The View | Asia’s appetite for logistics property has room to grow
- The more liquid offices sector is still favoured in this region, but investors can’t ignore the continuing demand for warehouse space in this pandemic-induced digital transformation
- The recent ESR-ARA merger reflects a move by the leading property groups to capitalise on the opportunities on offer, to help investors redeploy their capital into logistics and data centres
If there were any doubts about the strength of the recovery in Asia’s commercial property investment market, they were dispelled by the latest data on transaction volumes.
Investment activity surged 45 per cent, quarter on quarter, in the second quarter of this year to just over US$40 billion, 25 per cent higher than in the second quarter of 2019, data from CBRE shows.
Not only has investment activity returned to pre-pandemic levels, cross-border purchases in the first half of this year were on a par with volumes in 2017-18, driven by a string of major acquisitions by North American and Singaporean buyers.
Indeed, one of the most noteworthy aspects of the swift recovery in transactions is the sharp increase in the size of deals. According to CBRE, investments worth over US$1 billion accounted for one quarter of volumes last quarter, with large portfolio transactions increasingly prevalent.
In a sign of the extent to which the pandemic has catalysed a rebalancing of investors’ real estate portfolios, logistics and industrial deals – which have historically accounted for close to 10 per cent of transaction volumes in Asia – constituted 30 per cent of investment activity last quarter, the same share as the office and retail sectors, data from JLL shows.