News release

JLL forecasts Asia Pacific cold storage investment to cross USD2 billion by 2030

Hong Kong’s cold storage offers a rental premium ranging from 30% to 50%

January 05, 2024

Yvonne Liu

Public Relations Director, Hong Kong and Macao
+852 28465264

Jimmy Chan

+852 3103 0102

HONG KONG, 8 January 2024 – Cold storage facilities will continue to present a compelling long-term investment opportunity in Asia Pacific, supported by an ability to deliver resilient and stable returns and generate higher rental rates than other asset classes. According to JLL, investment in Asia Pacific cold storage real estate will likely cross USD2 billion between now and 2030 - compared to a USD948 million high in 2021 - as investors look to diversify portfolios and take advantage of end-user demand for more specialised facilities.

Between now and 2030, JLL believes that numerous factors will drive an investment recovery in cold storage assets, where volumes have contracted from a 2021 high. Specifically, investors will be drawn to the greater stability of the sector compared to other asset classes, supported by evergreen demand for perishable goods and medicine housed in cold storage facilities. Additionally, attractive leasing covenants, whereby rents are typically higher and lease terms longer than standard logistics and industrial facilities, will appeal to forward-thinking investors.

According to JLL analysis, transactional activity in the cold storage sector has slowed in the past 12 months, with external factors including higher interest rates and subsequent rising capital costs making real estate investments generally less attractive investment propositions across all sectors. Within the Asia Pacific sector, volumes soared for both distribution and cold storage centres in 2021 where the average price was above the historical average (USD29.6 million vs USD19.1 million 10-year average). Furthermore, the number of major deals reached a record 32 transactions, more than double the 15 annual deals on average over the past 10 years. In 2023, deal size has averaged USD16.3 million.

Ben Horner, Senior Director, Supply Chain & Logistics Solutions, Asia Pacific at JLL, said: "Investment in cold storage has cooled from 2021 but has by no means peaked. A spectrum of factors, ranging from structural changes in consumption patterns to the shift to online spending and various macroeconomic influences, will shore up this market for longer-term yet sustainable growth from a more select group of investors."

More recently, the higher barriers to entry into cold storage have influenced activity in the sector but will draw more specialised investors and operators. According to JLL analysis, there is a growing acceptance that cold storage investment requires a deep understanding of the unique complexities associated with temperature-controlled environments, logistics, and regulatory compliance. As a result, this operational reality can act as a competitive advantage for knowledgeable investors, while creating a deterrent to other investors.

Additionally, for the sector to meet consumer demand for both efficiency and to address global disruptions that have compromised some robust supply chains, technology investment is an increasingly important consideration for investors eyeing cold storage facilities. Advancements in automation, robotics, and energy efficiency can significantly enhance the operational efficiency of such facilities and help reduce operator/occupier costs as technology improves, making them more resilient, but will ultimately favour investors with specialised experience.

During the pandemic, Hong Kong saw a surge in demand for cold storage as consumers shifted to online shopping and delivery services for fresh produce and meat. While this growth in demand has continued post-pandemic, it has been difficult to meet due to the lack of modern cold storage facilities and distribution centres, and investors, both domestic and international, are keen to invest in the sector, particularly by converting existing warehouses into high-quality cold storage facilities. This proves lucrative as the rental premium over a traditional dry warehouse can range from 30%-50%.

Christopher Young, Head of Logistics and Industrial, Hong Kong Capital Markets at JLL, said: "Investors are still actively seeking properties with conversion potential given the underlying fundamentals and sustained growth prospects in the cold-storage space. We expect to see new entrants from mainland China and overseas investors looking to either build their own platforms or back existing cold storage specialist operators. However, finding suitable industrial buildings for conversion remains a challenge as many were built for light industrial manufacturing, rather than warehousing and logistics. Only buildings with a large floor plate, above 5-metre ceiling heights, and over 200lbs/sq ft floor loading with sufficient space for truck loading and unloading would be suitable to accommodate the needs of today's operators."

The macroeconomic influence will also shape the future investment requirements of the cold storage sector in Asia Pacific. The region's substantial middle-class population coupled with rapid economic growth and rising income levels are expected to support rising consumption levels, with private consumption in the region rising by a robust compound annual growth rate (CAGR) of 4.1% between 2013 and 2022. This is forecast to accelerate to 4.7% between 2023 and 2025.

Furthermore, in Asia, revenue from grocery delivery more than doubled between 2019 and 2022, rising from USD92 billion to USD269 billion, and revenue is projected to increase to USD453 billion by 2025, reflecting a CAGR of 19.1%. Concurrently, the global third-party logistics (3PL) market was valued at USD556.4 billion in 2022 with Asia Pacific accounting for about one-third of the market and is forecast to expand by a CAGR of 4.9% between 2023 and 2027, ahead of the US (2.1%) and Europe (2.2%).

Peter Guevarra, Director, Research Consultancy, Asia Pacific at JLL in Hong Kong, said: "The factors working in favour of the Asia Pacific cold storage market, be they demographic and macroeconomic, are undeniable. Given the increasing demand for cold storage space, underpinned by relatively inelastic underlying demand, cold storage assets can deliver robust financial performance, while providing greater stability and resilience in investment portfolios. Increasingly, we see a more specialised and knowledgeable investor that will be required to reignite investment and support the long-term future of this essential asset class."

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About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit