Data centres to drive demand for industrial property
PETALING JAYA: Foreign interest in data centre investments in Malaysia remains strong, which will result in industrial property continuing to be a major investment theme, says RHB Research.
The research house said interest in industrial property would also be driven by the prolonged US-China trade war.
'The performance of the property sector has been rather flat in the first two months of this year, given the market volatility arising from global concerns over US trade policies and the more recent geopolitical tensions in the Middle East.
'However, the fundamental demand for property has not changed significantly, in our view.
'The prolonged US-China trade war should continue to encourage investments into South-East Asia, and DayOne Data Centers Singapore Pte Ltd recently secured RM15bilin new debt funding for its data centre operations in Malaysia. This indicates the industrial segment should continue to drive the growth of the sector,' the research house added.
Headquartered in Singapore, DayOne is a global leader in digital infrastructure, with a growing footprint across tier-one and emerging markets, including Singapore, Johor, Batam in Indonesia, Greater Bangkok, Hong Kong, Tokyo and beyond.
The research house said it also expects the impact of the expanded sales and service tax (SST) to be manageable for the property segment.
'The exemption of the SST for serviced apartments built on commercial titles is a relief for industry players. The government recently clarified that this segment is now exempted from the SST, as long as the units are intended for residential use and fall under the purview of the Housing Development Act.
'In addition, essential construction materials such as cement, aggregate and sand are still subjected to a 0% tax. As such, only part of the construction component will be subject to the 6% tax, and this will only affect the industrial and commercial property segments,' RHB Research added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
21 minutes ago
- New Straits Times
Rare earth magnet users jolted into paying premium prices for ex-China supply
FOR years, Rahim Suleman had reached out repeatedly to carmakers and other potential clients to market the rare earth magnets from the plant his company was building in Estonia, one of just a handful outside dominant producer China. But after April 4, when Beijing imposed new restrictions on the super-strong magnets used in electric vehicles (EVs) and wind turbines, Suleman retired his sales pitch. He didn't need it any more. Ever since China's export controls tightened some rare earth exports to a trickle in the midst of a trade war with the United States, causing chaos in supply chains and some auto plant shutdowns, "the phone is ringing off the hook", said Suleman. Companies starting new plants in Europe, the US and Asia had previously reported difficult talks on deals that embedded the higher costs to make magnets outside China, which benefits from cheaper labour costs and economies of scale as well as government support via tax refunds. But the crisis has led many customers to soften or drop objections about paying those premiums as they scramble to hammer out deals, according to a dozen industry participants, including carmakers, magnet makers, rare earth producers, consultants and government officials interviewed by Reuters. While rare earths magnets from China are flowing again, customers remain on edge about the threat of future shortages. Suleman's company, Neo Performance Materials, launched output of permanent magnets at its Estonia plant in May. Now, he said, "everybody wants to talk about how (they can) satisfy their demand out of our facility". He said he had no worries about lining up enough customers who would pay a premium — US$10 to US$30 per kg, with EVs typically holding 2kg to 4kg of magnets per vehicle — over the price they usually pay for Chinese magnets. Output at Neo's factory in Estonia is starting small, providing samples to its first customer, which Suleman declined to identify. German auto parts supplier Schaeffler said it was a customer of the plant, but declined to comment on how much it is paying. In South Korea, customers of NovaTech, which produced magnets in China, were prepared to pay 15 to 20 per cent more for magnets made in Vietnam, said a company source, adding that there was "a growing sense of crisis among customers". The company, which sells China-made magnets used in Samsung's phones and tablets, is investing at least 10 billion won in a plant in Vietnam launching early next year to make magnets using locally processed rare earths from a partner, said the person and another company official. Britain's Less Common Metals (LCM), one of the few firms outside China involved in a key step of rare earths processing — making rare earth metals and alloys — says it is battling to cope with new enquiries. "Now, post-April 4, it's like someone stuck a cattle prod into the whole industry," said Grant Smith, its chairman. He said LCM had held discussions with numerous companies that used magnets as they sought alternative supply sources, though he declined to name them. Despite the new willingness to pay a premium, it would take many years or even decades to build up production outside of China, which accounted for 90 per cent of global permanent magnet supply, said industry participants. And the question of how much more should be paid for rare earths and magnets outside of China is a tricky one. Too high a premium for mined rare earths could see consumers cutting down their use, while premiums that are too low would not be enough to allow construction of ex-China projects, say analysts and consultants. Carmakers are willing to pay more to guarantee ex-China supplies, but they are also in the midst of an EV price war that has left them with thin margins. One executive at a rare earths company said the firm had held discussions with carmakers that were prepared to pay US$80 per kg for neodymium-praseodymium oxide, a rare earth needed for magnets used in motors and generators — a figure Reuters has not independently verified. That is already a significant — near 30 per cent — premium over the Chinese price of US$62 based on data from price reporting agency Fastmarkets.
The Star
2 hours ago
- The Star
Invest Asean-Malaysia 2025 Conference to run from tomorrow to July 3
PETALING JAYA: The Invest Asean-Malaysia 2025 Conference expects to attract more than 1,500 delegates, including foreign fixed income, equity and private equity investors with a combined asset under management (AUM) of over US$13.6 trillion or RM57.7 trillion. The event, which will be held in Kuala Lumpur from tomorrow to July 3, will be jointly hosted by Bursa Malaysia in collaboration with Malayan Banking Bhd (Maybank). The conference comprises a plenary and two days of corporate access showcasing 71 corporates from Asean, including 30 from Malaysia, with a total market capitalisation of US$382.6bil or RM1.62 trillion. It is themed 'Driving Asean Integration through Malaysia's Economic Resilience – Capital, Collaboration, Connections', Bursa Malaysia and Maybank stated in a statement. The three-day conference will bring together corporate leaders, policymakers and institutional investors from across the region to chart the next chapter of Asean's economic ascent. 'The country's Asean Chairmanship this year presents a unique opportunity to champion deeper regional integration. 'Through this flagship conference, we reaffirm Malaysia's value proposition and leadership towards this regional ambition. 'As the national exchange, Bursa Malaysia is committed to cultivating a dynamic and competitive capital market – one that not only drives Malaysia's economic growth, but also reinforces Asean's continued progress,' Bursa Malaysia chief executive officer Datuk Fad'l Mohamed said. Delegates will also have the opportunity to join a series of curated thematic site visits, offering them first-hand look at Malaysia's investment ready growth corridors and key industries.
Focus Malaysia
3 hours ago
- Focus Malaysia
Coherent SST reform requires zero exemptions for policymakers
THE Malaysian government's recent changes to the Sales and Service Tax (SST) are true to an at least decade-old tradition of self-defeating consumption tax policies. Raising taxes is a thankless but necessary task that requires astute policy design and nuanced messaging to manage both economic and political narratives. Both the 1 July changes and the case for them have left policymakers open to justifiable but needless criticism. Malaysian policymakers have long recognised the need to significantly increase revenue collections but have struggled to convince Malaysians. Tax reforms repeatedly adopt a narrow, small-target strategy that—by lacking both vision and tangible economic sustainability and equity objectives—instead become lightning rods for critics. Malaysians worried about their household budgets naturally fear higher taxes and do not count fiscal sustainability among their chief concerns. Making the case for consumption tax reform needs and deserves better than pointing to unsustainable budget deficits and delivering patronising rebukes of SST critics. It requires a consistent, coherent and non-condescending narrative that garners public support for changes that will improve not threaten their livelihoods. Policymakers should be explaining the importance of taxing consumption, how it supports a tax strategy that balances fairness, competitiveness and sustainably, and how the money raised will be used to benefit Malaysians. Consumption taxes have advantages that are especially relevant to Malaysia's circumstances. Malaysia has a large visiting and undocumented population whose income cannot be taxed but whose consumption can be. It has a sizeable informal sector contributing around a quarter of gross domestic product, whose income likewise escapes direct taxes but whose inputs may be partially captured by consumption levies. Shaping consumption choices through price signals will be essential to making Malaysia's future economic development less carbon intensive and more sustainable. Consumption taxes progressed alone cannot address Malaysia's revenue needs or be implemented equitably. Consumption taxes are regressive as low-income households consume more of their disposable incomes and therefore experience a greater relative impact. Attempts to neutralise these impacts by exempting or setting to zero the rate for basic goods introduces complexity for businesses and consumers, exempts rich and non-Malaysian consumers at the same time, and opens policymakers to arguments of inconsistency or bias. Accompanying changes to income taxes, transfers or welfare for low-income households would be a superior approach. Malaysians would be more receptive to tax hikes if their purpose were more tangibly linked to spending for their benefit. Public wariness remains high in the shadow of 1MDB and other newsworthy examples of funds being misused, with the government's fiscal challenges explicitly associated with corruption. At the same time Malaysians want better schools and hospitals, greater access to safe and efficient transport and technology, more generous social welfare and more. Transparent and well communicated spending intentions are an essential enabler of tax reform. The SST reforms have thus far been mapped poorly in these regards. Far from presenting a coherent vision for equitably, efficiently and sustainably raising revenue to spend in the interests of Malaysians, the reforms adopt a piecemeal and discriminatory approach to taxation. Two particularly concerning elements that have attracted fair criticism are the inclusion of basic goods and differential rates for local and imported goods. Malaysia is a net importer of food including many staple products, with openness to trade a critical contributor to food security both at the household and national levels. SST increases that represent an implicit import tariff, especially on basic and healthy goods like fruit, send precisely the wrong signal at a time when Malaysia is trying to counter global economic policy uncertainty. Malaysia must reinforce its openness to trade and investment by avoiding discriminatory taxes on overseas goods. Bowing to public backlash to provide post-announcement tax exemptions for imported apples and oranges (among other changes) further illustrates the policy development and communication shortcomings. Policymakers were either unaware of or misread public sensitivity on the price and availability of basic food imports, and in the absence of a compelling defence for the proposed SST increase were forced to make concessions. Evident is both a need for wider consultation and that complex and subjective tax design leaves policymakers exposed. Making the case for tax reform in Malaysia should also stick to message not mechanism. Long-running arguments comparing the SST with a restored GST are of greater distraction than consequence to the current debate. Either mechanism can be tailored to achieve comparable coverage and revenue outcomes, and tax incidence (who ultimately pays: consumers or producers) is determined by markets not tax design. Differences in administrative efficiency and effectiveness are important considerations that are adaptable to a consumption tax with either (or any) name. What Malaysia needs from policymakers is greater tax policy reform coherence, communication and ambition. And the leadership to design and deliver tax strategies and mechanisms that benefit Malaysia and Malaysians. ‒ July 2, 2025 Dr Stewart Nixon is the deputy director of research at the Institute for Democracy and Economic Affairs (IDEAS). The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia. Main image: Bigstock
