asia pacific industrial market overview - dec 2011

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The “Colliers Asia Pac Industrial Market Overview December 2011” has just been released. The report depicts the trend of Real Estate Industrial market in Asia Pac region.

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ASIA PACIFIC INDUSTRIAL MARKET OVERVIEWDecember 2011

Accelerating success.

TABLE OF CONTENTSASIA PACIFIC INDUSTRIAL MARKET OVERVIEWThis is the thirteenth issue of the Asia Pacific Industrial Market Overview, which covers 13 cities in nine countries, for the review period of April to September 2011. With this bi-annual update, we hope to provide an overview of industrial markets catering to multinational corporations and a comparison of industrial real estate costs across the key cities of the Asia-Pacific. Three types of industrial properties are tracked in this report, namely singleuser factory premises, single-user warehouse premises and multi-user high-specifications industrial premises, as these are the preferred choices of multinational corporations. This publication features land and capital values, as well as rents of single-user industrial premises; and rents of multi-user high-specification factories.

| DECEMBER 2011

Regional Overview

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Australia

5-6

Melbourne ............................................................................................................ 5 Sydney ................................................................................................................. 6 China 7-9 Beijing ...................................................................................................................7 Guangzhou ........................................................................................................... 8 Shanghai .............................................................................................................. 9 Hong Kong SAR India 10-11 12 New Delhi ...........................................................................................................12 Indonesia 13

Jakarta ................................................................................................................ 13 Japan 14 Greater Tokyo .....................................................................................................14 New Zealand 15-16

Auckland .............................................................................................................15 Wellington ...........................................................................................................16 Singapore Taiwan 17-18 19

Taiwan .................................................................................................................19 International Comparison 20-26

Single-user Warehouse Land Values, Capital Values and Monthly Gross Rents .................................................................................. 20 Single-user Factory Land Values, Capital Values and Monthly Gross Rents .................................................................................. 23 Multi-user High-Specs Average Monthly Gross Rents..................................... 26 Local Market Norm 27-29

Single-user Warehouse Land Values, Capital Values and Monthly Gross Rents .................................................................................. 27 Single-user Factory Land Values, Capital Values and Monthly Gross Rents .................................................................................. 29 Definitions & Terminology 30

REGIONAL OVERVIEWThe economies of the Asia Pacific region showed slower growth weighed down by concerns over the anaemic state of the US economy and European sovereign debt woes. The more open economies, like Singapore and Taiwan, saw a marked slowdown in GDP growth on a year-on-year (YoY) basis during the current review period, due to shrinkages in manufacturing output. On the other hand, manufacturing sectors in China and Indonesia remained buoyant bolstered by their strong domestic markets. Economic performance varies for countries recently hit by natural disasters. While the Japanese economy remained in recession, the Pacific region was more resilient, evident from the low positive growth in New Zealands and Australias GDP numbers. Of the 182 industrial submarkets across the 13 Asia Pacific cities surveyed, 88.0% or a total of 160 submarkets either showed growth or were stable during the period between April and September 2011. This is similar to the 88.0% of the 184 industrial submarkets surveyed during the previous period between October 2010 and March 2011. We were unable to track the Urayasu submarket which remained inundated after the earthquake and tsunami in March. In line with the downgrading of general business sentiments globally, land and capital values as well as rents for industrial space saw slower growth averaging at 4.7%, 3.6% and 2.7% during the six months ending September 2011, compared with the average growth of 5.1%, 4.2% and 3.7%, respectively in the previous six-month period. However, high-specs industrial space bucked this trend, and with a higher average rental growth of 4.1% in this review period compared with the 2.0% recorded in the previous one. In total, 43 out of 53 industrial submarkets surveyed in the Asia Pacific region saw their land values either holding steady at the levels of six months ago or trending up. Notably, in Jakartas Bekasi and Karawang, average land prices soared by a record breaking 45.0% during the six months between April and September 2011 due to the aggressive growth of the automotive industry in Indonesia combined with a drought in industrial land supply. In contrast, limited availability teamed with cautious investor sentiments kept values stable in Sydney and Auckland. Land values were also flat in Guangzhous GETDD as multinational corporations shied away from acquiring industrial land, following a series of measures introduced by the Chinese government to regulate the real estate market. The remaining submarkets which saw decreases in land values are primarily located in quake-stricken Japan. Moving on to building sales, 49 out of the 58 submarkets surveyed recorded either flat or an increase in capital values. Growth was strongest in Hong Kong, as uncompromising vendors kept factory and warehouse prices soaring by up to 19.2% and 16.4% respectively. Its economic rival, Singapore, saw warehouse capital values increase by as much as 16.0%, up from the 7.2% recorded in the previous review period, underpinned by occupier demand and acquisition interest from REITS. Capital values were stable in Delhi and Shanghai as credit-tightening measures and high financing costs slowed industrial growth and dampened investor sentiments. Surprisingly, in spite of the booming Indonesian economy, capital values grew at a slower rate of 6.0%, down from the 19.7% increase recorded in the previous review period ending March 2011. This was attributed to lower activity levels in the current review period.

COLLIERS INTERNATIONAL |

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REGIONAL OVERVIEWOf the 54 submarkets surveyed, only three saw rents heading south in the six-month period ending September 2011. Tokyos Shinsuna submarket saw industrial rents easing by 3.9% while Delhis NH24 saw a 1.9% drop each in both its warehouse and factory rents. The leasing market remained subdued in Australia and New Zealand with no change in rental levels from that of half a year ago. On the other hand, warehousing facilities in Hong Kong saw double-digit rental growth, fuelled by robust demand. Rapid expansions by third-party logistics (3PLs) players, including mainland Chinese operators, looking to establish their regional hubs in Hong Kong pushed rents upwards. However, tenant needs remained unmet given the mismatch of availability and occupiers space requirements in excess of 100,000 sq ft. For now, Asia continues to drive the global economic recovery, but the region is not immune to the seemingly never-ending euro zone woes and lacklustre recovery of the US economy. The outlook for the Asia Pacific industrial property market turned cautiously optimistic with stabilised values and rents expected in most submarkets over the next 12 months. Open economies like Hong Kong, which are extremely vulnerable to global economic headwinds, are already seeing a deceleration in their external trade growth in the review period. As such, Hong Kong expects industrial property rents and values to head south in the year ahead. On the other hand, the red hot Indonesian economy is expecting even better economic performance in 2012, underpinned by strong domestic consumption, solid investment inflows and higher export numbers. This is expected to drive growth in land and capital values as well as rents of industrial properties from 10.0% to 25.0% over the next year.

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| COLLIERS INTERNATIONAL

ASIA PACIFIC INDUSTRIAL MARKET OVERVIEW | DECEMBER 2011

AUST R A L I AECONOMIC INDICATORS FOR MELBOURNE ECONOMIC INDICATORSINDICATORS PERIOD DATA

Year-on-Year GDP Growth Year-on-Year Manufacturing Output Growth Rate Total Imports Total Exports Container Throughput (TEUs) Air Cargo Throughput (Tonnes)

April - September 2011 April - September 2011 April - September 2011 April - September 2011 April - September 2011 January - June 2011

1.65% -0.50% A$17.6 billion A$4.9 billion 1,252,769 77,763

MELBOURNE Factory and Warehouse Demand for industrial space continued to grow during the review period between April and September 2011, driven by companies moves to expand and consolidate their premises on the back of healthy business sentiments amid Australias strong economic fundamentals of low unemployment, low public debt and a long pipeline of mining and resource-sector related investments. However, global uncertainties arising from unresolved debt woes in the United States (US) and Europe tempered optimism and put a cap on the growth of industrial land and capital values as well as rents which thus remained unchanged during the six-month review period between April and September 2011. On the s

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