This city was the only one in APAC to decline in prime logistics rents in H2 2022

Rents in this city dipped by 0.1%, its first decline since the pandemic began.

The Asia-Pacific (APAC) logistics market saw a modest rental growth of 0.6% in the second half of 2022, bringing its year-on-year (YoY) growth to 2.5%, indicating a slight dip from the 3% increase seen in 2021.

According to Knight Frank’s latest Asia-Pacific Asia-Pacific Logistics Highlights report, which tracks prime logistics rents across 17 key cities, all cities recorded stable or increasing rents in H2 2022, except Bangkok, which saw rent contract by 0.1%, its first decline since the start of the pandemic. In comparison, Australasia continued to outperform APAC markets, registering a strong performance at an average yearly and half-yearly growth rate 20.5% and 12.9% respectively. Sydney led the region in rental expansion with a 22.8% half-year growth.

Tim Armstrong, global head of occupier strategy and solutions at Knight Frank, said: “In 2022, the logistics sector registered exponential growth. This has since started to slow in some markets as private consumption tapers off, and businesses become more cautious in response to an economic slowdown. Despite this, the outlook for the logistics market in the Asia-Pacific region remains positive, thanks to offshoring and nearshoring strategies, the relaxation of China's COVID-19 restrictions, and the easing of global supply chain challenges."

Christine Li, head of research at Knight Frank Asia-Pacific, said: "Deteriorating sentiments resulted in negative rental growth registered for the first time since the pandemic. High interest rates and inflation are promoting companies to reassess or consolidate their inventory. On the upside, we still see strong demand for cold chain facilities, especially in APAC, as consumers continue to favour e-commerce grocery. Alongside the shortage of quality supply, logistics rents are still expected to grow in 2023, albeit tamed.”