Colliers International, Asia Pacific

Asia Pacific Industrial Markets Are Expected to Firm Up Towards Year-end 

Global economic downturn has squashed the warehouse markets across all regions.  However, Asia Pacific remains comparatively the most robust region even when the warehouse rentals in most of the countries continued to decline in the first half of 2009.  According to Colliers International's latest bi-annual report on industrial real estate, Tokyo ranked top globally in warehouse rents at USD22.18 per sq ft, followed by Hong Kong at USD15.33 per sq ft (2nd spot in Asia Pacific, 4th spot in the world) and Seoul at USD13.02  per sq ft (3rd spot in Asia Pacific, 10th in the world).

Global Top Five Prime Industrial Warehouse Rents in 1H 2009 (USD per sq ft per year)            

Hong Kong
"Although the prime industrial land price in Hong Kong tops the world, it remains lower than that of Hong Kong's Grade A office and luxury residential properties," said Wayal Chiu, Director of Industrial, Colliers International Hong Kong.  "Given the investment yield is close to 6 – 6.5%, both en-bloc and strata-title industrial properties are sought-after by Hong Kong investors."

"With the current low interest rate and expectation of an economic recovery in the near future, the local industrial market has registered active sales activity after 1Q2009," said Simon Lo, Director of Research & Advisory, Colliers International Hong Kong. 

 "In 3Q 2009, the number and the total turnover of industrial property transactions valued over HK$1 million recorded 1,025 and HK$3,647 million, respectively, which have far exceeded the long-term average level, which is 546 and HK$2,001 million.  Meanwhile, compared to the notable rental fall in the first half of 2009, local warehouse rentals have stablilised in recent months," said Wayal.  "Industrial rentals in Hong Kong are projected to edge up 5% steadily in the next twelve months."

Asia Pacific
Although Tokyo and Hong Kong remain at the same spots in the world ranking, the warehouse rentals in the two cities dropped further from six months ago.  Based on their respective local currency that reflects a more accurate picture, Tokyo's warehouse rentals dropped by 3.55%, and Hong Kong's fell by 9.17%.

On industrial prime land prices, Asia Pacific took the top spots in land values, with Hong Kong at USD679.96 per sq, Seoul USD506.39 per sq ft and Tokyo at USD470.76 per sq ft. 

"Our research shows that almost every country in Asia registered a substantial drop in rents, with Singapore and India registering double-digit declines," said Piers Brunner, Chief Operating Officer, Asia, Colliers International. "However, with the global economy showing signs of life, we do expect the warehouse markets in this region to firm up in the latter half of the year, particularly on the sales side."

Europe, Middle East & Africa
Sluggish growth was again registered across the warehouse leasing markets in the region.  In particular, the United Kingdom, Hungary, Ireland and Spain remained the key areas of weakness.  Most markets were characterised by little leasing activity.  For the first half of 2009, warehouse rents across the region fell further on average by 6% in local currency.

Despite the falling rentals, Europe remains home to some of the most expensive warehouse rents in the world.  London's Heathrow submarket holds the title for the second-most expensive warehouse space in the world at USD20.64 per sq ft per year.  Despite the price decline of 23.79%, this submarket registered the most expensive land in the EMEA region at USD60.66 per sq ft.

North America
The U.S. and Canadian warehouse markets registered very weak results in 1H2009, with tenants returning substantial amounts of space in both countries.  Even though construction continued to wane, vacancies in both countries moved up significantly, with further increases anticipated in the latter half of the year.  The U.S. economy is beginning to shows signs of bottoming, and even expansion, leasing activities is however expected to remain very lethargic for the balance of 2009 and well into 2010.

Click here to view the report.

About Colliers International

Colliers Macaulay Nicolls Inc. (CMN) operating as Colliers International is a leading global real estate services company that provides a full range of services to real estate users, owners and investors worldwide. Colliers operates in 294 offices in 61 countries.  In Asia Pacific, Colliers has 64 offices in 15 countries.  Services include brokerage, property management, hotel investment sales and consulting, corporate services, valuation, consulting and appraisal services, mortgage banking and research.  Colliers International is a worldwide affiliation of independently owned and operated companies. 

Contact Information

May Chow        
Regional Manager
Communications and PR, Hong Kong Marketing
Colliers International (Hong Kong) Ltd
Tel    852 2822 0736
Fax   852 2868 5275
Email: May.Chow@colliers.com

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