Despite concerns about the overall economy, the industrial real estate sector in Asia remains strong, according to Jeff Schwartz, deputy chairman of Singapore-based Asian industrial REIT Global Logistic Properties (SGX: MCO.SI).
“If you don’t read the Financial Times, things are great, because the actual business operations are very, very strong,” Schwartz told REIT.com in a video interview in New York at REITWeek 2012: NAREIT’s Investor Forum. Schwartz cited a litany of factors outlining the health of the market. Among them, he noted that China is experiencing GDP growth of approximately 8 percent and retail sales are up 14 percent since the same time a year ago.
Schwartz said Global Logistic Properties has made a concerted effort to focus on servicing domestic consumption, which accounts for 80 percent of the company’s portfolio and will be the primary focus of any development projects that the company takes on this year. He noted that Global Logistic’s domestic consumption space is leased at a rate of 96 percent.
Schwartz said Global Logistic is looking to form joint-venture partnerships with the “best of the best” investors. The firm has formed a partnership with China’s sovereign wealth fund, the Chinese Investment Corp., and the Canadian Pension Plan, among others. Schwartz said such partnerships have enabled the company to acquire debt at attractive rates and boost returns.
“It’s a great business,” he said. “We’re very excited.”
In the wake of last year’s earthquake in Japan, Global Logistic has taken technological steps to secure the safety of its buildings. The firm has rolled out new patented technology. The previous system in place proved to be “very effective,” according to Schwartz. Forty percent of the company’s buildings had that previous technology in place during the earthquake, and none sustained any damage. Overall, the company suffered just $28 million in damages on its entire $6.5 billion as a result of the earthquake.
Schwartz said the new patented technology is “more flexible, more efficient and more cost-effective.” He said the new anti-earthquake system has generated strong demand from prospective tenants. Schwartz attributed the company’s high leasing velocity in part to the technology.