M&G Real Estate invests US$131m in Korean logistics

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London-headquartered M&G Real Estate has purchased a modern logistics centre near Seoul for 155.5bn won (US$131m), as the firm takes advantage of maturing logistics markets across Asia Pacific.

The four-storey, 100,000 sq.m. Yongin Baegam Logistics Centre is located in an established logistics cluster south of the capital city, M&G said in a statement.

Real estate investors have been betting heavily on the e-commerce story across Asia Pacific in recent years, with online shopping set to grow in Asia Pacific markets from 14% to 23% by 2023.

“We are positive about the fundamentals in Asia Pacific’s logistics sector, particularly in Korea, where supply is limited and demand is strong,” said core Asian property strategy manager Richard van den Berg.

“The relentless demand for faster delivery will push third-party logistics companies to larger, more centralised distribution centres near key transport hubs and highway interchanges, such as ours.”

Investors target South Korean logistics

The transaction marks the second Korean logistics acquisition for the M&G Asia Property Fund following its 2017 purchase of the 64,250 sq.m. Homeplus Hub Logistics Centre.

M&G Real Estate noted that spreads between logistics and other asset classes in developed markets have narrowed as the logistics sector matures and attracts more investor interest, with South Korea expected to follow the demand for modern well-located facilities.

Other international investors have made plays on the country’s industrial market this year, including Nuveen Real Estate’s purchase of a 24,400 sq.m. last-mile logistics facility in the Greater Seoul area in August.

Credit Suisse Asset Management Global Real Estate snapped up two last-mile warehouses near Seoul in July, while CBRE Global Investors bought a 239,000 sq.m. logistics development in the city of Ansan in June.

“Location will remain a key requirement as transportation typically accounts for at least half of logistics providers’ total costs,” Van den Berg said.

“Yongin Baegam Logistics Centre is well positioned to benefit from this trend and will be a valuable addition to our strategy and will provide stable and core income to our investors.”

M&G’s newly acquired high specification logistics centre is occupied by established third-party logistics operators and retailers.

M&G Real Estate has £33.5bn of assets under management and is the real estate fund management arm of M&G Investments.