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  • Singapore is fourth most expensive prime logistics market in the world; One in six APAC cities in global top ten most expensive markets

Singapore is fourth most expensive prime logistics market in the world; One in six APAC cities in global top ten most expensive markets

May 19, 2016
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Third party logistics firms driving sector in Singapore APAC Growth Firm despite China Slowdown

Singapore, May 19, 2016 – Prime logistics rents in global hub markets increased 2.8% year-over-year amid strong demand from supply chain users seeking modern distribution facilities to accommodate growing global trade and e-commerce activity, according to CBRE’s inaugural Global Prime Logistics Rents report. The report tracked the rents of prime logistics facilities in 69 global hubs in the Americas, APAC and EMAS at of Q4 2015. Top market rent was gathered based on industrial distribution space of the highest quality and specification in the best location within each industrial hub, based on factors such as infrastructure and accessibility, market size and business environment. Prime logistics facilities in Singapore are those with strong attributes including ramp up

The report cited strong global consumer demand and an ever-increasing share of retail sales online prompting third-party logistics firms to seek out advanced ‘prime’ logistics warehouses to modernize their supply chains to facilitate the rapid delivery of goods.

Hong Kong topped the list of most expensive markets worldwide, with prime logistics rents of US$28.94 per sq. ft. per annum, followed by Tokyo (US$16.74 per sq. ft.) and London (US$16.36 per sq. ft.). Overall, APAC contained six of the top ten most expensive markets worldwide, with Singapore in fourth place (US$10.91 per sq. ft.), Shanghai (sixth), Sydney (ninth) and Shenzhen (tenth) closing out the list.

“Strict regulatory controls on the types of industries approved to take up space in logistics facilities has resulted in limited availability of such space in Singapore. This accounts for Singapore’s position in the top 10 most expensive global logistics rental market. Singapore’s fundamentals as a prime logistics hub remain very strong, underpinned by the republic’s inherent strength as a strategic port and a critical point for re-distribution of goods to the region” Desmond Sim, Head, CBRE Research, Singapore and South East Asia.

Third party logistics firms have been fairly active in Singapore, driving demand for warehouse logistics facilities. [movements/ examples of players and where and what they’ve taken up].

Brenda Ong, Executive Director, Advisory & Transaction – Industrial & Logistics Services Singapore said “Prime rents for logistics has come off slightly at $xxx psf/ month since Q4 2015 but this is expected, given that manufacturing has shrunk for the last few quarters in Singapore. There are still pockets of demand from retailers using such space to manage their inventory; manufacturers handling the re-distribution of plastics and metal to the rest of the region/ anything from the landlord side?

Markets where land is more plentiful tend to be more affordable, and in Asian cities in particular, space is at a premium.

Regionally, prime logistics rents were up 5.6% year-over-year in the Americas, 2.5% in Asia Pacific and 0.8% in EMEA. CBRE tracked prime rents—the highest achievable rents for the logistics facility of the highest quality and specification—in 68 logistics hubs around the world. Fifty-nine percent (40 markets) of tracked markets saw year-over-year increases in rents, 25% (17 markets) saw no change and only 16% (11 markets) saw decreases.

Despite the slowdown in China’s economy, 15 out of the 27 markets tracked in Asia Pacific experienced rent growth. Seoul recorded 6.5% annual growth in prime rents as supportive government policies, rapid e-commerce growth and the modernization of the logistics industry continues in South Korea. Several Chinese markets also recorded strong growth, including Ningbo, Hangzhou and Nanjing, each increasing by 5%.

The relatively small and open economies of Hong Kong and Singapore showed some weakness in rents as regional trade slowed, though they remain among the most expensive industrial markets worldwide.

Similar to Japan a decade ago, the South Korean logistics market is undergoing modernization. The transformative effects of e-commerce and the search for greater efficiency among third party logistics firms are spurring demand for modern logistics facilities in Seoul.

“Meanwhile in China, e-commerce has taken off in first- and second-tier cities. Despite the overall economic slowdown in China, demand remains for logistics facilities in Shanghai, driven by fashion retailers, e-commerce and third party logistics firms. Logistics land supply is also becoming more limited as local governments are reluctant to release land for logistics development due to lack of tax revenues generated from such projects. As a result, there is continued interest in logistics by developers and investors,” said Dennis Yeo, Managing Director, Advisory & Transaction – Industrial & Logistics Services CBRE Asia.

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Disclaimer:

Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

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