Knight Frank Asia-Pacific Warehouse Review H2 2020

The second half of 2020 saw a strong performance for the Asia-Pacific warehouse market, fueled by the growth in e-commerce consumption and recovering manufacturing sentiments across the markets of APAC. Mainland China stood out as the only economy globally to achieve positive GDP growth in 2020. Rents rose 0.4% year-on-year, averaged across the 17 markets tracked by Knight Frank, and this has been fueled in part by the estimated 14% growth rate in e-commerce retail sales during the same period. We expect the momentum to continue, and there is plenty to be optimistic about in this sector. Knight Frank Asia Pacific projects a rental growth of 3% to 5% by the end of 2021.

Malaysia

Warehouse rents in Malaysia’s main economic hub, Klang Valley, have remained flat quarter-on-quarter. Despite its ongoing challenges to combat new waves of COVID-19 infections in 2021, committed tenancies and growing demand from logistics occupiers have helped the market stay resilient. Recently introduced initiatives from the government and positive sentiments in the manufacturing and logistics sector will continue to bolster and strengthen the market’s performance in 2021.

Singapore

Singapore’s prime warehouse rents rose 1.7% year-on-year in 2020, with this growth attributed to expansions in output from the electronic and biomedical manufacturing sectors. The market has long been considered a key warehousing and storage hub for Southeast Asia due to its strategic location, and its outlook has weathered the impacts of the COVID-19 pandemic. We expect rents to continue rising between 1% to 3% in 2021, on the back of its strong market fundamentals.

Mainland China

In H2 2020, the warehouse sectors in the Chinese Mainland performed well, as expected. Commercial activities have mostly returned to normal and as mentioned, economic growth of the market had exceeded every other economy in the world last year. Rents in Shanghai rose 3.2% year-on-year during the period, helped by healthy storage demand from the biomedical and fresh food e-commerce sectors towards the year-end peak season. Beijing’s warehouse rents rose 1.8% year-on-year in the same period, with healthy demand fundamentals absorbing the city’s excess supply. Vacancies declined 0.7% over the six months period towards end 2020 at 4.1%, which is a near return to the 3.9% level recorded at the end of 2019. In 2021, conditions are expected to remain stable in the Beijing warehouse market, as absorption rates continue to improve.

---

To read the full Asia-Pacific Warehouse Review Q4 2020, click here.