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SPIC-y Shifts in Penang

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Industrial Sector

The industrial sector of Penang recorded a minor increase (0.8%) of industrial units supply but contracted growth (-18%) of transacted units in H1 2013. Global economy uncertainties have posed substantial challenges to the investment climate during the first half of 2014. As a result, investment/expansion decisions have been on hold and thus the industrial market was subdued.

In terms of supply, about 82% of the existing industrial units are located on the mainland as at 3Q2013. Of these, majority of them are situated on Seberang Perai Tengah. In terms of future/incoming supply of industrial units for the State, about 57% would be constructed on the island (majority of them would be placed at South-West district). The mainland will accommodate the balance of about 43% of the future/incoming supply of industrial units for the State.

As disclosed by the World Investment Report 2013, Malaysia is ranked as the 16th prospective host economy for 2013 to 2015. She also maintained her ranking as the third largest recipient of FDI in Asean. With the continuous concerted promotional effort by InvestPenang and MIDA, Penang continues to be one of the locations of choice for foreign and domestic investors.

The demand for industrial sites and factories is foreseen to remain relatively resilient. Nonetheless, due to the scarcity of land suitable for industrial development on the island as well as with the new linkage to Seberang Perai via the Second Penang Bridge, the future request for industrial sites and factories are projected to shift towards the mainland, particularly to the Bukit Minyak and Batu Kawan areas. The market prices and rentals of ready built factories, in general, are expected to remain stable.

Retail Sector

In 3Q2013, the total existing supply of shopping complex/retail space in Penang was 1.479 million sqm, an increase of 4.6% from the preceding quarter. The overall occupancy rate was recorded about 68.9%.

Penang Island accounted for about 64.5% of the total retail space with the average occupancy rate of 74.2% recorded in 3Q2013. On the mainland, the occupancy rate of the retail space is about 59%. Gurney Paragon, a new shopping mall with a net lettable area of about 0.7 million sq ft has commenced business in July 2013.

Apart from the North-East District, the South-West District-Bayan Baru is well positioned to be one of the upcoming and dynamic growing locations for the retail industry. It is projected that an influx of population is foreseen within next one to three years as more residential and commercial supply would be in stock. The Bayan Lepas Free Industrial Zones and Industrial Parks, as well as its neighborhood industrial areas housing a few hundred MNCs, local large factories and small and medium manufacturing establishments, engaged a large pool of strong spending working professionals, engineers and manufacturing specialists. Moreover, the country’s first Subterranean Penang International Convention and Exhibition Center (SPICE) is expected to draw a substantial number of visitors and participants for meeting/incentive/convention/exhibition (MICE). With these positive pull factors, it is anticipated that the South-West District could be one of the preferred retail/shopping destination for working professionals, families, visitors and MICE participants.

 

Article written by Henry Butcher Malaysia Penang. The article represents their personal views.