Concrete Analysis | Hong Kong’s cold storage market heats up, ripe for investment amid short supply
- The pandemic is driving a shift in consumer behaviour that is creating more demand for cold chain facilities, particularly cold storage
- With relatively lower barriers to entry, cold storage has emerged as an alternative to data centre assets
Over the past few months, the emergence of a stay-at-home economy has brought about a significant change in how people shop for fresh food and groceries.
A cold chain, by definition, is a temperature-controlled supply chain and includes the manufacture, processing, transport and distribution of temperature sensitive as well as perishable consumer products. Cold storage refers to warehouses where products are stored, packaged and distributed.
Demand for cold storage is steadily increasing in Hong Kong, fuelled by the surge in online grocery shopping. One of the largest local online retailers, HKTV Mall, reported that it averaged 30,000 daily orders in the first half of 2020, marking a 1.2 times increase year on year. In first half of 2020, the city’s retail sales of fish, livestock and poultry, fresh or frozen products, increased by 15.2 per cent, while supermarket sales grew by 10.6 per cent, compared with a 33 per cent drop in overall retail sales over the same period, due to the outbreak.
Temperature-controlled storage facilities are also vital to pharmaceutical logistics. According to the latest Biopharma Cold Chain Sourcebook, pharmaceutical products that generally require 2°C to 8°C storage and shipping will total US$341 billion and show 48 per cent growth between 2018 and 2024 – 1.8 times the rate of non cold chain products.
03:24
China’s delivery business provides a career path for the deaf
In CBRE’s Asia-Pacific Investor Intentions Survey 2020, cold storage was regarded as one of the top 3 sought-after alternative asset classes over the past three years. “Build-to-suit” or forming partnerships with cold storage developers and operators are the main entry routes for investors.