Nuveen Real Estate enters Korean market with logistics deal

Nuveen Real Estate’s Asia Pacific Cities Fund (APCF) has acquired a 24,400 sq.m. last-mile logistics facility in the Greater Seoul area, marking the investment manager’s first deal in the country.

Located in Namyangju City, 20km northeast of the Seoul CBD, the newly-built property is fully let to local e-commerce leader Coupang and major convenience store operator Emart 24, the buyer announced.

Namyangju Logistics
Namyangju Logistics (image: Nuveen Real Estate)

“South Korea ranks as one of the most connected and technology-driven markets in Asia Pacific, with an online penetration rate of 90%,” said Louise Kavanagh, managing director Asia Pacific at Nuveen Real Estate. “However, in contrast less than 5% of its logistics stock is considered modern by global standards.”

Foreign investors have dominated Korea’s logistics investment market in recent years, replacing local retailers and investors who previously had an edge due to market opacity, says Colliers.

Completed in June this year, the asset features dry storage combined with a portion of designated cold storage and allows for 24-hour operation.

Nuveen has partnered with Sang Investment to provide investment operations and capability on the ground in Korea.

“Given the dynamics of the Korean logistics industry, this last-mile distribution centre has the potential to provide substantial rental growth driven by the country’s increasing demand for same-day delivery services,” said Sang Han, CEO at Sang Investment.

The asset is APCF’s second acquisition, following its purchase of a Sydney office development project in November last year.

The open-ended fund was launched in November last year and focuses on selected ‘future-proof’ cities like Seoul across Asia Pacific.

“We anticipate that the rapid expansion of e-commerce and associated third-party logistics demand in Asia Pacific, and particularly South Korea, will underpin structural resilience in the sector,” Kavanagh said.

In a report, Colliers’ associate director of research Judy Jang noted that overseas investors like GIC, Mapletree and DWS were market leaders in the South Korean logistics investment space.

Investors have been piling capital into logistics real estate in South Korea, and worldwide, to take advantage of logistics’ income stability and higher yields relative to offices and other asset classes.

“As logistics centres become tradable assets, most transactions will likely be driven by institutional investors rather than end-users,” the report said.

The transaction comes after Credit Suisse Asset Management’s property arm entered the Korean commercial property market with the purchase of two last-mile warehouses in the Greater Seoul Area in July and CBRE Global Investors bought a 239,000 sq.m. multi-storey logistics development in June.

Nuveen Real Estate has US$129bn of assets under management and is owned by US insurer, Teachers Insurance and Annuity Association of America (TIAA).

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