Need for quality logistics space up

By Hu Yuanyuan (China Daily) Updated: 2012-12-31 10:50

Goodman Group, an Australian developer that specializes in industrial real estate, announced recently that its new property development in the Chinese mainland during the third quarter would be around 260,000 square meters. The company said this also includes a 103,000 sq m pre-lease to a leading e-retailer.

"We are confident that China's economic outlook will remain robust due to the strong domestic consumption, a key driver of demand for prime logistics and warehouse space," said Philip Pearce, Goodman's managing director for Greater China.

Goodman has set a target for development of 800,000 sq m over the next 12 months and creating a land bank/reserve in excess of 4 million sq m, which has the capacity to deliver 2.7 million sq m of prime logistics space over the next three years.

The Internet is already an integral part of the retail experience for many Chinese, if not for the actual purchase then for conducting extensive research and price comparisons.

Online retail sales in China have grown annually at a rate of 99 percent in the past five years, compared with just 9 percent in the United States. In just one day in 2012 (Nov 11, otherwise known as "singles' day"), China's ecommerce market giant Taobao and its business-to-customer (B2C) platform, Tmall, generated gross sales in excess of 19.2 billion yuan ($3 billion) - 21 times the daily retailing volume of Hong Kong.

According to Ji, while the numbers are staggering, it is still far behind the actual potential as with only 37 percent Internet penetration the numbers are still well below those in the developed markets.

"The potential for growth is significant. Over 30 million new Chinese consumers - the equivalent of the population of Canada - are expected to make online purchases every year until 2015," said Ji.

However, the rapid growth of China's e-commerce market has often been underpinned by unique structural and demographic characteristics.

These include a limited physical retail network (online shopping has developed ahead of modern physical retail space in many markets, particularly in lower-tier cities), the rising power of the Chinese consumer, the rapid adoption of mobile Internet devices and government support (e-commerce is an integral part of the current five-year plan).

huyuanyuan@chinadaily.com.cn

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