Regional logistics most sought-after sector with enquiries up by 70%, says CBRE APAC - MIDA | Malaysian Investment Development Authority
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Regional logistics most sought-after sector with enquiries up by 70%, says CBRE APAC

Regional logistics most sought-after sector with enquiries up by 70%, says CBRE APAC

21 Jan 2022

Moving into 2022, investors are especially keen on logistics investments, with an estimated 70% of increased enquiries in Asia Pacific (APAC), according to CBRE APAC at Rehda Institute’s CEO Series 2022 Annual Property Developers Conference held on Jan 20.  

CBRE APAC head of occupier research, APAC and head of data intelligence and management, Ada Choi presented: “How can property developers and fund managers ride the boom in regional logistic and industrial real estate in 2022?”

“We are seeing higher enquiries compared to 1Q2021 (of about 70%) particularly in institutional grade logistics, compared to other asset classes such as office, for example Grade A office (40%), retail such as neighbourhood malls (20%), and other alternatives, such as data centres (36%), based on our recent data,” said Choi.

She added there is solid demand and a large pipeline to accommodate logistics. “The warehousing and net absorption and completions in 2021 have risen up at a record level of 64.2 million sq ft, with Greater Seoul topping the new supply of the major APAC markets, followed by Greater Tokyo, Sydney, Shanghai and Guangzhou.”

For the logistics and industrial sector, Choi also highlighted the tightened vacancy and continuous rental growth, adding that Shanghai has reached a vacancy rate of nearly 6%. Highest rental growths are recorded in Melbourne (nearly 7%), followed by Singapore (about 5%).

In terms of portfolio strategies and location selection, Choi pointed out the top three factors that investors consider before deciding on the locations, namely “proximity to markets and consumers, real estate rents and proximity to transportation facilities”. Other considerations include labour and availability cost, proximity to point of production and suppliers and network and synergy with other warehouses.

Moving forward, CBRE APAC anticipates warehouses in satellite cities (adjacent to/within mega metropolitan areas) to be the most preferred form of logistic asset, accounting for 69%, in the next three years. “This is followed by urban warehouses (52%), and in-city delivery stations (50%).”

Choi said: “There are implications for real estate investors, with opportunities in emerging submarkets and assemble landbank to cater to future demand. Other matters include to supply more modern, high-spec facilities and engagement with anchor tenants in the early stage to ensure building features that are suited to their requirements.”

Smart technologies that are trending up in APAC, for logistics, are systems which enable automation such as warehousing management software, Internet of Things (RFID and other sensors), automation tech such as conveyor and sortation system, Automated Storage and Retrieval System (AS/RS), goods-to-person picking system and Autonomous Guided Vehicles (AGVs), and emerging tech such as robotic arms/cobots and blockchain to trace delivery process, said Choi.

She also highlighted cost escalation as the biggest challenge for the industry. “The top three challenges for logistics in the next three years are cost escalation (eg fuel, transport and labour), pandemic-related impacts and economic uncertainty. Other challenges include market competition, labour and skills shortages, changing consumer environments and global trade policies and regulations.”

“There will be more emphasis on environmental, social and governance (ESG) and sustainability, hence the ability to source alternative energy, and other [relevant] features are the considerations for building the next generation of logistic real estate.”

Source: The Edge Markets