GLP plans China warehouse expansion
Global Logistic Properties (GLP), the mainland's biggest modern warehouse operator, plans to increase space at new projects by up to 25 per cent annually in the next two years as e-commerce grows and retail chains expand.
The company, part-owned by Singapore's sovereign wealth fund, GIC, is beginning construction of 2.5 million square metres of warehouse space in China this year, compared with two million square metres a year earlier, chief executive and co-founder Ming Mei said yesterday.
The company has a current portfolio of about eight million square metres in China.
Logistics properties are "the most attractive real estate opportunity" in China as consumers buy more from e-commerce companies including Alibaba Group and Amazon.com fuelling demand for storage space, according to a report released last month by commercial property brokerage Jones Lang LaSalle.
Singapore-listed GLP, which operates in at least 37 Chinese cities, expects business to also be driven by the expansion of chain stores such as AS Watson.
"E-commerce is just one sector of growth," Mei said. "At the moment, not only overall retail is growing, but the percentage of organised retail is also growing. And they're the ones that drive our business."
Chain stores account for about 10 per cent of retail in China and that percentage can grow to about 50 per cent over the next decade, Mei said. China accounted for about 56 per cent of the company's net assets at the end of June.
The new space GLP will add will be split evenly between first-tier and second-tier cities.
Warehouse rents in China will probably grow around 5 per cent annually on average in the long run, Mei said.