Asia Pacific Global Hubs to Remain Dominant: CBRE

09 Dec '15

6 min read

“The industrial and logistics sector in India has significant growth potential, especially with the entry of several major global firms alongside domestic players in this arena, in the wake of the e-commerce and start-up boom. Sector players in this space have not only established themselves in the top tier cities, but have spread to tier II locations as well. The sector, moreover, has been attracting considerable private equity investments in recent times. Once the Goods and Service Tax Bill is finally passed, it will provide an impetus to the sector,” said Jasmine Singh, Head of Industrial & Logistics Services – India, CBRE South Asia.

“With these regional and local hubs in Asia Pacific growing rapidly, they will continue to shape the future supply chain of logistics, improving the economic outlook among the region. Despite certain challenges in the sector - lack of modern logistics stock, restrictions on foreign ownership, transparency concerns i.e. corruption issues, uncertainty of trade agreements - these hubs will play an increasingly important role in bringing a multitude of opportunities for the region, as well as globally,” said Dr Henry Chin, Head of Research, CBRE Asia Pacific. “Long-term demand for logistics remains solid - identifying these logistics hubs is important for occupiers, developers, and investors alike.”

The global hub of Shanghai has long been a strong manufacturing base for the heavy industry, however, due to rising land/manufacturing costs, manufacturing and logistics bases have relocated to the surrounding areas of Hangzhou, Ningbo and Suzhou, as well as into western China in Chengdu. Infrastructure - for example the 'One Belt, One Road' project - is a key component for logistics hub development. Kunming is also another classic example of an infrastructure-led improvement. The Kunming-Singapore Railway project aims to be a key link between China and many ASEAN countries via land, connecting Kunming to Myanmar, Vietnam, Thailand, Malaysia and Singapore. The improved connectivity should increase the flow of goods through Kunming, making it a key logistics hub in the future.

As far as India is concerned, Delhi and Mumbai are expected to become regional hubs by 2030, due to a combination of strong population growth, growing consumption power, rising income levels, and favorable government policies. India's infrastructure spending is expected to grow in order to accommodate its rapidly expanding economy and population. The $90 billion-worth Delhi-Mumbai Industrial Corridor (DMIC) is a keystone infrastructure project that aims to boost the manufacturing capabilities and logistics efficiency in the northwest of India, connecting the large consumption base in Delhi to the manufacturing center in Mumbai, the report said.

In South Korea, strong infrastructure investment and higher trade efficiency is expected to help Busan grow in logistics prominence. On the back of the $16.7 billion port infrastructure project by the Busan Port Authority, Korea is increasing its trade efficiency through free trade agreements. According to the World Trade Organization, Korea has 14 regional trade agreements ranking third in Asia Pacific.

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