How to Evaluate the Value of Industrial Land Before Buying

Introduction

Whether you're an investor, developer, or business owner, evaluating the right industrial land is crucial to maximizing returns and minimizing risks. In Malaysia’s dynamic industrial market, land prices can vary significantly based on location, infrastructure, and usage potential. This guide outlines the key factors that influence industrial land valuation—so you can make confident, data-driven decisions.

1. Location, Location, Location

The proximity to highways, ports, airports, and urban centers heavily affects land value.

• Strategic Hubs like Shah Alam, Port Klang, and Senai enjoy premium prices due to strong connectivity.

• Land in remote areas may be cheaper but comes with lower demand and higher logistic costs.

Tip: Look for land near highways like NKVE, ELITE, or ECRL with industrial zoning and future infrastructure plans.

2. Zoning Classification

Zoning determines what can be built and operated on the land.

• Heavy Industry (I-3): Suitable for manufacturing, chemicals, metal processing.

• Medium Industry (I-2): For assembly lines, food processing, logistics.

• Light Industry (I-1): Ideal for clean and semi-commercial use.

 Land not zoned for industrial use will need conversion and can be risky.

3. Plot Ratio and Buildability

The plot ratio is the permissible built-up area relative to land size. A higher ratio allows you to build more.

• A ratio of 1:1 means 100,000 sq ft of land allows 100,000 sq ft built-up.

• Higher ratios are more valuable, especially in urban industrial parks.

Also, assess site topography, soil condition, and whether piling or land leveling is required.

4. Infrastructure & Utility Readiness

Land with ready access to:

• TNB electricity supply (including higher voltage lines if needed)

• Water supply and sewerage connections (Syabas, Indah Water)

• Road access (paved and wide enough for trailers)
  will typically command higher prices and faster development timelines.

5. Tenure Type: Freehold vs Leasehold

• Freehold land offers long-term ownership, higher resale value, and stronger financing options.

• Leasehold (especially under 60 years) may come with lower pricing but limits financing and future planning.

Check the balance of lease tenure and whether renewal is possible.

6. Market Demand and Surrounding Activity

Evaluate the demand from industries in the area:

• Are there logistics companies, exporters, or manufacturers nearby?

• What’s the vacancy rate for ready-built factories in the vicinity?

• Is the area part of a Halal Hub, Free Industrial Zone (FIZ), or tax-incentivized area?

Higher activity generally pushes up demand and value.

7. Legal & Compliance Check

Make sure:

• Land title is clear of encumbrances.

• There are no caveats or restrictions in interest.

• It has Borang 5B approval for industrial development (if you plan to build).

• Any conversion premiums have been paid (if it was converted from agriculture or commercial).

8. Comparable Sales (Market Benchmarking)

Check recent transaction prices per square foot of industrial land in similar areas.

• This helps validate asking prices and provides negotiation leverage.

• Use platforms like NAPIC, JPPH, or consult a property agent familiar with the zone.

Conclusion

Evaluating the value of industrial land isn’t just about price per square foot—it’s about use potential, risk, and future growth. From zoning to infrastructure, every element impacts profitability.

For professional advice and access to verified industrial land listings in Malaysia, reach out to Terra Group—your trusted partner in industrial real estate.