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Southeast Asia ViewPoint - Prolonged Supply Chain Disruption to Accelerate Southeast Asian Logistics Real Estate Demand 2022

27 Jun 2022

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  • Pandemic-related border controls, mainland China’s zero-covid policy, the rising cost of global shipping and higher energy prices will continue to pressure Southeast Asian supply chains in 2022 and mostly likely beyond.
  • As occupiers respond by strengthening supply chain resilience and seeking to strike a balance between “just-in-time” and “just-in-case” inventory models, new demand for modern warehouses is poised for substantial growth.
  • Demand will also benefit from the implementation of China Plus One strategies by manufacturers seeking to relocate production out of mainland China and into multiple bases in nearby markets, with ASEAN economies set to be clear winners.
  • As the RCEP and other FTAs take effect, Southeast Asian markets’ tariffs with their major trading partners will fall significantly, benefiting export growth and increasing their role and importance in global supply chains, spurring additional real estate requirements. The continued growth of the region’s e-commerce industry will also continue to drive warehouse demand.
  • As well as booming occupier demand, investment in Southeast Asian manufacturing and logistics real estate will accelerate, with opportunities in developed markets likely to focus on developing institutional grade logistics stock to ride on local consumer market growth and the increasing importance of Southeast Asia in global value chains.