TOKYO — As China shakes off the economic impact of the coronavirus outbreak, investors have flocked to funds focused on logistics facilities there and elsewhere in Asia, anticipating that growth in e-commerce will drive strong demand even after the pandemic.
Singapore-based GLP last month closed a $2.1 billion fund with a portfolio of 34 properties across 18 Chinese cities. Participants include seven Chinese institutional investors, six of which are new clients of the logistics expert, hinting at keen interest in the field as an investing theme.
The virus outbreak stalled Chinese real estate investment. Total deals in the first quarter of 2020 fell roughly 40% on the year to 43.1 billion yuan ($6.08 billion), real estate services firm Cushman & Wakefield says.
The heavy focus on distribution facilities stands out, given that the market has yet to return to pre-outbreak levels. Though property in general looks likely to remain a popular investment as central banks keep global interest rates low, investors are being selective in order to position themselves for success when conditions recover.
“Many investors are wary of investing in office buildings, which had seen a supply glut, and shopping centers, which are under threat from e-commerce,” Cushman’s Hideaki Suzuki said.
LaSalle Investment Management finished the initial close of its first dedicated China logistics vehicle in April. The firm has received commitments of $681 million from investors in Europe, the Middle East and Asia.
“Growth in domestic consumption, and e-commerce in particular, will continue to boost demand for modern logistics properties,” said Claire Tang, head of greater China at LaSalle.
Prologis, a U.S.-based real estate investment trust, has reported raising an additional $1.4 billion for an existing China-focused logistics fund. Newease China, a logistics real estate platform, has partnered with J.P. Morgan Asset Management for a joint fund holding $600 million in initial assets.
A similar trend is emerging in Japan. Though real estate transactions there fell sharply in April, “we’ve had more consultations about leasing floor space in distribution centers, and investor demand has also been high,” said a representative at a major real estate brokerage.
A closed-end fund operated by Prologis acquired logistics facilities from shipping company Nippon Express last month for about 50 billion yen ($467 million). Participants in the fund have not been disclosed, but they are believed to include Japan’s Government Pension Investment Fund, one of the world’s largest investors.