coLumNS
Rosy Real estate
n late 2008, I was working with financial who did all the right homework but due to market
I
investment in the industrial real estate forces still got caught out.
sector and experienced the sudden vacu- On the other side of the coin there are those
um and short fall of capital destined for developers who have chosen well and developed
the sector. Upon my recent return to the Class A logistics hubs and it is these developments
logistics real estate industry, I was surprised to find that have seen stable and sustained growth over
the sector experiencing a renewed vigor and inter- recent years. Hence the creation of a fragmented
est from financiers. It is interesting to note that, market with some developers having done well
from a property perspective, industrial real estate during the recent tough times and others bogged
is generally the first asset class that feels the effects down from a hangover legacy of bad investments.
of an economic down turn and is also the last sec- Most carry at least one or two troubled develop-
tor to recover. By nature of the way the industrial ments. It is this situation that offers a challenge to
industry has evolved, China is particularly sensitive both the user and to the developer going forward.
Jeremy Chapman is the director of to such demand shifts given its successful drive to There are a few well located facilities, which are
Industrial Investment at Colliers
in short supply and high de-
International, which assist clients
become the world’s factory.
in the repositioning, disposal and Therefore, this renewal of mand. Then there are those
development of projects. He can be
less attractive locations hav-
reached at Jeremy.chapman@col-
industrial real estate invest-
liers.com ment comes with a different ing their own issues.
set of needs but is more fo- Added to the equation
cused and streamlined than has been the difficulty of
in previous years. borrowing money for the
development of facilities,
The Real Impact both locally and from over-
Looking at the plans of seas. Investors may look to
leading developers, the pro- overseas financiers for fund-
jected supply of logistics ing as the cost of borrowing
warehousing slated for 2009 is potentially cheaper over
and 2010, it was a common time. This however comes
assumption that there would with a myriad of statutory
be an oversupply in 2010 and other investment related
and beyond. Given that the issues.
financial brakes were put
on during the latter half of Window of Opportunity
2008, most of this projected As was the case back in
supply never actually eventuated. Construction 1997 during the Asia crisis and again in 2008 to
The potential
stopped across the market and land was banked present, Foreign Direct Investment (FDI) into the
pitfall for the
for another day. Surviving investment committees industrial sector ground to a slow crawl when com-
pushed back on new potential purchases. pared to the boom years. When FDI decreases, lo-
market due It is rare to find investors who secured funding cal industrial zones and governments tend to show
to a slowness
prior to the crash and have continued to develop greater leniency and flexibility to other classes of
their facilities. Herein lies the problem for the fu- real estate including the development of logistics
to react and
ture of logistics service providers. This halt of de- hubs. The need to attract investment is paramount,
to grasp an
velopment, lag time of funding and development but to ensure that tax-income producing manu-
of product will inherently affect the market supply facturers/industries are balanced with low income
opportunity
of high grade facilities in many locations. generating logistics developers and users.
that seldom
During the frenzy of 2008 and before, a number The potential pitfall for the market due to a
comes around
of investors rushed into the country, buying what slowness to react and to grasp an opportunity that
they thought to be high potential growth loca- seldom comes around in China could result in the
in China tions without really understanding their customer’s dominance of the market by one or two developers
needs. There were also experienced developers facilities, therefore reducing the flexibility and pric-
14 MARCH/APRIL 2010 www.supplychains.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68