With the advent of changing consumption patterns in the mainland economy, the logistics property market is expected to increase at an incredible rate. Despite recent slowdowns in trade, some analysts predict that by 2029 the value of the logistics property will grow to a figure of about US$2.5 trillion. Much of this expected property value growth is fueled by consumption-lead changes within the mainland economy. According to the global real estate consultancy, Colliers International, “The total value of investment in warehouses and distribution centers there jumped 38.8 percent year on year to 3.2 billion yuan (HK$4.04 billion) last year, while the number of deals surged 85.7 percent.”
The surge in property values can be attributed to the law of supply and demand. Access to land remains problematic as local governments still remain hesitant to allocate the land to the logistics industry. Some corporations, however, are overcoming this property crunch by partnering other financial institutions to offer lucrative deals. One such company is Shanghai based Global Logistic Properties.
Global Logistic Properties is China’s largest owner of warehouses and distribution centers. It is betting on the unencumbered growth of the logistics property market, and as such is seeking to boost access to land. To achieve this Global Logistics Properties has signed a US$2.5 billion equity agreement with three financial firms, the Bank of China, Beijing-based China Life Insurance and private-equity firm Hopu Investment management.
If Beijing’s promise of economic growth based on increased domestic consumption is realized, logistics storage facilities such as those sought by Global Logistics Properties will be in high demand. New storage facility properties will enable faster delivery times to Chinese consumers as well as same-day delivery options.
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Source: Chiang, Langi, and Peggy Sito. “Logistics Property Market Takes off in China as Focus Shifts to Consumption.” South China Morning Post. N.p., 18 Mar. 2014. Web.