Since the development and widespread use of the internet, the development of information communication technology encompassing all manners of computer and telecommunications technology including the internet, integrated circuits, broadband transmission, has severely disrupted many industries.
In the first wave of digitisation, industries such as film photography, print media/ advertising and recorded music saw their business models disrupted and industry stalwarts brought low, if not eliminated altogether. The next wave of ICT advancement is set to cause the same kind of disruption to industries, business models and companies once thought impervious to the challenges posed by digitisation.
This report by CBRE Research examines the latest Industry 4.0 related technology trends, specifically in the area of manufacturing, and explains how they will transform the Asia Pacific industrial & logistics real estate landscape in the coming years.
Industrial & logistics investors, developers, operators and occupiers in the region will need to understand the potential impact of these trends, not only to avoid pitfalls but, more importantly, to leverage the benefits for their future growth.
Stronger than expected office leasing demand supported an increase in net absorption in Q1 2018. Active markets included Bangalore and Tokyo. Asian financial companies and tech firms continued to display a strong appetite for expansion and relocation, while co-working firms remained aggressive.
Retailer demand was solid in Q1 2018 amid the generally positive outlook for key markets including Hong Kong, Singapore and China. F&B remained the major demand driver, while other active sectors included luxury, fast fashion, lifestyle and entertainment.
Demand for warehouse space remained robust, with the exception of India and a few markets in the Pacific. Third-party logistics and e-commerce forms registered solid expansionary demand.
Commercial real estate investment turnover stood at US$25.4 billion in Q1 2018, an increase of 7.8% y-o-y. Market performance was mixed, with transaction volume increasing in China, Hong Kong and Korea, but declining in Australia and Singapore. Tight capital controls meant fewer big ticket cross-border deals were completed by Chinese buyers.
Welcome to the first edition of Asia Market Intel magazine.
This inaugural issue explores a variety of trends and hot topics in the Asia industrial and logistics market, with CBRE experts providing market leading insights to ensure our clients are at the forefront of the sector.
Subjects include Industry 4.0 and last mile logistics. We also profile the latest edition of the Asia Pacific Industrial Occupier Guide and bring you up-to-date market news and trends from our national experts in their respective markets across Asia.
Thank you for your support and we hope you enjoy this first edition of Asia Market Intel magazine.
Welcome to the 2017 edition of the CBRE Valuations & Advisory Services Research Review, a joint publication by CBRE’s Valuations & Advisory Services and Research teams in Asia Pacific.
This new report series aims to capture the key trends and forces that are accelerating the pace of change in the commercial real estate sector; change which is transforming the way in which we value property and is reshaping the value proposition of different asset classes.
This edition includes summaries of CBRE Research’s China Investment Strategy 2020; The Evolution of Co-working; Investing in Emerging Occupier Trends; and How Active are Retailers in Asia Pacific? reports, together with additional content assessing what these trends mean for valuations across the region.
We thank you for your ongoing support and hope you enjoy this edition of the CBRE Valuations & Advisory Services Research Review.
Global Gateway Cities reports on office and retail investment trends in 24 global gateway cities, giving investors a comprehensive overview of pricing and market conditions. Using a mix of proprietary and key external data, CBRE Research provides an analysis of investment activity as well as economic, occupier, supply, rent and yield trends in the third edition of this report series.
Welcome to the H1 2017 CBRE Advisory & Transaction Services Research Review, a joint publication by CBRE’s Advisory & Transaction Services and Research teams in Asia Pacific.
This edition includes articles on occupier trends in the legal sector; retailer strategy and expansion in Asia Pacific; the rise of co-working in Singapore; and the transformation of logistics facilities in Japan.
It also includes a recap of CBRE Research’s Seoul Office Market Tenant Survey, now in its fifth year.
We thank you for your ongoing support and hope you enjoy this edition of the CBRE Advisory & Transaction Services Research Review.
The Asia Pacific Industrial Occupier Guide helps occupiers navigate around the differences between the various leasing practices in Asia Pacific. It includes profiles of countries across the region as well as an analysis of standard leasing attributes and protocols such as:
•Typical lease length
•Space measurement standards
•Occupancy cost analysis
•Sales and purchase terms
•Market and other lease provisions
•Websites and contact information within CBRE for additional market information
•Easy access to summary analysis by country for comparison purposes
The Industrial Occupier Guide draws upon the knowledge of CBRE professionals across the region who possess detailed knowledge of the leasing practices in their respective markets.
Please contact us if we can assist in any way. We welcome suggestions for improvements to future editions of this Guide.
Data centres are becoming as important a part of business operations as office, retail and industrial assets. This trend is being driven by several factors including the increasingly digital world, IT development and the importance enterprise IT strategy plays in business delivery.
How data centre operators and cloud service providers position themselves now will determine their competitive status in the medium to long term. Asia is significantly different to the U.S. and EU, meaning that formulating the right strategy based on reliable intelligence and advice will be critical for service providers and end users.
The Internet of Things (IoT) and Industry 4.0 are likely to fuel incremental data centre demand, given the intensity of their data and computing needs. The importance of manufacturing to many Asian economies means that the adoption of the most advanced production methods will be a priority for many countries.
This report by CBRE Research explains why Asia Pacific is set to become the most important data centre regional market in the medium term. However, there remain pitfalls for the unwary and significant challenges for global multinationals in a culturally diverse and swiftly changing landscape.
Solid occupier demand expected for offices and logistics, but regional discrepancy likely to widen
Tokyo Grade A Office - Large-scale of new supply poses rental correction
Office: In 2018, vacancy rates are likely to start rising in Tokyo but are expected to continue tightening in regional cities. As such, Tokyo rents are forecast to see a downward correction, whereas regional rents have further upside.
Logistics: Greater Tokyo will see a 40% increase in its stock of large-scale multi-tenant logistics facilities. While demand is solid mainly driven by e-commerce, the difference in the supply-demand balance by area will become further pronounced.
Retail: Ginza high street rents are expected to continue trending down in 2018. However, with an expected recovery in demand from luxury retailers and an expansion of show-room strategies, rents may start to rise at the start of 2019.
Investment: While investor sentiment remains high, we look for a y-o-y drop in volume by about 6% to JPY3.7 trillion in 2018. Upside in rents is becoming limited for some assets and/or areas, making investors more cautious on pricing.
Despite cautionary trends permeating the office sector, we expect 2018 to be a positive year. Office properties are expected to remain in high demand, with PE and institutional firms increasingly acquiring/expanding real estate portfolios to hold quality office assets. While disruptions in the tech sector might cause a slight dip in leasing activity, demand from other sectors would largely offset the decline.
Southern India (primarily Hyderabad and Bangalore) is expected to lead retail supply in 2018, with nearly 6 million sq. ft. of supply likely to be added across key seven cities. The year is likely to be the starting point for the evolution of Indian retail as new developments (such as sharing economy and flexible leases) improve its alignment with global trends.
The logistics sector is likely to go from strength to strength in 2018, on the back of sustained demand from several sectors and government initiatives such as grant of infrastructure status and GST. As existing players expand operations and new players enter the market, demand for warehousing space is anticipated to remain robust this year, with smaller cities accounting for most of the growth.
The residential sector is likely to undergo consolidation in 2018 as the after-effects of RERA and demonetization continue to be felt. The sieving process is expected to help credible players differentiate themselves as the focus moves towards end-users, ultimately leading to an improvement in buyer sentiment. Affordable housing is expected to be the key driver of the sector, and private participation in the segment is likely to pick up pace.
Improved transparency in the investment market (thanks to government initiatives) is expected to create a more secure environment for investors and provide them better exit opportunities. As a result, interest from offshore equity investors, large Indian corporates and HNIs in the market might increase in 2018. Average ticket size of investments would also increase, with office, warehousing and retail segments accounting for most of the investments.
FOREIGN CAPITAL CONTINUES TO ENTER KOREA IN SEARCH OF HIGHER RETURNS
Foreign investors purchased US$2.8 billion worth of commercial real estate in Korea in 2017, a decline of 48.1% y-o-y, due mainly to a lack of big ticket deals. Despite the lower transaction volume, foreign investors retain a strong appetite for Korean property as they seek to diversify their investment portfolios and secure returns that are higher compared to other mature markets in the Asia Pacific.
GROWING INTEREST FROM INDIVIDUAL INVESTORS SEEKING OPPORTUNITIES OVERSEAS
Korean outbound real estate investment has risen by a CAGR of 11.1% over the past five years. Investors are demonstrating a strong preference for office assets in major markets, with such deals accounting for 88% of total outbound investment volume in 2017. Other key criteria include assets with guaranteed long term master leases and properties located in markets with strong fundamentals and solid leasing demand.
The journey of an omni-channel shopper is spread across bricks and mortar stores, social media, apps, desktops and mobile devices. Access to internet-connected mobile devices has transformed shopping into a 24/7 activity, consequently placing pressure on retailers to provide fast and efficient delivery and returns processes.
As shoppers come to expect same-day or next-day delivery, the subsequent pressure on supply chain and distribution networks will drive demand for suburban distribution centre space due to the need for e-commerce fulfilment centres to be located near the relevant client base. As customer loyalty becomes harder to come by, the simplicity and efficiency of delivery as well as returns processes will be vital for retailers to operate profitably and ensure that customers shop again.
The future of retail does not mean the end of bricks and mortar retail; customer experience and fulfilment together will be the foundations of a successful retailer, driving the convergence of retail and logistics in Australia.
As a means of addressing the labor shortage, there is increasing use of technology in logistics facilities, especially those that are centered around automation. Artificial intelligence-equipped logistics robots are capable of performing tasks currently handled by humans and can accumulate experiences as data.
The introduction of logistics robots is likely to spur the growth of "shared logistics facilities", a logistics version of shared offices. Shared logistics facilities involve shipping companies sharing facilities and paying fees according to the volume of goods processed and the period of use. This minimizes initial costs for goods owners while also enabling systems and distribution networking firms that are not necessarily specialists in logistics, in addition to existing 3PL (third-party logistics) firms.
In 2018–2019, large multi-tenant (LMT) properties equivalent to 40% of existing stock is scheduled to be built in the Greater Tokyo area. With this, there are concerns about the balance of supply and demand. CBRE Research believes that offering shared logistics services would enable landlords to enhance the competitiveness of their facilities and therefore attract tenants.
The Western Sydney Airport will be the economic catalyst to transform the Western Parkland City over the next 40 years. It will have significant freight and logistics strengths that will complement the existing commercial centres of Liverpool, Greater Penrith and Campbelltown-Macarthur, and will facilitate a new metropolitan centre, The Badgerys Creek Aerotropolis