Em­ploy­ees Prov­i­dent Fund, the Canada Pen­sion Plan In­vest­ment Board and Den­mark’s Spar­in­vest Prop­er­ties In­vestors.

The main thrust of the fund is to in­vest and de­velop gated and guarded Grade A in­dus­trial es­tates that come with recre­ational fa­cil­i­ties and workers’ ac­com­mo­da­tion on site for a plug and play ex­pe­ri­ence for in­vestors.

The fund’s maiden pro­ject is AREA Lo­gis­tics@Am­pang, a large high-end ware­hous­ing fa­cil­ity in Ulu Klang.

AREA Lo­gis­tics will have 1.5 mil­lion sq ft of net let­table space, mak­ing

Datuk Ste­wart LaBrooy it the largest in­te­grated dis­tri­bu­tion cen­tre ever built in Malaysia.

The four-level fa­cil­ity will cater to the in­creas­ing de­mand for an in­ner city dis­tri­bu­tion cen­tre in Kuala Lumpur and Se­lan­gor. It will in­clude space for e-com­merce, par­cel sort­ing, self stor­age, courier ser­vices, cold chain lo­gis­tics and last mile de­liv­ery.

AREA ex­ec­u­tive chair­man Datuk Ste­wart LaBrooy said the fa­cil­ity would help to speed up de­liv­er­ies within Kuala Lumpur and save op­er­a­tors down time in de­liv­er­ies to their cus­tomers.

“We are get­ting the fi­nal draw­ings ready for sub­mis­sion. Land clear­ing has started and we hope to com­mence con­struc­tion by the end of next month. It would take 18 months to build,” he told Prop­erty Times.

AREA was tar­get­ing com­pa­nies look­ing for the last mile de­liv­ery, es­pe­cially e-com­merce play­ers, food in­dus­try, sup­ply-chain firms, courier firms and fast-mov­ing con­sumer goods, he said.

“E-com­merce is a brand new in­dus­try that is start­ing to take hold in Malaysia. I think E-com­merce will bal­loon to a RM20 bil­lion busi­ness by 2020. That is go­ing to cre­ate another set of eco­nomic driv­ers.

“It also gives the young peo­ple a new av­enue for busi­ness growth. You don’t need a shop to run a busi­ness any­more. It can be vir­tual. I can see very clearly what is go­ing to hap­pen in the fu­ture and that is why we are build­ing this fa­cil­ity,” said LaBrooy.

He was the chief ex­ec­u­tive of­fi­cer of Axis REIT Man­agers Bhd from Au­gust 6 2008 to De­cem­ber 31 last year. The com­pany han­dles the in­dus­trial lo­gis­tics, of­fice-cen­tric Axis REIT fund and LaBrooy was re­spon­si­ble for the over­all man­age­ment and op­er­a­tions of the REIT.

LaBrooy is not a new­comer in in­dus­trial park de­vel­op­ment. In 2012, he in­vested in the 81ha i-Park and 14.18ha SME City in Kulai Jaya, Johor, via AME Group, in part­ner­ship with Axis IE Sdn Bhd, a mem­ber of the Axis Group.

AME Group was set up by him and other in­vestors with Axis Group as a share­holder.

i-Park re­de­fines how in­dus­trial es­tates should be built. It is gated and guarded with man­aged worker ac­com­mo­da­tion on site ur­ban parks with full ser­vices, in­clud­ing high­speed broad­band, and a high level of cus­tomi­sa­tion for cus­tomers.

Mean­while, LaBrooy said there were plans by AREA to de­velop more high-tech in­dus­trial parks in Se­lan­gor, Johor, Pe­nang and Perak.

“Malaysia is the sixth largest ecom­merce player. Malaysians make more or­ders on­line than buy di­rectly from stores. The top three cat­e­gories for e-com­merce are air tick­ets, ho­tels and cin­e­mas.

“Even fash­ion, elec­tron­ics and food have moved to e-com­merce. Com­pa­nies are able to boost their share per­for­mance by hav­ing an ag­gres­sive strat­egy in terms of the ecom­merce busi­ness. A huge amount of cap­i­tal is be­ing ploughed into this in Malaysia and glob­ally,” he added.

LaBrooy said be­sides lo­gis­tics, man­u­fac­tur­ing, freight, elec­tron­ics, food, oil and gas, au­to­mo­tive, min­ing, re­sources and SMEs, new driv­ers of growth for e-com­merce were ex­pected to come from aero­space, where there were big plans by air­craft man­u­fac­tur­ers to move into Asia.

“There is also grow­ing de­mand for high-qual­ity in­dus­trial parks by MNCs and that is another area we are also tar­get­ing. We are see­ing the re­turn of many MNCs. The MNCs are look­ing to set up man­u­fac­tur­ing and lo­gis­tics op­er­a­tions in Malaysia after a long hia­tus of pack­ing up their bags and go­ing away.

“Malaysia’s key strengths in­clude its strate­gic location, strong trade pol­icy, good in­fra­struc­ture and work­force, as well as bank­ing fa­cil­i­ties. We have very good In­ter­na­tional prop­erty rights and rea­son­ably well-ed­u­cated work­force,” he said.

AREA ex­ec­u­tive chair­man

Lo­gis­tics will have 1.5 mil­lion sq ft of net let­table space, mak­ing it the largest in­te­grated dis­tri­bu­tion cen­tre ever built in Malaysia.

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