Southeast Asia Industrial FOCUS: & Logistics CONTENTS
Total Page:16
File Type:pdf, Size:1020Kb
NEW FRONTIERSPROSPECTS FOR REAL ESTATE ALONG THE BELT AND ROAD INITIATIVE SPECIALSoutheast Asia Industrial FOCUS: & Logistics CONTENTS NEW FRONTIERS: SUMMARY 2 FOREWORD 3 RANKING THE MARKETS BELT AND ROAD INDEX INDUSTRIAL OVERVIEW 4 MARKET UPDATE MAJOR RECENT SOUTHEAST ASIA 5 BRI DEALS MAP MAJOR RECENT SOUTHEAST ASIA BRI DEALS 6 TABLE 7 BRIGHT INDUSTRIAL OUTLOOK PHILIPPINES TAPERING SUPPLY TO KEEP RENTS IN CHECK 8 THAILAND 9 ON TRACK DESPITE THE DETOUR MALAYSIA ON THE RISE 10 CAMBODIA 11 THE BELT AND ROAD INDEX BARI METHODOLOGY NEW FRONTIERS KEY CONTACTS 12 CONTACTS NEW FRONTIERS Special Focus: Southeast Asia Industrial & Logistics P G . 0 1 PORT KLANG, MALAYSIA NEW FRONTIERS: SUMMARY The Belt and Road Initiative is helping potential, demographic advan- major coastal regions and laying lift Southeast Asian infrastructure tage, infrastructure development, either rail or expressway transport through new ports, railroads and institutional effectiveness, market networks connecting these new highways. Increased connectivity accessibility and resilience to economic hubs to the country’s through shipping and overland trade natural disasters; further details capital. Over the past five years routes is likely to provide on our methodology can be found since the BRI’s launch, US$59.25 opportunities in the logistics, on page 9. manufacturing and industrial markets. billion in Chinese-linked capital Focusing on the Southeast Asian has been invested across the Launched in 2013, the Belt and countries, Singapore retains its Southeast Asian transportation, Road Initiative (BRI) is China’s plat- top position followed by Malaysia real estate and logistics sectors; form for multilateral cooperation which maintained its top ten almost 3.5 times the US$17.1 billion which will create new economic status in 9th. Improvements were invested in the five years prior to links and improve its business seen with Thailand and Philippines BRI. networks across the globe. Of the who moved up five and six places six economic corridors that were to 26th and 44th respectively on These initiatives have breathed identified, this report delves into better infrastructure development new life into the industrial and the Maritime Silk Road that con- and institutional effectiveness logistics real estate sectors nect Southeast Asia to India and metrics, while Cambodia moved across the Southeast Asian mar- the Europe Middle East and up two places on improved market kets by providing new either African region; and gives further accessibility metrics. sources of demand or gentrifying insights into how the BRI has influ- older stock. With expectations for enced the industrial markets A big driver behind the success of more infrastructure investments across Southeast Asia. the Maritime Silk Road is the infra- along the Maritime Silk Road, the structure needed to “connect the outlook for the industrial real This edition includes the updated dots” across a highly fragmented estate sector within the Southeast Knight Frank Belt and Road Index and rural region. This includes Asian markets looks promising (BARI) which ranks 66 BRI-related building ports and negotiating over the next three to five years. countries by their economic special economic zones along NEW FRONTIERS Special Focus: Southeast Asia Industrial & Logistics P G . 0 2 BELT & ROAD INDEX 2019 INDEX COUNTRY RANK RANK . SINGAPORE . UNITED ARAB EMIRATES . NEW ZEALAND . CHINA . QATAR . ESTONIA . SOUTH KOREA . OMAN . MALAYSIA . CZECH REPUBLIC . BAHRAIN . INDIA . VIETNAM . ISRAEL . HUNGARY . POLAND . SLOVENIA . BHUTAN . BRUNEI . SLOVAKIA . GEORGIA . MONGOLIA . LITHUANIA . MALDIVES . LATVIA . THAILAND . ALBANIA . CROATIA . INDONESIA . MONTENEGRO . SAUDI ARABIA . ROMANIA . BULGARIA . LAOS . SOUTH AFRICA . CAMBODIA . SERBIA . KUWAIT . KAZAKHSTAN . TURKEY . SRI LANKA . ETHIOPIA . JORDAN . PHILIPPINES . MYANMAR . BANGLADESH . MOLDOVA . ARMENIA . BOSNIA AND HERZEGOVINA . EGYPT . TURKMENISTAN . RUSSIA . KYRGYZSTAN . AZERBAIJAN . LEBANON . PAKISTAN . BELARUS . NEPAL . UKRAINE . UZBEKISTAN . TAJIKISTAN . IRAN . TIMORLESTE . YEMEN . IRAQ . AFGHANISTAN SOUTHEAST ASIA Source: Knight Frank Research NEW FRONTIERS Special Focus: Southeast Asia Industrial & Logistics P G . 0 3 SOUTHEAST ASIA INDUSTRIAL & LOGISTICS OVERVIEW Established in 1967, the Association of Southeast therefore presents an attractive opportunity for the Asian Nations (ASEAN) is an intergovernmental Southeast Asian countries as both sides share organisation formed by ten Southeast Asian common goals. Notable examples in recent years nations to facilitate economic, political and securi- have been the US$2.1 billion highway in Cambodia ty cooperation among its member states. These that will cut the five-hour travel time between capi- ten countries have a total population 661 million, tal Phnom Penh and Sihanoukville Port by 50%, which accounts for 8.6% of the world’s population, and the US$2.7 billion high-speed rail project in and a total 2017 GDP of US$2.76 trillion or 3.4% of Bangkok that will form part of the rail link between the world’s GDP. In comparison, the European China’s Kunming and Singapore. Union with its 513 million population or 6.7% of the world’s population has a combined 2017 GDP of With all this new infrastructure being built, investor US$17.3 trillion or 21.4% of the world’s GDP. While interest in the industrial sector has increased in there are several key differences between these recent years, especially from cross-border inves- two similar-sized regions, the extensive and tors. Between 2009 and 2015, cross border invest- efficient transport infrastructure connections in the ments into the Southeast Asian industrial sector hit European Union stands in stark contrast to South- a high of US$330 million, while the market share of east Asia, where a lack of infrastructure remains a total industrial investments within the region major hurdle to economic expansion. capped out at 22%. However, from 2016 onwards when several large infrastructure agreements were The authorities within Southeast Asia have recog- signed under the BRI banner, interest from nised this and have themselves embarked on bold cross-border investors saw a significant increase, infrastructure plans, for example Thailand’s hitting a peak of US$1.4 billion with a 72% market Eastern Economic Corridor and Philippines’ share (of total industrial investments) in 2017. In “Build, build, build” policy. However, many lack the brief, the weight of capital interest has benefitted necessary fiscal strength given the large upfront the Southeast Asian industrial markets, which we capital commitments required and the difficulty in detail in this report, by driving rapid development, attracting private enterprises given the long dated the gentrification of aging stock and rental growth return prospects. China’s Belt and Road initiative in most markets across the region. ASIA PACIFIC SOUTHEAST ASIA INDUSTRIAL WAREHOUSE RENTS CROSS BORDER INVESTMENTS SINGAPORE , % % TOKYO , % , PHILIPPINES % , SHANGHAI % % USD Millions THAILAND % MALAYSIA % % CAMBODIA % USD psm pa CROSS BORDER VOLUME US$mn CROSS BORDER SHARE % Source: Knight Frank Research and Real Capital Analytics As of Q4 2018 NEW FRONTIERS Special Focus: Southeast Asia Industrial & Logistics P G . 0 4 MAJOR RECENT SOUTHEAST ASIAN BRI DEALS LAOS THAILAND CAMBODIA PHILIPPINES TO INDIA, AFRICA AND EUROPE MALAYSIA SINGAPORE INDONESIA HIGHWAY DEEP SEA PORT HIGH SPEED RAIL REAL ESTATE, OFFICE ROAD & TUNNEL PROJECT LAND RECLAMATION & PORT BUILDING Source: Knight Frank Research and The American Enterprise Institute P G . 0 5 NEW FRONTIERS Special Focus: Southeast Asia Industrial & Logistics MAJOR RECENT SOUTHEAST ASIAN BRI DEALS COUNTRY SUBREGION DATE TYPE HOW MUCH SUMMARY OPPORTUNITY The railway is expected to spur new Part of the Kunming- developments including industrial parks and LAOS VIENTIANE 2016 Sep Railway US$. bn Singapore railway hotels for increased tourism. Travel time between kunming and vientiane is cut from 3 days to 3 hours. First highway in Laos The new expressway will spur new developments such as industrial parks for LAOS VIENTIANE 2018 Apr Highway US$. bn linking capital Vientiane to Boten, bordering Chinese manufacturers looking outside of China. China. New four lane highway Part of the government's long-term industrial linking capital Phnom development plan. Sihanoukville will progress PHNOM PENH 2018 Jan Highway US$. bn CAMBODIA Penh to Sihanoukville to be the largest industrial hub in Cambodia; port town. will bode well for its real estate market. Railway will cut the current 12-hour car travel time down to six hours. Increase flow of Manila to Bicol PHILIPPINES MANILA 2018 Nov Railway US$ mn shipments from the region which will stimulate railway industrial real estate, while increased tourism should benefit the hotel sector. Boost the attractiveness of Davao as a New land used for industrial and shipping hub for the Philippines Land which will attract both domestic and foreign PHILIPPINES DAVAO 2016 Oct Reclamation US$ mn new port and real estate MNCs to setup operations; a boon for the overall real estate market. High speed rail to connect to a new Part of the Kunming- international airport in the Rayong port region. THAILAND BANGKOK 2017 Dec High Speed Rail US$. bn Singapore railway Expect industrial and residential real estate sectors to benefit. Undersea tunnel to New mainland link will benefit the real estate