The shortage of warehousing property: the reasons for the lack of space
There is a shortage of warehousing property in Kazakhstan, which has existed since Q3 2022. In total, the segment comprises 1.3 million sqm of facilities. According to experts, the limited supply in the market is related to the payback problem. To offset construction costs, a warehouse complex must be at least 20,000 sqm, but such options are not popular with buyers and tenants. Only large developers are currently involved in building this type of property, which cannot meet the growing demand.
Outdated approaches are also hindering the development of the warehouse real estate market. For example, most countries do not classify facilities, as is common in the CIS. The classification was introduced when Kazakhstan became an independent state and had to deal with a large amount of industrial property that was being misused.
As in the rest of the world, there has been a high demand for warehouse space in the country since the pandemic. In most cases, warehouses are used as distribution centres for shops. In addition, companies from neighbouring countries are interested in facilities in Kazakhstan after being relocated due to geopolitical conflicts. Currently, such facilities are available in the country at about 0.07 sq m per capita. This compares with around 2 sqm per capita in Europe and 4 sqm per capita in the US. In China, the availability of warehouse space is about 0.8 square metres.
Why there was a shortage of warehousing property in Kazakhstan
It should be noted that the problem of warehousing property is particularly acute in Kazakhstan, which is the largest market in the Central Asian region. At the same time, the construction of new facilities is weak despite demand.
In Kazakhstan, Class B facilities account for around 70% of all warehouse space, and 92% are located in major cities. For example, the share of such properties in Almaty is 63%, and in Astana, it is 21%. In addition, 20% of all space in the country is occupied by logistics companies providing 3PL services.
There has been an acute shortage of Class A warehouses since the second half of 2022. The lack has led to a 16% increase in rental rates. While it cost US$100 per year to rent a square metre of Class A facilities in the third quarter of last year, this figure had risen to US$116 by the first quarter of 2023. And prices are still growing. According to experts, Kazakhstan’s warehousing property will increase by around 2 million sqm to 3.3 million sqm within 3-4 years.