Investing in industrial properties

Lee has been in the property business for six years. 

By Daniel Sim | April 19, 2012

Just like residential property, location is an important factor in determining the value of industrial property.

According to Megaharta Real Estate Sdn Bhd senior property negotiator Lee Soo Wai, unlike residential property which can be categorised as high-end, mid-range or low-end, it is not the same with industrial property.

Nevertheless, industrial property such as factories and warehouses can be classified as linked, semi-detached and detached properties.

Trends 
Lee who has been in the property business for six years, started out by helping to transact landed residential property. Later, she switched to industrial property.

“Nowadays, I focus on industrial and commercial property as I believe there are better opportunities ahead.

“For industrial property, the client would normally know what they want. This is because the type of factories in demand would be influenced by the nature of their industries,” explained Lee.

According to her, certain clients prefer a factory with a high ceiling while some would require a factory with greater floor space to accommodate production operations.

A semi-detached property refers to factories that come with extra land on the side and at the back of the development. Such property can offer more parking space for staff and guests, it also helps in planning logistics such as the movement of trucks and containers.

Semi-detached factories range from 1½-storey to three-storey buildings. The ground floor is always the warehouse space and the corporate office is located on the first level.

But certain companies may want to use the first two levels in a semi-detached factory as their production space while the corporate office will be on the top floor. Such factories will normally come with a high ceiling of 6m to 9 m (20 ft to 30 ft).

The land area of semi-detached factories usually range from 743sq m to 1858sq m (8,000sq ft to 20,000sq ft). And its built-up space will normally range from 5,000sq ft to 15,000sq ft.

Prices of semi-detached factories would not only depend on the land and built-up space but also special features, accessibility, land tenure and location.

Tangkas Arena at Sime UEP Industrial Park.

Prestige 
According to Lee, the demand for industrial property now tends to focus on semi-detached factories in “prestigious” places in Kota Damansara.

Just like residential property, where prestigious names associated with popular locations such as Bangsar or Mont’ Kiara, play a role in the price and the demand, it is the same with industrial property.

Other locations for industrial property which are popular with investors include Sime UEP Industrial Park, Bukit Jelutong Industrial Park , Hicom Glenmarie and Temasya Industrial Park. And when it comes to the selling price, location counts a lot.

A semi-detached factory of 1½ storeys, with a built-up space between 372sq m and 465sq m (4,000sq ft to 5,000sq ft) can sell for RM1.8mil in Puchong but such a factory can even fetch RM4.3mil in Kota Damansara. Nowadays, semi-detached factories are usually designed with a modern and stylish façade for greater market appeal.

Such a design will not only attract Small and Medium-sized Enterprise (SME) business investors or entrepreneurs of start-up companies but also, corporate decision-makers. For instance, a well-designed property can be used as an automobile showroom which offer the 3S concept, namely, sales, service and spare-parts.

Linked factories 
“Like residential property, linked factories can be single-storey, 1½-storey and even two storeys. Single-storey, linked factories are suitable for small business set-ups such as an automobile repair and storage centre. Such businesses do not require much office space.

Linked factories of 1½ storeys to two storeys, normally come with office space on the first level.

Typically, linked factory size is based on the land plus the upper portion of space, if any. There are three typical sizes when it comes to linked factories, namely, 186sq m (2,000sq ft) and 232sq m (2,500sq ft) for the medium-size and 302sq m (3,250sq ft) for the largest. The ceiling height ranges from 5.4m to 7.6m (18ft to 25ft).

Detached factories 
Detached factories or warehouses are like bungalows. This type of factories usually sits on 0.4ha (one acre) of land or more. They are meant for big organizations with large-scale operations and production. Such companies would normally build their factories to suit their business needs.

IParc 1 at Bukit Jelutong Industrial Park

Before joining MegaHarta, Lee was trained in secretarial duties and administrative work. As a real estate negotiator, Lee focuses on providing clients a professional level of service and to be disciplined in getting all the relevant details to ensure a better chance of closing any deal.

She explained that a negotiator needed to be able to schedule several tasks such as getting a listing, visiting the owner and familiarizing herself with the location and property as well as schedule appointment and present the facts to prospective clients.

Being able to advise clients honestly can help them make a fast decision. This is one of the many ways that Lee has gained the confidence of her clients. Nowadays, most of her business dealings are through referrals.

“I have clients who change their mind in buying the property upon hearing my advice,” said Lee. “There is no fixed salary in being a negotiator in MegaHarta Real Estate. I earn my income from commissions, therefore being disciplined, helps me stay committed. I treat this job like my own business and from such commitment would yield the desired results.”

Disagreement 
“My greatest challenge is to be able to stay calm and help resolve disagreements that may arise between vendors and purchasers,” pointed out Lee.

“It is not easy to do this business full-time, let alone part-time, as not only have you to do your research but you have to be ready to meet your clients at different places within the day. Besides, it is a competitive field, as more and more negotiators join the business full-time.”

Like residential properties, Lee handles both industrial land as well as ready-built factories. Currently, she focuses on Subang Jaya and Shah Alam, while she eyes Balakong and Port Klang.