Industrial and logistics sectors in the Asia Pacific region are forecast to gain more investments in the next three to five years, as investors look to increase exposure to the asset class.
In its latest report, Jones Lang LaSalle (JLL) said it forecasts logistics and industrial investment volumes to rise to $50 to 60 billion between 2023 and 2025 from $25 and 30 billion in 2019 to 2020.
JLL said logistics and industrial buildings, which consist of warehousing, supply chain and manufacturing facilities, will see increased investment due to rising occupier confidence in the sector.
“Across Asia Pacific, structural changes to asset allocations and supply chain networks have converged to accelerate logistics sector investor and occupier demand,” said JLL Asia Pacific head of logistics and industrial Tom Woolhouse.
“Increased investment into logistics and industrial real estate mirrors changes in occupier strategies for higher quality assets and the shifting composition towards ‘new economy’ occupiers, based largely around e-commerce growth and technology-enabled supply chains,” he added.
In the Philippines, investments into the logistics and industrial markets will be driven by the trend of diversification.
“The pandemic has forced diversification,” said P. Ryan Isip, Head of Capital Markets, JLL Philippines.
“Developers in the Philippines are looking to diversify into industrial & logistics, with most of the inventory demand being in office and residential developments,” he added.
JLL Philippines head of research and consultancy Janlo de los Reyes said the logistics and industrial sectors continue to be a bright spot in the real estate market.
He added that logistics and industrial transactions volume grew by 47 percent, outshining other asset classes as demand continues to increase and rent remains stable.
“As e-commerce continues to be the consumer platform of choice for many Filipinos, urban logistics demand continues to grow. We are also seeing growth of third-party logistics firms seeking spaces within and outside metro areas,” JLL said.
Aside from the rising investment volumes, JLL pointed out that several macroeconomic factors are also seen to contribute to the growth of Asia Pacific’s logistics and industrial sector, such as the projected annual urban population growth of 41 million between 2020 and 2025.
“In the same period, an additional 760 million people will join the middle class, and incomes will grow four percent per year, presenting significant growth potential for the sector,” JLL also said.