Market news


Time: 20/12/2021
The development of e-commerce is changing the demand of warehouse space for rent in the Asia Pacific region.

Transfer from centralized supply to diversification supply chain
According to CBRE's report on international trade, the development of infrastructure will facilitate the trade of goods and promote the demand for logistics space in Asia when the Manufacturers around the world are actively re-evaluating their production and sourcing strategies in response to the ongoing trade war and the COVID-19 pandemic.
Increasing geopolitical tensions have led to a situation that goes against the trend of globalization in the Asia Pacific region. In this context, production centers are likely to move closer to target markets and markets with low-cost and high-skilled labor.
 Recent disruptions have forced companies to diversify their supply chains in various countries across Asia. Due to the impact of the pandemic, companies that used to be overly dependent on a certain country or region will have to reevaluate their sourcing and production strategies.
“We see a number of manufacturers moving from centralized sourcing to diversifying their supply chains,” said by Mr. Desmond Sim, head of CBRE Research, Singapore and Southeast Asia Zone. “Countries that are investing in infrastructure development and incentivizing to attract industries will be able to capture the majority of market share from relocation of production.”
This trend has already begun. China, the world's largest exporting economy by value, recorded a 12.7% decrease in total exports from China to the US in 2019, and a decrease in the total value of trade between the two countries is about 100 billion USD over the same period last year. Countries benefiting from this trend include Taiwan and Vietnam, two of America's fastest-growing trading partners. The total value of trade between the US and Southeast Asian countries increased by 18.7 billion USD and 9.1 billion USD respectively in 2019. Similarly, trade activities in countries outside Asia such as Belgium, France and the Netherlands also recorded growth. According to Mr. Sim: “CBRE predicts that the transformation of trade models will be accompanied by diversification of supply chains and production locations.”
 In the context of increasing trade protection globally, Vietnam continues to record more exports, and is on track to become a new processing and manufacturing center. Exports recorded an average annual growth of 16.8% between 2010 and 2019. The total trade surplus last year reached $9.9 billion.
The China-US trade war has brought many benefits to Vietnam's industrial real estate market in 2019, as manufacturers have begun to relocate to other potential markets. The average asking price for industrial land in Vietnam increased by about 10%, some industrial parks recorded that the rent could increase by 40% compared to the same period last year.
Although there are still many barriers for investors such as the lack of industrial land and infrastructure in favorable locations (including near seaports, airports, and large urban areas), the manufacturing industry and industrial real estate market of Vietnam will still benefit from rapid changes in supply chains and global commercialization, trade with developed countries will continue to be a driving force of Vietnam's main growth.
 E-commerce leads the change of the logistics market
 In addition to developing infrastructure that will facilitate the trade of goods and promote the demand for leasing warehouse space in the long term, CBRE realizes that the development of e-commerce is changing demand of warehouse space for rent in Asia Pacific region. Total cross-border e-commerce sales in the region are projected to double to $389.5 billion by 2023, from $181.4 billion in 2018.
Improvements in local supply chains will combine industrial and retail real estate, affecting how goods are stored and delivered to consumers. Bonded warehouses, a form of warehouse that allows goods to be stored without paying taxes, are becoming increasingly popular amid increased consumer demand for imported products, as they facilitate faster delivery than shipping directly from the country of origin. CBRE predicts that demand for these warehouses will increase, especially in major consumer markets such as China and India, and in cities with major ports and airports, such as Hangzhou, Shenzhen, and Shanghai, Mumbai and Chennai.