Cold Storage Assets are Heating Up

Cold storage investment volumes in Asia Pacific grew nearly fivefold from 2019 to hit US$1 billion in 2021, according to data from Real Capital Analytics. Logistics assets have seen record levels of deal activity in the last few years, and now cold storage warehouses are quickly playing catch-up.

Interest from investors has intensified since the pandemic due to the sustained demand from occupiers such as food and beverage producers and pharmaceutical companies.

In March this year, a joint venture between CapitaLand Investment and PGIM Real Estate completed the acquisition of Hansol Cold Storage Centre in Gwangju, South Korea, for KRW 90.2 billion (US$74 million) as part of its core logistics strategy in the country.

Gwangju cold chain facility

Cold storage facilities are likewise seeing booming growth in the U.S., where private-equity firm Bain Capital and real estate developer Barber Partners recently announced a US$500 million partnership to develop next-generation cold storage warehouses across the country.

Driven by strong growth in capital flows into the sector and robust demand tailwinds, cold storage yields are also compressing at a brisker pace than that of conventional warehouses.

The spread between cold storage and general warehouses has been tightening in more mature markets and is estimated between zero and 80 basis points (bps) in tier-one markets across Asia Pacific, according to world leader in real estate services, JLL.