Interest in cold storage real estate is getting warmer, according to Business Times. The growing appetite is due to a larger push into less competitive markets in the industrial real estate sector. Another reason behind the major shift is a sudden interest from a demographic that's not looking at the sector before, as well as a change in consumer behavior.
The robust demand for logistics assets as well as high quality industrial real estate in the Asia Pacific had been growing steadily for years. The surge has always been driven by "strong domestic consumption," or interest coming from local investors in the region.
The e-commerce sector also gave benefits to the expansion of the industry. It helped heap attention to spur industry expansion and further development of modern logistics facilities into an investment product worthy to be invested in. Cold storage has become this and much more, creating a "substantial niche" to which sustainable growth could happen.
Cold storage investment isn't a new idea to happen in the Asia Pacific region. However, the opportunity to invest in the sector hasn't been taken seriously until recently. The pickup in interest has led investors to seek different investment opportunities in all stages of the sector's supply chain.
Evidence of the world's shift toward investment in cold storage maybe this deal by DWS to acquire prime Australian cold storage assets. The German asset manager, according to Funds-Europe, received 50% in freehold interest for a "prime" refrigerated distribution center, which is in Queensland, Australia. The payment has been set at €81 million.
The facility is made up of a single-story, state-of-the-art cold storage center. It is a 15.5-hectare purpose-built, cross-docked facility with two levels of offices. The Australian retailer Coles Group Ltd uses most of the spaces in the facility.
This deal was completed on behalf of DWS and their Asia core Real Estate fund. 50% of the ownership will be retained by Frasers Logistics & Industrial Trust. Like many investors into the Asia Pacific cold storage asset market, it was an "attractive opportunity" the company could not ignore, according to DWS head of Asia Pacific real estate Victoria Sharpe.
The plan is to create a series of investments aimed at maximizing the new-found opportunity into cold storage spaces So far, investors have trusted their instincts and a new understanding of cold storage facilities. These are also "decoupled" from other assets in logistical portfolios, such as warehouse facilities.