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Key trends behind the growth in Asia-Pacific’s industrial and logistics market

As the retail market moves online, demand for modern logistics warehousing will only increase further.



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

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