China’s logistics property sector – boosted by coronavirus outbreak – attracts local and overseas investors

Mainland Chinese and overseas investors are looking to increase their stake in China’s logistics property segment, which is expected to recover faster from the novel coronavirus pandemic, analysts said.

The sector has, in fact, benefited from the outbreak and the resulting containment measures, because of a rise in online shopping as well as increased use of the internet for office meetings and children’s schooling. Logistics properties include warehouses, cold storage facilities, data centres and logistics centres.

“The logistics warehousing market has not been materially [and] adversely impacted by Covid-19 relative to other property types,” said Claire Tang, head of Greater China at LaSalle Investment Management, an independent unit of property consultancy JLL.

“We have seen more and more global [fund managers] raising capital this year to invest in China logistics, including our own China logistics fund, which is a dedicated vehicle for investing in logistics properties in China’s tier-1 and selected tier-2 cities,” she said. “This shows the growing appetite for logistics real estate among global institutional investors.”

LaSalle’s dedicated China logistics fund and its co-investment vehicle have received initial capital commitments of US$681 million. China’s total stock of modern logistics real estate stands at 45 million square metres currently. It has grown 12 per cent per annum in the past five years, according to LaSalle, and this growth appears to have been boosted by a 30 per cent increase annually in online sales.

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The number of real-estate funds targeting the logistics sector has doubled over the past five years, CBRE said. Its latest investor intention survey also found that 33 per cent of respondents were looking for industrial and logistics assets this year, an increase over the 25 per cent recorded in 2019.