Investors are attracted by strong occupier demand for logistics properties, and higher yields relative to other forms of traditional real estate.
In Asia Pacific, drivers of growth for logistics and warehousing space include demand from third-party logistics operators and e-commerce companies.
Direct real estate transaction volumes in the industrial sector totaled US$13.8 billion in 2016, based on data from Real Capital Analytics (RCA).
Five markets (Australia, Japan, Hong Kong, Singapore and China) accounted for over 80 per cent of industrial investment volumes regionally in the 2011-2016 period. In comparison, India and emerging Southeast Asia accounted for less than three per cent of volumes.
Logistics stock in Asia Pacific more than US and Europe combined
Growing logistics stock presents more options for investors, and enables easier entry into or exit from a market.
Based on our estimates, total amount of stock in the seven largest logistics markets in the region currently totals more than 1.5 billion sqm (gross floor area), more than the United States (795 million sqm) and Europe (260 million sqm) combined.
However, stock size varies vastly across markets as regional economies are at very different stages of development. In addition, prime facilities consists of just a small portion of the regional stock.
The definition of prime stock differs across markets because of factors such as stock availability, occupiers and investors’ requirements. But the main criteria involves newer stock (less than 10 or 20 years old), as well as larger space (cutoff point may differ) that is primarily for lease.
Australia has 29.1 million sqm of logistics space that is generally modern, but a lot of the stock in East Asia comprises of older facilities and the majority is owner-occupied. Currently, less than 5 per cent of the total stock in China and Japan consists of investment-grade facilities for lease.
Logistics stock in Asia Pacific to continue growing
More high-specification modern logistics facilities will come online over the next few years. Large logistics space for lease is growing rapidly in China and Japan.
Meanwhile, logistics real estate in India is also growing, fueled by the growth of the e-commerce sector, economic revival, implementation of the Good and Services Tax and government initiatives.
Large planned investments in road, rails, ports and airways across emerging Southeast Asia will bolster trade and warehousing demand, and consequently make more modern facilities available.
For more information, download our “Growth in logistics sector luring investors in Asia Pacific” report today.
Bangkok falls 19 places to 49th most expensive location worldwide
Locations reliant on international tourism have seen their rental markets hit especially hard during the pandemic, resulting in some major drops in the rankings. Bangkok has fallen 19 places to 49th, while Hanoi saw a similar drop of 12 places to 81st.
Is There a Silver lining amid COVID-19?
Thinking of the future impact of this pandemic on office buildings, it may have already dawned on many of us that a majority of potential long-term trends and health measures will become permanent work-life features in the times to come.
Subscribe via Email
3 ways Asia can recover from the COVID-19 pandemic faster
Countries in the East Asia and Pacific region will benefit from cooperation in three major areas: vaccine deployment, reviving sectors...
Thailand’s Vaccine Strategy: What went wrong?
Questions are being asked, and not answered, over the decision to rely almost entirely on Siam Bioscience, a local, palace-owned...
Exclusive interview with Richi Kukreja, HR Lead Director for Zoetis South East Asia
Zoetis is a global animal health industry leader, dedicated to supporting customers and their businesses in ever better ways. Building...
World Bank lowers Thai GDP growth outlook to 2.2%
In the Thailand Economic Monitor released today, the World Bank adjusted its outlook on Thailand’s economic growth this year to...
The Importance of E-Wallets for Online Gaming Sites
With e-wallets and cryptocurrency being the most relevant options, banks have been put on the side burner, especially when e-wallets...