changi port
Warehouses near busy ports – such as Changi, Singapore – have seen rents increase. Image – Canva.
  • Rents rose by 0.5% across the region during the last six months of 2021
  • Sydney saw rents rise by 5.9%
  • Melbourne and Brisbane also performed strongly too

The warehouse markets across the Asia Pacific remained strong throughout the second half of 2021 thanks to resurgent trade flows and overall recovery in global demand, highlights a recent Knight Frank report.

During this time, rents rose by a modest 0.5% year-on-year. Although almost 9 million sqm of new supply will be delivered across the region this year, vacancies are expected to remain tight due to strong demand and active pre-commitments.

However, divergent policies and varied vaccinations rates have led to a mostly uneven recovery.

Logistic warehouses have benefited from the tailwinds of e-commerce, but further growth can only be sustained by stability across macro consumption and investment, argued Knight Frank’s Global Heads of Occupier Strategy and Solutions, Tim Armstrong.

“The emergence of the Omicron variant late into 2021 created fresh headwinds for the region,” said Mr Armstrong.

“While it has put pressure on supply chains in the short term and constrained trade, which has been a vital engine of growth, it is unlikely to detract from the long-term structural fundamentals that logistics markets in the Asia Pacific enjoy.

“The current momentum indicates that demand from occupiers in the region still has ample room to run. Rents are tipped for further growth in 2022 but will be challenged by occupiers’ cost sensitivity in certain sectors. The supply imbalance in the region, however, will continually tilt markets in landlords’ favour.”

Due to these factors, the outlook for the sector is bifurcated between the emerging and developed markets.

Australia top in the region

The report noted that Australia’s prime warehouse rents across the eastern seaboard witnessed the highest increases in the region. Sydney saw demand grow by 5% year-on-year, with similar levels in Brisbane and Melbourne.

Leasing activity levels remained above pre-pandemic levels, primarily due to the need to mitigate supply chain disruptions with increased warehouse spaces.

There is about 2.6 million sqm of new warehousing space in the pipeline – a record.

asia pacific warehouses
Source – Knight Frank.

Outside of Australia, Singapore saw rents ease by 4.9%. Despite this, occupancy is at 90%. Container passing through also reached a record high – Singapore remains the world’s busiest container transhipment hub.

In Hong Kong, total imports and exports rebounded, thanks in part to the government’s consumption coupons. Rents rose marginally as vaccinees tighten to under 6%.

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