Demand for logistics properties is shifting as global growth takes off and technology reshapes supply chains. What does it mean for locally listed industrial REITs and logistics companies?

SINGAPORE (Apr 23): YCH Group is testing some of the latest logistics technologies at its Supply Chain City, a two million sq ft facility located on Bulim Avenue, in the western end of Singapore. Goods are moved in 50m-tall automated storage and retrieval system towers, and drones might one day be used to keep track of all the inventory. “The spaces in the automated storage and retrieval system can be filled within a few minutes and can handle a sudden fluctuation in demand,” says James Ong, head of corporate finance and asset management at YCH Group.

The Supply Chain City cost YCH Group about $200 million to build and a further $40 million in technology investment. It opened last year, and is already running at a utilisation rate of close to 100%. And, despite the hefty cost, the privately held logistics group is already earning a good return from the investment. “Yield based on real estate is 7% to 8%, but [logistics] service margins are much higher in general,” Ong says.

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