China’s logistics markets are expanding thanks to strong demand from e-commerce and more broadly from the policy shift towards a more domestic-driven, consumption-based growth model than an export-based one. As the on-again, off-again trade-war-of-words with the U.S. administration continues as a potential downside threat to global trade, we are reassured by the size and growth of the consumer base within Asia and in China specifically. For it is domestic demand which holds strong potential to drive internal, nationwide trade, and in China this potential is particularly strong. Distribution centers and last-mile delivery facilities are the real estate subtypes which are benefitting from the trends of strong consumption and higher propensity to shop online. China’s retail sales more broadly have been holding up well with some USD 5.2 trillion (at current prices) of retail sales recorded in 2017, an increase of 10.2% YoY. Already around a fifth of such sales are through online channels which require the storage of merchandise in logistics facilities. Oxford Economics forecasts an additional 127 million urban residents in China in the next 7 years and expects continued middle class expansion (with households earning USD 35,000 - 70,000 per annum as a share of all households to rise from 16% to 27% by 2025). Yet only just over half the population currently uses the internet, and so e-commerce growth should continue. Unsurprisingly, China’s logistics markets have become more highly sought-after investment targets for domestic and foreign capital alike.
Source : CBRE Global Investors