Investors facing stiff competition are mulling new routes into the Asia Pacific sector as demand for industrial real estate rises.
According to JLL data, investment volumes in Asia Pacific logistics assets rose 26 percent in the first quarter year-on-year and constituted over a fifth of all transactions. Early estimates project first-half numbers will continue to further accelerate.
The research has highlighted that amid heightened competition, many investors are finding entry or expansion into the sector has been challenging.
“There is a mismatch between demand and supply right now that’s really driving this market,” noted Tom Woolhouse, Head of Logistics and Industrial, Asia Pacific, JLL.
“It’s making it more difficult for investors to gain exposure to the sector.”
With supply unlikely to rise fast enough to meet demand, at least in the short term, alternate solutions are being considered. For instance, Woolhouse pointed out the potential for more sale-and-leaseback transactions in the sector. Many owner-operators are exploring this option to upgrade facilities, repair balance sheets, and implement new technological solutions into warehousing and supply chain management.
“Sales-and-leaseback transactions will likely rise as a result of competition for logistics and industrial space,” said Woolhouse.
“It provides a win-win solution for the corporate occupier that needs to monetise the asset for operational needs while allowing the institutional investor access to a steady rental income stream.”