TOKYO -- Global warehouse operator GLP will set up an investment fund to pour around 625 billion yen ($5.6 billion) into logistics facility development in Japan, targeting a dozen or so properties planned in 2019 and beyond.
Asia's top logistics facility provider is set to launch the fund as early as this year, and will invest in properties mainly in the greater Tokyo and Osaka areas. Among them is one of Japan's largest logistics facilities planned in Sagamihara, Kanagawa Prefecture -- slated for completion as soon as 2022.
Institutional investors struggling to generate adequate returns are increasingly shifting assets to real estate. As property development offers hefty returns in exchange for its inherent risks, demand is growing for an investment fund like this one.
Five or six institutional investors, including the Canada Pension Plan Investment Board and government-backed funds from Asia and the Middle East, are expected to participate. GLP, formerly known as Global Logistic Properties, previously invested 550 billion yen in Japanese facilities through two funds set up with the Canadian public pension fund manager.
GLP is a global warehouse operator that originated in Singapore. It delisted from the Singapore Exchange in January after being acquired by a consortium including Chinese private equity firm Hillhouse Capital Management.
Logistics facilities in Japan are considered a hot spot because e-commerce has much room to grow in the country. Online sales accounted for less than 6% of overall goods sales here last year. Cutting-edge facilities that can handle speedy shipments of various goods are in high demand. Existing facilities often lack the space to install equipment for automated machines.
GLP's Japanese arm develops large facilities by tapping investment funds and unloads the assets to affiliated REITs once the facilities are up and running. With more than 6 million sq. meters of facilities managed by the company, it is the market leader in Japan.