Canada’s QuadReal Property Group and Singapore-based IGIS Asia Investment Management have formed a $1 billion joint venture to develop logistics assets in South Korea, home to IGIS AIM’s parent group.
QuadReal will provide the majority of the JV’s capital, with the IGIS team responsible for originating, developing and operating the assets, the partners said in a release.
The venture will capitalise on what the partners describe as highly favourable structural drivers underpinning demand for logistics space in South Korea, including accelerating e-commerce penetration and an acute shortage of Grade A tenant accommodation.
“Global logistics market fundamentals remain compelling, driven by supply chain reconfiguration requirements and the growth of omni-channel retail,” said Peter Kim, managing director for Asia at Vancouver-based QuadReal. “In South Korea we continue to witness the interrelation between e-commerce led occupational demand and a shortage of Grade A space in proximity to dominant urban centres, which is forecast to underpin rental and capital growth.”
Underserved in Sheds
The partners noted that while South Korea’s e-commerce penetration rate is second only to China’s, the modern stock of logistics space per capita ranks well below levels in other developed countries.
Properties under the new JV will be designed and developed to appeal to e-commerce, 3PL, retail and cold storage companies catering to shifting consumer patterns as Korean retail continues to move online.
IGIS AIM CEO Steve Oh said the country’s evolving logistics market would create interesting investment opportunities and deliver attractive risk-adjusted returns.
“We are seeing not only increasing demand for high-quality logistics assets in emerging submarkets outside of Greater Seoul, such as the southern provinces, but also from traditional and emerging manufacturing businesses seeking to enhance the cost-effectiveness of their supply chains,” Oh said.
Founded two years ago, IGIS AIM is an overseas subsidiary of Korean investment giant IGIS Asset Management, which had assets under management totalling $45.6 billion at the end of 2021.
The parent company’s moves in the global logistics market include the $170 million purchase of an Amazon warehouse in Delaware, the separate acquisition of three Amazon logistics centres in the US (alongside Hana Financial Investment) for $390 million and the pick-up of seven DHL properties in northern Italy (alongside Australia’s Cromwell Property Group) for $61 million, with those transactions all taking place in 2020.
QuadReal, whose assets under management amount to $67.1 billion, is a partner in a $4.9 billion European logistics development fund with the Canada Pension Plan Investment Board and Singapore-based GLP, as well as a $1 billion China logistics development tie-up with Warburg Pincus-backed New Ease.