Asian Industrial Property Market Flash

In the first quarter of 2007 institutional investorsfollowing the Central Government's introduction of
continued to show strong interest in the acquisition ofminimum land prices and open market mechanisms for
logistics facilities, with high levels of investment activityprimary sales of industrial land in late 2006. The
in Japan and China. Demand for industrial property oraverage price of Shanghai industrial land rose 3.2%
land remained buoyant in most Asian cities on theq-o-q to RMB 879.4 psm (RMB 81.7 psf), while the
back of robust economies and sustained growth in theaverage rent of industrial facilities increased 2.5% q-o-q
manufacturing sector.to RMB 38.5 psm (RMB 3.6 psf) per month. Three
In Japan, investor interest in distribution facilitiesindustrial land parcels in Shanghai were transferred by
continued to grow during the first quarter of 2007, withmeans of public listing for the first time under the new
domestic and international investors both active in theregime.
sector. Mitsui Soko and recent entrant MapletreeThe price of industrial land in Guangzhou similarly
Logistics Trust were among those making purchases.surged after the implementation of the new policies.
At the same time, ProLogis and AMB remainedThe rise in land prices has not dampened industrialists'
among the most prolific developers of large,enthusiasm about the Pearl River Delta, and the
high-specification logistics facilities. The quarter sawindustrial market saw brisk investment and leasing
domestic logistics leasing and asset management firmactivity.
J-REP announce plans to construct five distributionIn Beijing, logistics has emerged as the hot spot in
facilities over the next 12 months.industrial property investment, with a number of
Singapore saw increases in both rents and capitalinternational logistics property developers and investors
values of industrial property during the first quarter, withincluding AMB, ProLogis and Mapletree actively seeking
further appreciation expected. Developers displayedsuitable investment opportunities. Investors have
robust interest in the sector, purchasing four industrialfocused on mature industrial areas, including Shunyi
development sites during the quarter at unit pricesTianzhu in northwestern Beijing and Tongzhou
above those recorded in 2006. Though high-techMajuqiao in the southeastern city.
space continued to lead the sector, average factoryChengdu's industrial sector continued its rapid
rents rose after remaining unchanged throughout 2006expansion in the first quarter of 2007. The first two
and the average rent for warehouse space increasedmonths of the year saw 168 enterprises commit to
for the first time since 2003.entering Concentrated Manufacturing Industries
In Hong Kong, demand for industrial space remainedPlanned Areas. In March, PetroChina announced that it
strong thanks to robust re-export activities andwould invest RMB 38 billion in an oil refinery and
investors' optimism about the local economy. Landlordsethylene plant in Pengzhou, Chengdu. The
saw room for upward price and rental adjustments inmega-project is expected to stimulate industrial
all industrial sectors. However, completion of a numberproperty development throughout the Pengzhou area.
of upcoming office developments in East Kowloon willA number of MNCs are expanding their operations in
exert downward pressure on rents and prices in thethe Philippines, with companies in the manufacturing
industrial/office (I/O) sector. Investment activity wasand IT services sectors being the chief demand
extremely brisk, with HK$2.5 billion in en bloc and sitedrivers. Occupiers in a number of industrial zones are
transactions recorded during the quarter.expected to be awarded a number of tax perks
Industrial land prices in China appreciated furtherfollowing new legislation.