In our experience advising corporate clients on high-value industrial and commercial property acquisitions, due diligence is far more than a checklist—it is a strategic tool that safeguards your business operations, preserves investment value, and prevents unexpected disruptions. For companies (local or foreign) acquiring property for their own manufacturing, logistics or operational use, a thorough review of the land title and beyond helps align the asset with your long-term strategy. Getting this wrong can delay projects, block financing, or limit how you actually use the site.
Here are 12 key areas we examine in industrial property due diligence:
- Fresh land title search
We conduct an up-to-date search at the relevant Land Office to confirm current ownership and identify any registered encumbrances such as bank charges, private caveats or Registrar’s caveats. These may signal existing financing or disputes that must be cleared before completion. Unresolved interests can block transfer and expose buyers to third-party claims.
- Compulsory land acquisition risks
Under the Land Acquisition Act 1960 (LAA), authorities may acquire land for public purposes. Due diligence can reveal ongoing or impending acquisition notices, which can drastically reduce the property’s value and prevent your intended business use. Early detection allows you to reassess or walk away before committing capital.
- Remaining leasehold tenure
For leasehold land under the National Land Code 1965 (NLC), we verify the number of unexpired years. Short tenure affects bank financing, resale value and your operational planning horizon. Buyers can then factor in the time and cost of premiums when applying for an extension of tenure well before closing. Most states use a pro-rated formula based on State Land Rules to compute the premium payable – for example in Selangor, the Premium = ¾ × (1/100) × Market Value (RM per sq ft) × (New term – remaining years) × Land area (sq ft). Byers can obtain a preliminary JPPH valuation and State Land Office indication of premium before committing to purchase, so the true long-term cost is clear.
- Restrictions in interest and State Authority consents
The NLC often imposes restrictions that require prior State Authority consent before any transfer or dealing. We identify these early so you can build the consent timeline into your transaction schedule rather than face last-minute delays. Foreign buyers or certain corporate structures may need approval under section 433B of the NLC, or from the Ministry of Economy (formerly EPU). These processes can add up to 6 months. Also, some states such as Johor imposes a percentage-based levy often called the “foreign approval levy” or “State consent fee”, which can be a minimum of RM30,000 or up to 4% whichever is higher.
- Zoning and planning controls
Zoning restrictions under planning laws and local authority rules do not always appear on the title. Where relevant, cross-checking the category of use stated in the land title against the approved development plans allows comfort that your intended industrial activities are permitted. A mismatch can prevent you from obtaining building permits or operating licences later.
- Manufacturing licence considerations
For industrial properties used in manufacturing, a valid licence from the Malaysian Investment Development Authority (MIDA) may be required as supporting documentation for State consent. Flagging this early allows time to coordinate licence applications in parallel with the purchase.
- Environmental regulatory obligations
Depending on your business activity (eg, manufacturing, food processing), the Department of Environment may impose conditions on waste disposal, emissions or site remediation. Due diligence identifies existing compliance status, helping to avoid future fines or operational shutdowns.
- Certificate of Completion and Compliance (CCC)
We check whether the existing buildings carry a valid CCC, confirming they were built to approved plans and standards at that time. Missing or invalid approvals create regulatory risk and may affect insurance or resale.
- Existing tenancy agreements
Long-term tenancies—such as those granted to telecommunications providers for roof space usage or Tenaga Nasional Berhad (TNB) for sub-stations—can restrict vacant possession. We analyse termination rights, renewal clauses and impact on your occupation timeline.
- Affixed machinery and regulated equipment
Industrial sites often include boilers, pressure vessels or lifts governed by the Occupational Safety and Health Act 1994. We verify licences, certifications and maintenance records so you inherit compliant assets rather than unexpected compliance costs.
- Vendor status and capacity
We confirm the vendor’s position: whether a Bumiputra individual (triggering disposal restrictions), an estate requiring probate, or a company whose solvency could affect title validity. These checks protect transaction certainty and timeline.
- Stamp duty exposure on the Memorandum of Transfer (MOT)
Stamp duty payable on the instrument of transfer (conveyance) depends directly on the buyer’s status. Malaysian citizens and permanent residents pay the standard progressive rates under the Stamp Act 1949 (1% on the first RM100,000, scaling to 4% above RM1 million). However, foreign buyers (non-citizens and foreign-owned companies, excluding permanent residents) face a flat rate. For industrial and commercial properties, this remains at 4% of the higher of the purchase price or market value. (Note: the increased 8% flat rate introduced in Budget 2026 applies only to residential properties.) Early identification of buyer structure allows accurate budgeting and can influence deal structuring or negotiations with the vendor.
What businesses should do
Engage corporate real estate counsel early—ideally before signing a Letter of Intent. A structured due diligence exercise, grounded in the National Land Code and related regulations, gives you the commercial clarity needed to negotiate effectively, secure financing and move forward with confidence.
At Donovan & Ho, we approach every transaction with this practical, business-first lens. If you are evaluating an industrial or commercial property acquisition, we are happy to discuss how a targeted property due diligence can support your operational goals.
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This article was written by Shawn Ho (Partner) from Donovan & Ho’s corporate practice.
Our corporate practice group advises on corporate acquisitions, restructuring exercises, joint venture arrangements, shareholder agreements, employee share options and franchise businesses, Malaysia start-up founders and can assist with venture capital funds in Seed, Series A & B funding rounds. Feel free to contact us if you have any queries.
