Logistics: ‘China’s best property investment opportunity’

Michael Klibaner

In a presentation at BBAM’s luncheon, Michael Klibaner argued that China’s e-commerce market will continue to grow and will have a significant impact on the physical retail sector. He also pointed out that there is an undersupply of modern warehouses and believes that logistics will be a great property investment opportunity.
Klibaner said that China’s e-commerce market is predicted to reach USD1 trillion in 2020. While there are 40 to 50 million new internet users and 30 to 40 million new online shoppers each year, he said that there is still room for e-commerce to grow in future, due to the internet’s relatively low penetration rate – with only 40 percent of internet users being online shoppers.
He also suggested several other factors behind the rapid growth of e-commerce, including the fast-growing Chinese economy, the expansion of the middle class, and the immaturity of the retail sector in Tier 3 and Tier 4 cities, as well as innovation and competition in payment and delivery services.
With competition from online retail websites such as Taobao, Klibaner predicts that some outsized retail centres, with each small unit owned by different individuals, are uncompetitive. However, he does not think that e-commerce will annihilate the traditional retail market. In fact, he believes that people will still spend time and money in shopping malls that can offer an engaging shopping experience. Therefore, he argued that it is crucial for shopping malls in mainland China to brand and differentiate themselves from their competitors.
He also said that the growth of e-commerce is going to drive up the demand for warehouse space. The JLL regional director reckoned that the sector has been “chronically under supply in China for a long time.” The demand will be further driven by the rise of business-to-consumer sites, where businesses sell their products directly to consumers online.
Therefore, he predicts that there will be a boom in the warehouse industry, which will continue until the consolidation period arrives. JPL