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Asia Pacific Market Outlook Soundbites


Liz Hung, Associate Director, Research, APAC

Desmond Sim, Head of Research, Singapore and Southeast Asia

Claire Choi, Head of Research, Korea




The Asia Pacific logistics market will continue to thrive in 2021 on the back of rising domestic consumption and a recovery in global trade. The International Monetary Fund (IMF) expects global trade volume to grow by 8.3% y-o-y in 2021 compared to a contraction of 10.4% y-o-y in 2020. While U.S.- China relations are expected to improve this year, tension between China and other countries such as Australia may weigh on regional trading activity.

Pandemic-induced supply chain disruption has led many companies to review and strengthen supply chain resilience by diversifying production and sourcing. India and Southeast Asia will continue to benefit from the adoption of “China Plus One” strategies. However, Mainland China remains one of the world’s largest consumption markets and key player in the global supply chain. Manufacturing capacity in China is therefore likely to increase further to serve domestic demand, a strategy now known as “China for China”.

CBRE retains an optimistic view towards long term regional warehouse demand from the trading sector. Regional trade activity is poised to accelerate following the recent signing of the Regional Comprehensive Economic Partnership (RCEP) between major Asia Pacific economies, which will remove up to 90% of existing tariffs within the next two decades.


Supply chain resilience will come under scrutiny as companies guard against disruption. Strategies such as expanding network resiliency and boosting local inventory will translate into long-term warehouse space demand.




E-commerce will continue to drive logistics leasing demand in 2021 as the pandemic accelerates the shift to omnichannel retailing. Urban fulfillment centres, particularly those near residential neighbourhoods, will continue to attract strong interest.

Asia Pacific online grocery sales are projected to rise by a Compound Annual Growth Rate (CAGR) of 30% between 2019 to 20242. Coupled with the growth of on-demand food delivery witnessed since the onset of the pandemic, demand for cold storage, food processing centres and dark kitchens will continue to expand.

Figure 17

Demand for highly specialised cold storage for pharmaceuticals, particularly vaccines, will reach new highs this year. Fosun Pharma has built a 2,000 sq. m. cold storage facility with ultra-cold refrigerators (-70 degrees Celsius) in Shanghai Pudong Airport to store and distribute vaccines3.

2Forrester, November 2020.
2South China Morning Post, 31 December 2020 [Link]




The deployment of robots and automation systems to enhance warehousing operating efficiency is expected to further stimulate demand for warehouse space in 2021.

High-cost storage systems such as Automatic Storage & Retrieval Systems (ASRS) are increasingly popular among large e-commerce companies. However, a 2019 survey by Prologis found that only 3% - 5% of logistics customers in the U.S. are equipped with fixed automation systems. These solutions usually require build-to-suit properties or the consolidation of operations into large scale new-builds which have higher ceilings and wider columns and bay spacing. Power supply requirements for such facilities are generally higher and need dedicated server rooms.

Occupiers with smaller volume requirements can adopt semi-automatic solutions such as conveyors and pallet shutters. Robotics-as-a-Service (RaaS) models are also emerging in the logistics sector as more occupiers seek low-priced and flexible robotics options. Automatic Guided vehicles (AGVs) and Autonomous Mobile Robots (AMRs) are expected to be more widely adopted in warehouse operations in 2021 and beyond.


The pandemic will continue to drive a shift towards omni-channel retailing. Technology will lead to significant advances in warehouse operations and efficiency.




Pandemic-induced delays to several new logistics schemes due for completion in 2020 have pushed up projected new supply for 2021 to 94 million sq. ft., an increase of 26% y-o-y. Despite the surge in new stock, robust demand from omnichannel retailing and a recovery in the trade and manufacturing sectors should ensure vacancy remains low.

The bulk of new supply due to be added this year is in Greater Tokyo and Greater Seoul. Both cities are reporting strong pre-leasing demand from e-commerce companies amid continued tight availability.

The limited supply of industrial land remains a challenge in tier I cities of Mainland China, with the shortage of in-city last-mile facilities prompting occupiers to turn their attention to adjacent tier II cities in coastal areas. New supply in the central and western regions of the country is relatively more substantial and will include numerous warehouses developed by major e-commerce platforms, some space in which will be made available for lease.

Solid logistics market fundamentals will continue to attract investors to participate in new warehouse development. While the near-term rental outlook should be unaffected by the steady increase in new supply, longer-term rental growth prospects may soon diminish.


Given that transport cost accounts for more than half of total supply chain cost, facilities with well-connected transport networks will be keenly sought-after. Occupiers are advised to conduct real estate strategy reviews well in advance in order to secure their preferred locations.


Figure 18



Asia Pacific logistics rents are expected to rise across all markets in 2021. Tier I cities in Mainland China will edge out Greater Tokyo and Singapore as the drivers of regional logistics rental growth, with the rate of increase in Beijing, Guangzhou and Shenzhen set to accelerate on the back of a recovery in leasing demand and limited urban supply.

In Singapore, prime logistics stock occupied by pandemic-driven government stockpiling will be returned to the market in H2 2021, limiting prospects for rental growth. Rents in Hong Kong SAR are forecasted to stabilise due to an increase in forced relocation demand resulting from the redevelopment and revitalisation of older industrial buildings.

In Pacific markets, incentives rose over the course of 2020 as landlords responded to the economic downturn. This year will see stronger rental growth but the recovery in Melbourne will be delayed by a second lockdown in Q3 2020 and a growing number of sublease space released by Third Party Logistics (3PL) occupiers. In Auckland, institutional landlords began reducing incentives from H2 2020 as the pandemic was contained. Rapidly increasing land prices and construction costs are likely to translate into higher rents in the coming years.


Strong fundamentals and sustained rental growth will drive investment interest in logistics to new highs4. In view of the construction boom, landlords are advised to futureproof their portfolios by upgrading supporting facilities such as cold rooms and server rooms to cater to evolving occupier demand or redeveloping older facilities in prime logistics locations.

4Asia Pacific Investor Intentions Survey, CBRE Research, January 2021.

Figure 19

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Asia Pacific Real Estate Market Outlook 2021

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Manish Kashyap
Global President, Advisory & Transaction Services
Advisory & Transaction Services
+65 6326 1220
+65 6225 1987
Dr. Henry Chin
Global Head of Investor Thought Leadership
& Head of Research, APAC
+852 2820 8160
+852 2810 0830
Ada Choi
Ada Choi, CFA
Head of Occupier Research, APAC
& Head of Data Intelligence and Management, APAC
+852 2820 2871
+852 2810 0830
Liz Hung
Asia Pacific
+852 2820 6557
+852 2810 0830