Logistics Warehouse Prospects Vary Across Mainland China
Driven by online retailers and thirdparty logistics companies, the demand for logistics facilities in the mainland is strong. However, the supply of quality modern logistics facilities is limited, and most existing logistics warehouses were only converted from dilapidated factories and do not meet international standards. In view of short supply, the average rent of quality logistics warehouses has been rising over the past few years.
Meanwhile, thanks to high-transparency business development strategies and financing of the construction and operation of modern logistics warehouses, most large-scale warehouse suppliers have developed well. Sources indicate that a Chinese private equity fund acquired Global Logistic Properties (GLP), a Singapore-listed company, in July 2017 for approximately SGD 16 billion (or USD 11.6 billion), as the largest provider of modern logistics facilities in China, Japan, the United States and Brazil. GLP also operates many logistics warehouses in the Greater Bay Area. Alibaba's logistics subsidiary, the Cainiao Network, also announced in June 2017 that it will cooperate with China Life Insurance to establish a logistics warehouse fund with a market value of RMB 8.5 billion, aiming to expand the network of smart processing and storage facilities in China.
The development prospects of logistics warehouses vary across mainland China. Guangzhou has always been the logistics centre of southern China and will have a large supply in the next few years, mainly in Conghua, Zengcheng and Huadu districts. With the recovery of global trade in 2017, the logistics industry in Hong Kong and Shenzhen has also begun to improve. In June this year, Cainiao Network announced that its joint venture company will invest approximately HKD12 billion in building a world-class smart logistics centre at Hong Kong International Airport, and help Cainiao expand and strengthen its global layout of the logistics network. In the long run, however, the development prospects of the industry in Hong Kong and Shenzhen will continue to be affected by land shortages and high land prices. In contrast, there will be increasing logistics and warehouse facilities to be seen in second-tier cities such as Foshan, Dongguan and Huizhou.