Industrial and logistics space was once the forgotten wasteland of real estate investing, a gritty but generally boring asset class. Then came the internet and, with it, ecommerce. Throw in a crippling pandemic, and suddenly logistics is all the rage. It is cited by virtually everyone as the sector to watch in 2021.
Not only has real estate proven its worth in a mixed-asset portfolio, the Asia Pacific region is now a fixture in global real estate portfolios, and allocations are expected to continue to rise, as most investors report themselves underallocated.
The structural themes that have favoured modern logistics in the Asia Pacific region for the past decade were accelerated by the COVID-19 pandemic in 2020, as occupiers competed for quality, well-located space in the best distribution locations of the largest metros in the region.
In recent years, the awareness of environmental, social and governance (ESG) concepts and their utilisation have rapidly grown in Japanese markets and real estate sectors, led by market leaders in government sectors as well as institutional players.
Recurring themes accelerated by the pandemic are top of mind for institutional property investors looking to capitalise on — and receive income production from — high-value assets.
South Korea’s US$672 billion National Pension Service is increasing its push into real assets around the world, with three prominent partnerships announced in December 2020.
According to JLL, there are three factors that, once aligned, will shift how investors view assets and how occupiers and consumers use real estate across Asia Pacific: economic recovery is likely in many markets; new dynamics influencing how people work, live and play will become more obvious; and pre-COVID real estate trends will continue to accelerate.