Fire Safety Approval: The Hidden Deal Breaker

Key Takeaways

• Datasonic Group Bhd terminated a RM28.5 million industrial property acquisition in Petaling Jaya.
• The deal fell through after its wholly owned subsidiary, Datasonic Technologies Sdn Bhd, failed to obtain Fire and Rescue Department approval for fire safety equipment.
• This case shows that fire safety approval can become a deal breaker after a sale and purchase agreement is signed.
• For industrial property buyers and sellers, fire compliance is no longer a post-completion technical matter but a core due diligence item.
• Companies choosing a factory or warehouse should assess fire system upgrade difficulty early to avoid losing both time and money.

Why a Deal Stopped at the Final Stage

Datasonic Group Bhd announced in October 2026 that it had terminated a RM28.5 million industrial property acquisition. The property is located in Petaling Jaya. The termination notice was issued by its wholly owned subsidiary, Datasonic Technologies Sdn Bhd, to the vendor. The reason was not price, nor financing. It was the failure to obtain approval from the Fire and Rescue Department for the property's fire safety equipment.

This case deserves serious attention from every participant in the industrial property market. For a long time, factory and warehouse transactions focused on three dimensions: location, price and built-up area. Fire safety was typically treated as a technical detail handled after completion. Datasonic's termination shows that fire compliance has moved to the front of the transaction chain.

Why Fire Approval Can Derail a Deal

Compliance risk has moved earlier

In Malaysia, fire safety requirements for industrial buildings are regulated by the Fire and Rescue Department. The production activities, stored materials, building height and span all influence the design standard for fire equipment. When a company plans to acquire an existing factory and convert it for a specific use, the existing fire system may not meet the new use requirements. The upgrade plan must be submitted for approval. If approval is not granted, the acquired property cannot be put into operation as planned.

Buyers are writing approval outcomes into deal conditions

Datasonic's termination shows that more buyers are setting conditions in sale and purchase agreements, requiring fire safety equipment to obtain departmental approval. Such clauses protect buyers from acquiring a factory that cannot legally operate. For sellers, this means greater transaction uncertainty. A deal thought to be sealed can be overturned at the approval stage.

Time cost is being repriced

An industrial property transaction from letter of intent to completion often takes months. If fire safety approval is raised late and the outcome is unfavourable, the buyer's waiting cost, legal fees and financing arrangements are all disrupted. Datasonic chose to terminate outright rather than wait or renegotiate, reflecting a higher sensitivity to time cost.

Three Levels of Impact on the Industrial Property Market

Sellers: compliance documents become part of valuation

Sellers traditionally showcase title, area, power capacity and ceiling height. Now, complete fire system drawings, past compliance records and the latest fire inspection results directly influence the premium a buyer is willing to pay. A factory with a clean fire record transacts faster. A factory needing major fire system upgrades will see the buyer factor upgrade cost and approval risk into the price. The market is learning to price compliance certainty.

Buyers: due diligence checklist needs a fire item

For owner occupiers, acquiring a factory is about starting production. Every day of fire approval delay is a day of production delay. Before making an offer, do three things. First, confirm whether the current fire equipment suits the existing use. Second, assess what additional equipment or upgrades the new use requires. Third, confirm approval feasibility with a professional consultant. Doing these upfront avoids a Datasonic style surprise.

Tenants: leasing decisions are affected too

Fire approval issues are not limited to sales. Tenants planning specific production activities in a leased factory may also need to submit a fire plan. During lease negotiations, clarify who is responsible for obtaining approval and what happens if approval is not granted. Writing responsibilities clearly beats arguing afterwards.

Practical Steps for Business Owners

Put fire into the first screening round

Many companies look at appearance, location and price first. Add fire conditions to the first round. A factory with an old fire system, missing drawings or unclear records may carry high upgrade costs. Excluding high risk options early is better than discovering problems late in negotiations.

Budget for approval time and upgrade cost

Even if existing fire equipment is broadly usable, a new use may still require adjustments. Budget for two things: approval time and upgrade funding. Ignoring these can disrupt production plans.

Use professional advisers to reduce uncertainty

Fire safety involves buildings, production processes and stored materials. Business owners need not become fire experts, but should know when to bring in advisers. One consultation before bidding or signing is usually cheaper than remedying a rejected approval.

Another Signal from the LNG Project

On the same day, Air Products announced it will supply Malaysia's first LNG based air separation unit for a PETRONAS Gas led joint venture. The project aims to improve energy efficiency and support Malaysia's industrial growth. This news and Datasonic's terminated deal appear unrelated, yet both point to one trend: Malaysian industrial activity is upgrading, and requirements for factories and industrial infrastructure are rising. High specification industrial projects need higher standard facilities, including power, gas supply and fire safety. A factory's competitiveness is no longer just area and location, but whether it can support more complex production flows.

Conclusion

Datasonic's termination of a RM28.5 million acquisition is a sign of a maturing industrial property market. Buyers increasingly value compliance certainty, sellers need to provide more complete documents, and tenants need clearer clauses. For business owners, choosing a factory is not just choosing a space, it is choosing a base where operations can run smoothly. FactoryHub.my is dedicated to helping every client find the right factory or warehouse.

Frequently Asked Questions

What are the risks of industrial property?

The main risk is that fire safety approval can become a deal breaker after a sale and purchase agreement is signed, as shown when Datasonic Group Bhd terminated a RM28.5 million industrial property acquisition in Petaling Jaya after its subsidiary failed to obtain Fire and Rescue Department approval for the property's fire safety equipment. Buyers also face waiting costs, legal fees and disrupted financing arrangements if fire safety approval is raised late and the outcome is unfavourable, while sellers face greater transaction uncertainty because a deal thought to be sealed can be overturned at the approval stage.