Knight Frank Asia-Pacific H2 2024 Logistics Highlights

Despite slowing demand, the long-term fundamentals of the Asia-Pacific logistics and warehousing market remain strong. In the second half of 2024, 14 out of 17 tracked cities in the Asia-Pacific region recorded stable or increasing rents year-on-year. However, Beijing and Shanghai experienced significant rental declines due to rising supply and weak demand.

Asia-Pacific Logistics Market Overview
The Asia-Pacific logistics market continued to face challenges in the second half of 2024, driven by increasing supply and evolving tenant demand. While rental growth has slowed significantly, some markets like Melbourne and Greater Kuala Lumpur continued to see steady gains.

Overall Market Performance

•   Rental Growth Further Decelerates
➜ The Asia-Pacific logistics rental index increased by just 0.2% year-on-year in the second half of 2024, a sharp slowdown from 7.0% in 2023.
➜ Beijing and Shanghai saw rents decline by 14%-15%, with vacancy rates nearing 30% due to high new supply levels.

•   Strong Performers
➜ Melbourne led the region with rental growth of 6.7%, driven by limited developable land, tightening supply, and sustained demand.
➜ Greater Kuala Lumpur exhibited the strongest momentum, with rents rising by 5%, supported by the completion of higher-quality industrial properties, albeit from a low base.



Market Trends & Tenant Strategies

•   Tenants Taking a More Cautious Approach
➜ Occupiers are focusing on optimizing existing space rather than large-scale expansions.
➜ Some firms are considering purchasing rather than leasing warehouse facilities to reduce long-term rental costs.

•   Sustainability & Technology Driving Demand
➜ Occupiers are increasingly seeking high-standard logistics facilities with ESG certifications.
➜ Logistics automation and supply chain digitalization remain key focus areas.

Taiwan Logistics Market Highlights
The Taiwan logistics market remains stable, with Taipei's low vacancy rates and steady rental growth attracting investor interest.

Market Characteristics

•   Stable Rental Growth
➜ Taipei's prime rent reached TWD 1,222 per ping per month, with a stable vacancy rate of 4.1%.
➜ Compared to other Asia-Pacific cities, Taipei remains a stable market.

•   Diverse Demand Sources
➜ E-commerce and retail players continue to drive demand for high-specification warehousing.
➜ Some manufacturers are relocating parts of their supply chain back to Taiwan to enhance logistics efficiency.

Landlord Advantages

•   Low Vacancy Rates Support Rental Growth
➜ Landlords can attract tenants by enhancing property quality and services.
➜ Sustainability and smart upgrades are key factors in enhancing property value.

Trends & Challenges

Asia-Pacific Market Trends

•   Rising Supply Impacting the Market
➜ Over 4 million sqm of new logistics space is expected to be delivered in Beijing and Shanghai in the second half of 2024, exerting downward pressure on rents.
➜ Emerging markets such as Vietnam continue to benefit from infrastructure investments but are seeing slower rental growth due to increasing supply.

•   Technology & Efficiency Driving Demand
➜ Logistics automation and supply chain digitalization continue to drive demand for modern logistics spaces.
➜ Markets like Vietnam and Malaysia remain attractive but face slower rental growth.

Opportunities & Challenges for Taiwan

•   Opportunities
➜ Growth in e-commerce and manufacturing is driving demand for high-quality warehouse facilities.
➜ Taiwan can leverage its strategic location and market stability to attract international capital.
•   Challenges
➜ Rental growth remains relatively moderate compared to other Asia-Pacific markets.
➜ Future new supply could increase vacancy rates, impacting market balance.

Taiwan Logistics Market Outlook

•   Short-Term Outlook
➜ Taipei's market is expected to remain stable, but demand fluctuations in e-commerce and retail need monitoring.
➜ Landlords should optimize facilities, incorporating smart logistics and sustainability measures.

•   Long-Term Recommendations
➜ Investors should focus on high-end logistics facilities to meet efficiency and sustainability requirements.
➜ Taiwan should utilize its regional advantages and stable market to attract more international capital.