The GBA logistics property market inherited its growing momentum since last two years at the beginning of 2022 and performed well on par with market expectations during Q1/2022. However, this has been shaken up since April 2022 as logistics property occupiers started to have a growing concern over their business operations. The confluence of domestic and global events affecting the economy, trade and global supply chain had left occupiers reviewing and altering their logistics property plans and as a result, leasing demand for the overall GBA logistics property market softened HoH, causing a small uptick in the average vacancy rate. Nonetheless, this had not dampened the leasing sentiment from most landlords’ perspective and changed their letting strategies just yet and the GBA rental index inched up by 1.3% HoH and 4.3% YoY by the end of 1H/2022 concurrently. During the same period, many investors’ investment interest in the GBA logistics property investment market remained intact compared to 2H/2021, and the level of transactional activity was on par with what was seen in the last 12 months, with a couple of investment deals closing within the region. The GBA price index grew 5.1% HoH and 9.7% YoY by the end of 1H/2022. Despite the upbeat performance of both rental and capital values in the first half, all the GBA logistics markets entered a late upswing market cycle, with rentals particularly approaching their peaks in most of the cities, if not all.

Looking into 2H/2022, the recurrence of covid outbreaks in many cities, albeit at a small scale, has already brought about some negative impacts on the development of the supply chain, eroding occupancy and rental rates from an asset management perspective in the leasing market in early 2H/2022. This will likely lower the rental index further by end-2022. Although investors are becoming more rational and price-sensitive and even selective with their deal sourcing, this is not enough to alter landlords’ pricing confidence and strategies for at least 2H/2022 and thus the GBA price index is expected to rather become steady in the second half.