Over the past five years, global investment into industrial and logistics property has doubled, reaching a total of US$126 billion in 2017.

A sector traditionally prized for its stable income has recently seen dynamic capital growth, and logistics facilities now attract lower yields than retail property in some markets.

This evolution has been driven by exceptionally broad investor appetite for the sector, ranging from private equity vehicles and institutional funds to private individuals and families. Platform and portfolio transactions have become increasingly common among larger investors as they seek large-scale assets.

In Western markets, the rise in online shopping is one of the key drivers stimulating this apparently insatiable appetite, as retailer demand for modern distribution facilities continues to grow.

In Europe, rental growth forecasts for the sector are healthy, as stock is scarce and demand high. Asia-Pacific markets share these characteristics too.

However, as these five key trends demonstrate, they face an arguably more diverse mix of investment drivers, encompassing global trade, manufacturing growth and new infrastructure opportunities.

China moves up the value chain

China’s growth over the past 30 years has been largely based on its status as the workshop of the world. Today, however, the “Made in China 2025” initiative represents a concerted effort to move China up the value chain, with the ultimate aim being for China to compete globally in manufacturing innovative technologies.

Modern logistics facilities and high-tech business parks are seeking more investment to upgrade existing sites and regenerate older brownfield sites.

E-commerce in South-East Asia

A fragmented market, lack of easy online payment methods and a strong shopping mall culture means e-commerce has not yet had the same powerful impact in South-East Asia that it has had in other regions.

However, with both Alibaba and Tencent investing heavily in the region in recent months and the introduction of cross-border payment solutions, there is now significant scope for growth (see chart).

And, as the retail market moves online, demand for modern logistics warehousing in close proximit y to major urban centres and transport links will only increase further. Key trends behind the growth in Asia-Pacific’s industrial and logistics market – Knight Frank

About the author

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Sign Up for Our Newsletter

Get notified of our weekly selection of news

You May Also Like

Real estate in Thailand: On the way to a sustainable architecture

Like in many other countries in Europe and America, in Asia, sustainability has become a new focus also for residential property developments. This is particularly an urgent move at a time when the globe is facing risks from climate change and illnesses.

Thailand’s liveability ranking sinks amidst Covid-19 restrictions and environmental concerns

Thai cities have fallen out of the global top 100 most liveable locations for expatriate workers from East Asia, with Bangkok and Chiang Mai placed at 115th and 118th in the latest Location Ratings survey respectively

Hotel sector continues to face challenges in Asia Pacific

The quarter was also marked by the partial reopening of Thailand to international visitors with the launch of the Sandbox initiative in Phuket and Koh Samui.