In recent years, Chinese logistics properties have been in great demand from institutional investors, many of whom are attracted to the higher-than-average rental yields and investment returns. During the past two years, foreign and domestic investors have poured more than 60 billion yuan (US$9.7 billion) into China’s logistics property market, according to JLL.

These investments are spurred by the growing demand for prime logistics space in China from third-party logistics providers and retail operators, in particular for e-commerce, with China’s e-commerce market capable of exceeding those of the United States and Europe combined by 2018, according to McKinsey & Co (see graph, page 6). This surge in logistics demand in China mainly is due to the growth in urbanisation, which has resulted in rising incomes in the country.

China’s economy has transformed during the past 10 years from manufacturing-based to consumption-based. With more than 1.7 million square