Real Estate

Opportunities in global listed property: pan-Asian logistics property

By James Maydew
BSc (Hons), MRICS Head of Global Listed Real Estate Sydney, Australia

The total amount of e-commerce transacted in China every year is the equivalent of all the online sales from the US and Japan combined1. And the latter two economies have high rates of internet penetration, whereas only one-in-two people in China have online access2.

It’s a startling statistic that demonstrates the opportunities in e-commerce in China, not just for retailers, but for everyone along the supply chain from manufacturers to delivery companies.

Annual spending online in China, which is currently at US$450 billion, is forecast to grow at a compound rate of 16 per cent over the next few years, taking total sales volume to more than US$800 billion by 20213.

At the heart of this growth is the rise in disposable income in China. In the major cities, household income per capita is forecast to increase at a 6.5 per cent compound annual growth rate over the next decade. In the tier two cities, that pace is expected to reach 8.2 per cent4.
 

Asian logistics
Source: Mapletree Logistics Trust, May 2018 Chart: Mapletree Logistics Trust, May 2018

The Chinese government understands the opportunity. Back in 2013 it launched its One Belt, One Road initiative. It is a massive spending project to develop infrastructure, from roads and railways to distribution centres and delivery vehicles across more than 65 countries. The initiative, which was later renamed The Belt and Road Initiative, has massive economic benefits for China and surrounding economies.

One sector already benefitting from the combination of e-commerce in China and The Belt and Road Initiative is logistics property. The surging demand to ship goods has put pressure on the logistics capabilities of the region. Property trusts are buying into sites with e-commerce-related tenants to fill the void. China, Hong Kong and Singapore are key logistics markets in the region.

The eventual winners in the market will be property trusts with exposure to the key markets, high quality management and good locations. Being a first mover in some regions will be beneficial, and for Australian companies, that can depend on partners in the region.

Australian investors can capitalise on this growth opportunity through real estate investment trusts (REITs), such as the AMP Capital Global Property Securities Fund, which is an active ETF trading on the Australian Stock Exchange.

1,2,3,4 Mapletree Logistics Trust, Strategic expansion in the attractive China logistics market, May 2018

 

This article has been prepared by AMP Capital Investors Ltd (ABN 59 001 777 591, AFSL 232497) (“AMP Capital”). BetaShares Capital Ltd (ACN 139 566 868, AFSL 341181 ("BetaShares") is the responsible entity and the issuer of units in the AMP CAPITAL GLOBAL PROPERTY SECURITIES FUND (UNHEDGED) (MANAGED FUND), ( “Fund”). AMP Capital is the investment manager of the Funds and has been appointed by the responsible entity to provide investment management and associated services in respect of the Funds. Investors should consider the Product Disclosure Statement (PDS) for the relevant Fund before making any decision regarding the Fund. The PDS contains important information about investing in each Fund and it is important investors read the PDS before making a decision about whether to acquire, continue to hold or dispose of units in the Funds. While every care has been taken in the preparation of this document, AMP Capital makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. Neither BetaShares, AMP Capital, nor any other company in the AMP Group guarantees the repayment of capital or the performance of any product or any particular rate of return referred to in this information. This information has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. Investors should, before making any investment decisions, consider the appropriateness of this information, and seek professional advice, having regard to their objectives, financial situation and needs.

 

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Important notes

While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455)  (AMP Capital) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

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