Rental Values Kunshan’s average Grade A logistics rents declined to RMB34.50 psm pm as at 2023. Kunshan’s average rent recorded higher than the nation-wide average rent but declined from its pre-pandemic levels. Landlords are seeking to retain existing tenants and attract new tenants through more flexible business terms including extensions of rent free periods, price concessions, and subsidies, on the back of a competitive leasing market. Source: Colliers International Consultancy & Valuation (Singapore) Pte Ltd 40.0 30.0 20.0 10.0 0.0 KUNSHAN GRADE A LOGISTICS AVERAGE RENTS (2018 TO 2023) 2018 2019 2020 2021 2022 2023 RMB psm pm 35.10 35.70 37.20 34.50 35.40 36.60 Market Outlook The e-commerce boom in Greater Shanghai had driven rapid development of Kunshan’s logistics sector. Demand is expected to be soft as tenants continue to seek price competitive alternatives. Rents are expected to remain flat and adjusted upwards after 2024. The limited new supply is however expected to support slight improvement to vacancy rates in the coming year. KUNSHAN GRADE A LOGISTICS SUPPLY, DEMAND, AND OCCUPANCY RATE (2018 TO 2023) Source: Colliers International Consultancy & Valuation (Singapore) Pte Ltd 0.6 0.5 0.4 0.3 0.2 0.1 0.0 -0.1 -0.2 -0.3 -0.4 100 80 60 40 20 0 -20 -40 -60 2018 2019 2020 2021 2022 2023 Gross Absorption (LHS) Net New Supply (LHS) Occupancy Rate (RHS) sq m (million) % 0.4 98.0% 97.0% 93.0% 97.0% 96.0% 80.0% 0.2 0.2 0.1 0.2 (0.2) 0.1 0.2 0.2 0.3 0.3 0.3 Demand and Occupancy Over the past five years, the average gross absorption of Grade A logistics space in Kunshan stood near 100,700 sq m per year. As of 2023, the average gross absorption recorded a decline of near 240,000 sq m and the Grade A logistics occupancy rate declined to 80.0%. Overall logistics demand softened on the back of relocation of anchor tenants to self-built warehouses, competitive price advantage of cities around Kunshan, and injection of new supply into the market in the year. ANNUAL REPORT 2023 73 Financials Framework Portfolio Performance Leadership Overview
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