Why APAC logistics holds strong appeal for institutions

The warehousing and logistics sectors have undergone significant transformation driven by the rise of e-commerce, throwing up new and evolving opportunities for institutional investors.
Why APAC logistics holds strong appeal for institutions

The pandemic-era boost to e-commerce has significantly driven industrial demand for distribution facilities, warehousing and logistics, according to the Global Outsourcing of Warehousing Report by global commercial real estate investment firm CBRE.

As consumers moved to online platforms for their purchases more frequently, associated real estate sectors have been reshaped, according to Amanda Ortiz, director of US industrial and logistics research at CBRE.

Other industry experts noted that Asia Pacific's regional industry has some highly desirable investment attributes.

Institutional investors are trying to stay ahead of these trends as they continue to invest selectively in logistics.


Logistics overall, has been a key investment theme for regional institutional investors in recent years although 2022 and 2023 have seen pullbacks due to high prices, rising construction costs and the need to trim allocations to rebalance portfolios following losses in equity markets, AsianInvestor reported last July.

Sentiment, however, picked up later in 2023.

Industrial and logistics transactions accounted for 29% of transactions across all segments of Asia-Pacific’s real estate market during the first 10 months of 2023, up 5% from the same period in 2022, according to data from real estate services firm Colliers.

Institutional investors in Asia-Pacific are showing increased interest in industrial and logistics real estate in the region as the market segment matures, AsianInvestor reported last November.

Amanda Ortiz

“This [e-commerce] boom benefitted the industrial sector as distribution facilities for e-commerce use tend to be larger and closer to large consumer bases. We expect this trend to continue to grow over the next five years, with automation and urban warehousing playing a larger role for this industry,” Ortiz told AsianInvestor.


Asia represents the strongest region in terms of growth and opportunities, according to Chiang Ling Ng, chief investment officer, Asia Pacific of $90 billion global real estate investor Hines.

Chiang Ling Ng

Despite market challenges, Hines has seen strong performance in Asia, highlighting the region's potential for warehousing and logistics expansion.

“The logistics sector definitely has some strong and desirable attributes, particularly in markets like Korea and Australia—there’s probably faster turnaround opportunities in those markets,” Ng said.


Across the region, the rise of fourth-party logistics, or external logistics companies that manage entire supply chains, and the increasing integration of technology is also tipped to usher in changes in warehouse design and infrastructure.

Beyond driving the incorporation of new technologies, societal changes have prompted a shift in how the industry views and uses its physical spaces.

The future of warehousing is smart, efficient, and responsive to the evolving needs of the market, according to CBRE's Ortiz.

Ng, meanwhile, emphasised the importance of an operator-led model that focuses on creating value at the asset level.

“For logistics, some markets are good, but also there are markets where maybe there's a bit of oversupply. Our strategy has always been sector agnostic and there are many ways to play.”


The economic climate has also seen a shift towards “green logistics,” as sustainability has become a growing concern.

"The trend of more sustainable warehouses has been growing and, in some cases, necessitated by an occupier’s sustainability goals," said Ortiz.

“The use of solar power and efficient layouts tends to attract tenants and investors that are mindful of ESG practices. We expect new warehouse development to be built with more sustainable materials that will leverage automation for a lower environmental impact.”

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