Investors pour US$12b into China's logistics sector

Hong Kong

WHEN US private equity heavyweight Warburg Pincus started looking at China's logistics sector in late 2009, there were more modern warehouses in Boston than in the whole of the world's most populous country.

But as Chinese consumers embarked on an online shopping spree, demand has soared from appliance makers, express delivery firms and e-commerce companies such as Alibaba Group Holding Ltd and JD.com Inc, far outpacing supply and prompting a parallel binge in investment in warehouses and logistics businesses.

Deep-pocket investors including Carlyle Group LP, Canada Pension Plan Investment Board (CPPIB) and Warburg Pincus have splashed US$12 billion on the sector in China since 2013, said real estate consultancy Jones Lang LaSalle. "The thinking was even if it didn't necessarily scale to the size we were anticipating, we had a good sense that while Boston is a pretty decent size city in the US, China should have far more modern warehousing space over the longer term," said Jeffrey Perlman, who heads South-east Asia at Warburg Pincus and also focuses on real estate investments across the Asia-Pacific. "We were taking that di…