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Warehouse firm GLP to invest $300-500 mln/yr in China

  Global Logistic Properties (GLP), an Asia-focused warehouse owner and developer, plans to invest $300 million to $500 million annually in China in the next few years, banking that government stimulus spending will boost demand for warehousing services, its president said on Tuesday.

GLP, formerly the Asia operation of Prologis and now 50%-owned by the real estate arm of Government of Singapore Investment Corp (GIC), controls 60 logistics parks in 18 major Chinese cities, including Shanghai and Beijing, Ming Mei told a briefing for reporters.

Although GLP’s rental rate growth in China has slowed to 2-3% this year from more than 10% in 2008, the country remains an ideal investment destination compared with Europe and North America, where rental rates in some cities are actually declining, GLP Chairman Jeffrey Schwartz told Reuters.

“The rental rates here are not rising as fast as they were in the past. But if you look at China relative to the rest of the world, it is by far the strongest market globally,” said Schwartz, who resigned as Prologis chief executive in late 2008.

Beijing’s recently unveiled CNY 4 trillion ($585 billion) stimulus package to bolster domestic consumption will benefit GLP, which rents space to Chinese and foreign retailers operating in the country, he said. “People talk about us as if we are heavily driven by imports and exports, but it’s really domestic consumption that drives us,” he said.

GLP, with a China portfolio totaling 3.29 million square meters completed and under construction as of the end of January, will continue to expand in tier-one cities, investing $300 million to $500 million in warehousing facilities annually, Mei said.

The firm may consider bringing in institutional investors such as China’s national social security fund in the longer term and has had some initial contacts with them, Mei said, although he declined to provide further details.

Prologis unveiled a plan in December to sell its operation in China and its interest in its Japanese property funds for $1.3 billion to GIC Real Estate to raise cash. (Reuters)