JLL: Asia-Pacific cold storage real estate value likely to cross US$2 bil in 2030

• “Investment in cold storage has cooled from 2021 but has by no means peaked. A spectrum of factors, ranging from structural changes in consumption patterns to the shift to online spending and various macroeconomic influences, will shore up this market for longer-term yet sustainable growth from a more select group of investors,” said Ben Horner, JLL Asia Pacific’s senior director of supply chain & logistics solutions.

KUALA LUMPUR (Jan 3): Investment in Asia-Pacific cold storage real estate will likely cross US$2 billion (RM9.26 billion) between now and 2030, compared to a US$948 million high in 2021, according to international commercial real estate and investment management company JLL’s latest research report, Cold chain, unlocked: The cold storage opportunity in Asia Pacific.

In a press statement, JLL pointed out that cold storage facilities will continue to present a compelling long-term investment opportunity in the Asia-Pacific, supported by an ability to deliver resilient and stable returns, as well as to generate higher rental rates than other asset classes.

“Investment in cold storage has cooled from 2021 but has by no means peaked. A spectrum of factors, ranging from structural changes in consumption patterns to the shift to online spending and various macroeconomic influences, will shore up this market for longer-term yet sustainable growth from a more select group of investors,” said Ben Horner, JLL Asia Pacific’s senior director of supply chain & logistics solutions in the statement.

He added that in between today and 2030, numerous factors are expected to drive an investment recovery in cold storage assets, where volumes have contracted from a 2021 high. Specifically, investors will be drawn to the greater stability of the sector compared to other asset classes, supported by evergreen demand for perishable goods like food and medicine housed in cold storage facilities. Additionally, attractive leasing covenants, whereby rents are typically higher than standard logistics and industrial facilities and lease terms are longer, will attract forward-thinking investors.  

According to the report, transactional activity in the overall cold storage sector has slowed in the past 12 months due to several external factors, such as higher interest rates and subsequent rising capital costs.

In the Asia-Pacific, however, the transaction volume soared for both distribution and cold storage centres in 2021, with major deals reaching a record of 32 transactions with an average deal size of US$16.3 million.

Meanwhile, the size of the Malaysian cold storage market recorded an annual 7% growth over the past seven years, thanks to the changing consumer preferences and the rise of e-commerce, said JLL Malaysia head of research & consultancy Yulia Nikulicheva.

“In line with global trends, Malaysian consumers are increasingly willing to purchase fresh products and expect faster delivery. Categories such as vegetables, fruits, and dairy products have experienced particularly rapid growth. The global surge in the halal food segment is also expected to act as a catalyst for further growth in the Malaysian cold storage market. Malaysia has announced plans in its Halal Industry Master Plan 2030 to nearly double the size of this segment by 2030,” Nikulicheva noted.

Nonetheless, she added that the Malaysian market remains fragmented with the majority of the cold storage space owned and operated by domestic third-party logistics (3PL) operators, where it is highly concentrated around Kuala Lumpur, Shah Alam and Klang, as the goods are delivered into Malaysia through the nation's major seaport. Notable recent projects include the Kokubu facility in Shah Alam and two facilities operated by Havi Logistics in Klang and Bukit Raja.

However, JLL Malaysia chief growth officer Christophe Vicic highlighted that the Malaysian market has garnered significant interest from international players, which will spur further market transformation and growth in the medium term.

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