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Capital Inflow in Logistics Yangtze River Delta might Lead to Cap Rate Compression of Logistics Properties

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New Ease China announced partnership with QuadReal Property Group (“QuadReal”) to launch New Ease Gold Development L.P. with a total equity commitment of up to US$1 billion. The fund will invest in high-quality logistics developments in tier 1, tier 1.5 cities and selected tier 2 cities with dynamic manufacturing and consumption activities. The first investment is located in Suzhou as a three-storey ramp-up logistics facility with planned GFA of approximately 140,000 sqm. Positioned as a regional distribution centre, the project is expected to support and serve the logistics development in the Greater Shanghai Area.

Colliers commented:
Major logistics funds and investment institutions show keen interest in the economic development of Yangtze River Delta region. Investors are actively seeking for high-quality logistics projects in key cities, reflecting their confidence in the development of smart logistics industry in the area. Large investment capital inflow is estimated to push up capital values of the high quality logistics properties, the cap rates of which might face a downward trend as a result.