China has seen demand for property used for warehousing and by logistics companies rise on the back of growth in e-commerce, which has boosted the prices of such properties and attracted both foreign and domestic investors, reports Shanghai’s National […]
China has seen demand for property used for warehousing and by logistics companies rise on the back of growth in e-commerce, which has boosted the prices of such properties and attracted both foreign and domestic investors, reports Shanghai's National Business Daily.
Investment firms Blackstone Group and Carlyle Group, along with China's Ping An, have begun investing in property and development projects involving warehouses and logistics companies, having spied China's rise to global dominance in the sector, the newspaper said.
Blackstone is planning to launch a new property fund of US$13 billion, after the company came close to achieving the target for its first fund focusing on Asian properties, said the report.
This comes as e-commerce giant Alibaba spent over 100 billion yuan (US$16.3 billion) to build its logistics networks with the creation of Cainiao Network Technology and developer Vanke's forays into the sector because of the downturn in the housing market.
Shanghai, which is tipped to become the center of the government's plan for an economic belt along the Yangtze, has seen a surge in the rent of property for logistics use. Between 2008-2014, the trend grew an annual average of 8%, according to the report.
According to the State Council's plan published in September, Shanghai will be transformed into an international financial, shipping and trading center to lead growth in the Yangtze region.
Properties for logistical use are the most profitable real estate investments in Shanghai, with the returns surpassing those for residential and other commercial properties over the past five years.
Cai Weimin, a professor at Fudan University in Shanghai, predicts that investors will continue investing money in these properties during the next three to five years, and those in the pilot free trade zone in Shanghai are likely to see the greatest surge in prices.
Ownership of logistics properties may boost a company's value, a report by Heitong Securities said. Shanghai Waigaoqiao Group is just one company that stands to reap the rewards, now that it is sitting on 13 million square meters of land in the free trade zone. Waigaoqiao has also set up a subsidiary for third-party logistics services and logistics services for dangerous items, according to the company's annual report.
Another area in Shanghai that could have growth potential in the logistical property sector is the region around the Yangshan port, which has become the world largest port with its throughput of over 10 million TEUs (Twenty-foot Equivalent Units), said the report.