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Asia Pacific saw stable leasing demand for industrial space in the third quarter of 2016 as the major drivers of demand remained intact, said a CBRE report.
In Singapore, net absorption in the last 12 months has been equal to the five-year historical average of 0.95 million sq ft per quarter. This comes as the September manufacturing PMI returned to expansion territory following 14 consecutive quarters of contraction. Despite this, overall sentiment is relatively weak in the city-state.
While manufacturing remained sluggish in Melbourne, the housing sector continued to support demand. Brisbane started to bottom out during the quarter as the housing market and stronger resources exports supported demand.
In supply-starved Hong Kong, forced relocations created a steady source of demand.
CBRE noted that Wellington, Auckland and Sydney remained the most upbeat markets.
“Sydney continued to register solid demand from the housing, transport, and infrastructure sectors, while in New Zealand, vacancy remained at historical lows,” it said.
“In contrast, leasing activity was weaker in the large emerging economies of China and India.”
In Q3 2016, net absorption was weak in China, particularly in tier-II cities with less robust advanced manufacturing and housing sectors.
The period also saw a drop in industrial production in India, despite a growing economy.
Meanwhile, the regional supply pipeline for this remains significant, with 52.3 million sq ft of logistics space slated for completion this year. Most new supply is concentrated in Singapore, Seoul, Shanghai and Greater Tokyo.
Consequently, vacancy in these markets increased, with affected submarkets registering above average vacancy levels.
Logistics rents, on the other hand, were essentially flat during the period under review, marginally increasing by 0.1 percent quarter-on-quarter.
“Strong rental growth in the Pacific markets of Wellington, Sydney, and Melbourne helped balance rental declines in Perth, Singapore, and Hong Kong,” said CBRE.
“Regionally, the year-to-date rental growth of 0.9 percent is an improvement on the negative 0.1 percent year-on-year decline recorded at the end of 2015.”
It noted that industrial capital value growth remained polarised in Asia Pacific, with Shanghai, Sydney and Auckland recording growth of more than four percent quarter-on-quarter, leading to further yield compression in these markets.
But while capital values remained under pressure in Hong Kong and Singapore, overall Asia Pacific industrial capital values were up by 0.8 percent quarter-on-quarter.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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