Market insight: Asia – Pacific cold storage


According to research from Savills, the cold storage market is one of the exciting options for investors when attracting $ 4,9 billion in investment capital on a global scale.

Soaring demand in Asia 

In Savills' recent Asia-Pacific cold storage report, the cold storage market accounted for only 11,4% of industrial real estate transactions, but this sector has record growth rate of 29,6% from 2017 to 2022, exceeding other forms of industrial real estate.

The main growth drivers of cold storage are the growth of household income, the increase in urban population and changing consume habit of middle class.

Specifically, the shopping habits of consumers have gradually shifted to fresh food with high quality as income increases. Old habits like shopping at a traditional market have switched to the supermarket with diversified products and convenient preservation.

Another driver is e-commerce, according to Mr. Thomas Rooney, Senior Manager of Industrial Services at Savills: “During the pandemic, e-commerce and online shopping for essential goods have been bloomed with an average global e-commerce penetration rate of 22%. Notably, China and South Korea are the two countries with the highest e-commerce penetration rate in the world with 27%. In emerging markets such as Southeast Asia, the main consumer group is mostly the young population, which is expected to achieve a growth rate of e-commerce penetration rate of about 17% in the period 2022-2026.

In addition, the pandemic has also boosted demand for stocks of vaccines, pharmaceuticals, and other medical products. With the Asia-Pacific market being a newly developing market, some prominent countries such as China, India, Japan, Korea, Australia. In which, India has the highest total cold storage capacity globally with 150 million m3, followed by China with 105 million m3, Japan with 38 million m3, according to a report from GCCA (Global Cold Chain Alliance).

However, the supply has not yet met the demand, the average cold storage volume available per capita in the main Asian markets is at 0,03 – 0,5m3 in 2018. This is much lower than the US or UK market when it is 0,49 m3 and 0,44 m3 respectively.

To be equivalent to the US and UK markets, the amount of storage volume that the Asia-Pacific market needs to compensate for is 325 million m3. Currently, cold storage supply in this market is fragmented compared to developed markets (USA, UK, Australia) at 100 000 m3 average cold storage capacity, when India is at 15 000 - 25 000 m3.

According to Savills’s report, the shortage of supply will remain in the short and medium term, which means that the occupancy rate of cold storage will be higher, rental price will increase, creating attractive investment opportunities.

Potential from cold storage real estate in Vietnam

For Vietnam, the report of Savills said that the revenue of the fresh food industry increased by 6,3% in the period 2020 - 2022, equivalent to USD 40,4 billion to USD 45,7 billion.

In addition, Vietnam's e-commerce industry also has a fast growth rate from 2017 to 2022 at 21,5%, boosting additional services expansion. For example, online food delivery has a growth rate of 5,5% from 2020 to 2022.

Vietnam's cold storage market, like other markets in Asia-Pacific, is developing with a small scale, by 2022 there are 40 projects with a total area of 460 000m2. The southern market recorded more dynamic growth, which stem from demand for food, seafood, and retail products. The main feature of Vietnam's cold storage market is its concentration in big cities.

Cold storage supply is mainly concentrated in Ho Chi Minh City, Binh Duong, Long An and Dong Nai when accounting for 87% of the national supply. For the Northern market, the main markets including: Hanoi, Bac Ninh, Hung Yen have significantly increased supply recently but the proportion is still quite small compared to the Southern market.

In terms of cold storage rental rates, Ho Chi Minh City currently has a price nearly double of other markets due to better facilities and a variety of value-added services.

“The average rental price of cold storage in Vietnam is currently from 22 USD/ton/month (Bac Ninh) to 50 USD/ton/month (HCMC), domestic enterprises hold most of the cold storage supply. Some foreign enterprises such as: Lineage Logistics, SK Logistics, Lotte Logistics are actively investing in their own storage systems in Vietnam. Still, the supply haven’t met with the demand” said Mr .Rooney.

The occupancy rate of cold storage is currently at 88% by the end of 2022, especially some markets such as Ho Chi Minh City, Binh Duong, Long An, Bac Ninh have occupancy rates of over 90%.

Assessing the development potential of the cold storage market, Mr. Rooney noticed some key characteristics as follows:

- Changes in consumer buying habits will be the main driving force of the market

- Currently, the Asia-Pacific market has barriers in terms of appropriate infrastructure and technology, so it continues to receive support from the government through policies and subsidies.

- Cold storage often requires new technology, automation system, complex operating system, large investment and cost, long payback period, strict regulations and licensing process. Therefore, investors in cold storage often have experience and financial capability.

“Investors also need to identify risks such as possible operational problems, economic volatility and falling yields in order to better capitalize on the opportunities that the cold storage segment offers. Based on my experience in supporting tenants and investors in the cold supply chain, I believe that well-invested, well-designed, prime locations and optimized operating costs will outperform conventional competitors, thereby attracting more transactions and investments from larger businesses in the future" added Mr. Rooney.


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