Investment in regional logistics, industrial real estate should double in 3-5 years: JLL
Investments in logistics and industrial real estate in Asia-Pacific will double over the next three to five years as investors seek to increase their exposure to the asset class, real estate consultant Jones Lang LaSalle predicted in a recent report.
He expects that figure to rise from $25-30 billion to $50-60 billion currently.
Logistics and industrial buildings, including warehouses, supply chain and manufacturing facilities, would see increased investment due to growing occupant confidence in the sector, he said.
In recent years, due to the evolution of e-commerce and third-party logistics (3PL) services, investor engagement and occupant mix in logistics and industrial real estate have changed significantly, he said. declared.
Tom Woolhouse, head of logistics and industrial research at JLL Asia-Pacific, noted that across the region, “structural changes to asset allocations and supply chain networks have converged to accelerate demand. investors and occupants of the logistics sector. The increase in investment in logistics and industrial real estate reflects changes in occupiers’ strategies for higher quality assets and the shift in mix towards ‘new economy’ occupiers, largely based on growth e-commerce and technology-enabled supply chains”.
The increasing number of portfolios and mega-transactions and several macroeconomic factors contribute to the increase in investment volumes.
In 2020-2025, the urban population of the Asia-Pacific region is expected to increase by 41 million per year, an additional 760 million people will join the middle class, and incomes will increase by 4% per year, presenting significant growth potential for The area.
According to JLL research, logistics funds doubled their assets under management in 2020 and continued to accelerate in 2021.
Over the past six months, a record number of mega-deals have been completed in Asia-Pacific’s logistics and industrials sector, including ESR’s purchase of Australia’s Blackstone Milestone portfolio, even as yields have fallen faster than interest rates over the past 12 months.
Regina Lim, Head of Capital Markets Research at JLL Asia Pacific, said: “The attractiveness of the logistics and industrial asset class will only intensify in the eyes of investors. In reality, institutional investors have just begun the strategic reallocation of their portfolios and need to increase their exposure to logistics assets by 40-50% in the near term as they seek to allocate capital to stable income-generating assets.
Investments are expected to be greatest in South Korea, Australia and China, given the availability of new modern logistics inventory. The influx of funds focused on these countries and resilient demand from e-commerce penetration will continue to offset yield compression and fierce competition for assets.
According to JLL analysis, strong supply and demand momentum will support further yield compression.
Vietnam, currently one of the fastest growing e-commerce markets in Southeast Asia, saw a massive acceleration in 2020-21 as shoppers stuck at home flocked online.
JLL’s Country Manager for Vietnam, Paul Fisher, said, “Logistics is critical to the future success of the Vietnamese e-commerce market. Many overseas logistics providers are striving to meet the rapidly growing needs of the market.
Due to the steady increase in core and core-plus funds entering the sector over the past few years, there is potential for more sale and leaseback transactions in the sector across Asia-Pacific.
Many homeowners are exploring this option to free up capital expenditures to upgrade facilities and implement new technology solutions for warehousing and supply chain management.
JLL Asia-Pacific Research Director Peter Guevara said, “The growing adoption of technology and automation solutions, coupled with a better understanding of the growing importance of environmental, social and governance design requirements and human-centric, all point to a new trajectory for the logistics industry. .
“Ultimately, this new trajectory significantly changes the occupier mix and supports the investment thesis for modern, prime logistics real estate.”
Fisher noted that the logistics market in Vietnam is still at a relatively nascent stage and expressed optimism that “driven by the growth of the e-commerce and manufacturing sectors, as well as the growth of domestic consumption… [it] will continue to thrive and evolve in the same way we have seen in other markets.”
VIET NAM NEWS/ASIA NEWS NETWORK