KUALA LUMPUR: Despite logistics rents across Asia-Pacific growing by just 0.2% in 2024, significantly lower than the 7% growth recorded in 2023, Greater Kuala Lumpur stood out with a remarkable 5% increase in half-yearly rental growth, driven by the completion of premium industrial properties and sustained demand from the e-commerce and manufacturing sectors.
This was revealed in the Knight Frank Asia-Pacific H2’24 Logistics Report which was launched recently.
Knight Frank Occupier Strategy and Solutions global head Tim Armstrong said, “As the world braces for Trump 2.0, the realignment of supply chains is likely to gather pace in response to planned tariff increases. China-plus strategies, consequently, are expected to take on added urgency as manufacturers focus on further diversifying bases in Southeast Asia and India, strategically leveraging these locations to friend shore operations.” He added occupiers will have to tread a strategic tightrope, focusing on cost management while selectively evaluating their logistics footprint.
“This emphasises logistics hubs that are well-connected to major trade routes. The evolving geopolitical landscape, and pre-ference for modernised distribution facilities are expected to continue drive demand for well-located, efficient prime logistics spaces in the region,” he said.
The Asia-Pacific logistics sector is expected to maintain a delicate balance in 2025 despite market fluctuations. Occupiers will likely focus on optimising their existing footprints and working through excess capacity, which should help stabilise demand-supply dynamics.
Prime logistics spaces are anticipated to see continued healthy demand, with leasing volumes keeping pace with new supply. As a result, regional vacancy rates are forecast to remain largely stable, supporting moderate rent growth of up to 2%.
Knight Frank Asia-Pacific research head Christine Li said a flight-to-quality trend will remain supportive of demand for new logistics spaces in the region, as occupiers continue to plan for supply chain contingencies and optimise the use of technology in their operations.
She added that the manufacturing sector is also emerging to be a key source of demand, particularly in high-growth, strategic sectors such as electric vehicles and electronics, as the need for specialised supply chains will reshape the region’s trade and logistics landscape.
Li said, “Where excess capacity will continue to depress rents, those in the rest of the region will be supported by more balanced demand-supply dynamics. At the same time, the delivery of new premium facilities in the region’s emerging markets will also prop up average rents.”
For Malaysia, the industrial and logistics market has proven to be resilient despite external pressures. The government’s continued focus on infrastructure develop-ment have also played significant roles in supporting this growth.
Knight Frank land & industrial solutions senior executive director Allan Sim said that the industrial market in Greater Kuala Lumpur continues to experience stable growth, benefitting from the underpinning demand for warehouses and manufacturing facilities from foreign manufacturers as a result of the trade tension and flight in quality, integrating elements of artificial intelligence and automation to cater to the evolving needs of businesses, ensuring its competitive edge.
Looking ahead, Knight Frank Malaysia anticipates that logistics rents in Greater Kuala Lumpur will stabilise while maintaining positive momentum, supported by ongoing infrastructure projects and foreign invest-ments in manufacturing.
Knight Frank Malaysia group managing director Keith Ooi said, “Malaysia’s industrial and logistics market is strategically positioned to benefit from the ongoing global supply chain realignment and heightened trade tensions, particularly with the recent tariff increases from the US. While we must tread carefully in response to these challenges, our prime location within Southeast Asia, coupled with continuous investments in infrastructure, provides a solid foundation for growth.”
