Elevated demand for warehouse in Asia is expected to sustain in long term.
Hong Kong, Tokyo and Singapore were listed as the three most expensive prime industrial land prices in the world at mid-2011, says a recent Global Industrial Report 1H 2011 released by real estate services giant Colliers International.
According to the report, the top five markets seeing the most expensive industrial rents in the globe remained the same as six months ago. Tokyo’s warehouse rent took the world’s top spot, followed by London (Heathrow), Zurich, Hong Kong and Geneva, respectively. Except Hong Kong’s warehouse rent rising 10.8% over the first six months of 2011, warehouse rents of the others in the top five remained unchanged.
In Asia Pacific, the industrial market remained the most robust in the world. While the devastating earthquake and tsunami which hit Japan in early 2011 brought a temporary stall to Japan, the positive economic growth around the region had off-set the effects causing little impact on industrial leasing markets in Asia Pacific. In the first half of 2011, rents were steady or up in most markets throughout the region.
“Following the encouraging performance over the first six months this year, industrial leasing markets in Asia are anticipated to slowdown in the coming months amidst uncertain economic environment in the US and Eurozone and slowdown in China’s economic growth,” said Simon Lo, Executive Director of Research and Advisory, Asia at Colliers International. “However, elevated demand for warehouse space in the region is expected to sustain in the long term.”
Many markets in the United States and Canada registered a modest decline in vacancies in the first half of 2011, which was attributed to solid demand and minimal construction. However, warehouse rents registered a modest decrease, continuing a downward trend that has lasted for three-and-a-half year.
Due to the decelerating economy and rising concern of the European sovereign debt crisis, many businesses are likely to delay expansion and reduce aggregate demand for warehouse space in the coming months. This will likely to cause leasing activity to pull back and occupancy growth not able to sustain at the same growth as that in the last few quarters.
Europe, Middle East, Africa (EMEA)
In EMEA, warehouse occupancies largely maintained in the first half of 2011. However, various markets in the region were clouded by sluggish leasing activity and little expansion. Warehouse rents mostly held steady in the first six months, but lower rents were recorded in Athens, Dublin, Madrid, Minsk, Sofia and Zagreb. London (Heathrow)’s warehouse rent at USD20.88 per sq ft per year continued to be the highest in EMEA at midyear.
In addition, prime industrial land price in London (Heathrow) was the highest in the region at USD62.65 per sq ft, and was ranked as the 4th most expensive in the world in mid-2011.
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