CFA Society Singapore
SINGAPORE (Apr 20): As global growth takes off and technology reshapes the economies of Singapore and the rest of Southeast Asia, demand for logistics properties is shifting.
Not only is the volume of goods that need to be moved rising, but a growing proportion of this merchandise is headed directly to the doorsteps of customers instead of the shelves of big department stores, because of e-commerce.
In fact, reflecting the growing importance of e-commerce to Singapore’s economic growth, the Department of Statistics has just begun releasing data on online shopping trends. In February, online purchases topped $144.3 million and accounted for 3.9% of overall retail sales.
The growth rate of online shopping in Southeast Asia, a region with a combined population of 620 million and an economy of US$2.6 trillion ($3.4 trillion), is forecast to outpace that in China. About 100 million people in the region are already shopping online, racking up total sales of US$11 billion last year.
As the region’s middle-class population comes of age, e-commerce sales is estimated to hit US$88 billion by 2025, growing 32% each year, according to a report by Google and Temasek Holdings late last year.
As such, some market watchers see recovering demand for logistics assets and a growing need for modern facilities tuned for the needs of e-commerce players attracting more investment into the logistics space and driving up the valuations of these assets.
Is there a way for ordinary investors to participate in the growing demand for logistics assets and the e-commerce boom?
According to some analysts, the bigger logistics REITs, such as Singapore’s Ascendas REIT and Australia’s Goodman Group, are trading at full value. Nevertheless, some of these larger players could be interesting if they manage to make astute acquisitions.
Read more in our latest cover story, Logistics Boom?, in this week’s issue of The Edge Singapore (Issue 827, week of Apr 23), available at newsstands now.