Growth in the CBRE Asia Pacific Logistics Rental Index accelerated to 2.0% q-o-q in the third quarter compared to 1.4% q-o-q in the second quarter. This was largely due to the strong performance of key Greater China markets, where retailers competed to secure quality logistics space in prime areas in anticipation of peak retail consumption during the Lunar New Year in January. Logistics rents in the Pacific held firm, although some markets recorded significant fluctuations.
But Growth in Land and Capital Values Slows
In contrast to the acceleration in rental growth, capital values increased at a slower pace in Asian markets during the third quarter while values in Pacific remained largely steady due to a lack of sales activity and stagnant occupier demand. In China, industrial land values edged up marginally as manufacturers of exports were less aggressive in expanding their production bases, whilst in Singapore land values increased at a slower rate as developers remained wary of the possible weakening of demand from the manufacturing sector. Land values in Australia increased marginally in most markets.
Demand for logistics property in Asia Pacific continued to be driven by retailers and logistics firms focusing on national level distribution. In contrast, manufacturers turned less active towards expansion amid slowing export demand from the West. High quality industrial space was the subject of strong demand in Greater China and the Pacific. Some occupiers were actively pre-leasing quality space in new stock due to tightening availability of modern logistics facilities.
Andrew Hatherley, Executive Director of Industrial & Logistics Services, CBRE Asia said,
“In the forthcoming quarters, it is expected that the manufactures’ relocation of operation to low cost markets will continue and will be the key demand driver for industrial sites and properties particularly in Southeast Asia, China and India markets. Meanwhile, the tight supply of modern industrial and logistic facilities along with strong domestic demand is likely to continue to drive prime industrial / logistics rents in the medium term across the Asia region.”
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