Hong Kong-listed ESR has joined forces with Mitsubishi Corporation and the sovereign wealth fund of Indonesia to invest in three logistics parks in that country, marking the industrial specialist’s first strategic venture in Southeast Asia’s biggest economy.
The three ESR-developed logistics parks in West Java include two in Cikarang and one in Karawang with a total gross floor area of 216,864 square metres (2.3 million square feet). The partners are exploring additional joint investments in the sector, ESR said Monday in a release.
The venture signifies the first real estate investment for the Indonesia Investment Authority, the nation’s $20 billion sovereign fund, and the first logistics asset in the country for Mitsubishi’s MC Urban Development Indonesia, a wholly owned local unit of the Japanese conglomerate.
“This partnership marks ESR’s commitment to Indonesia, a key market in our expansion strategy for the fast-growing Southeast Asia region,” said ESR co-founder and co-CEO Stuart Gibson. “Underpinned by a surging consumer class, the exponential growth of e-commerce, and the Indonesian government’s push for electric vehicles, there is robust demand for high-quality logistics and industrial spaces in the country from both multinational and domestic customers.”
Further Ventures Likely
The Cikarang assets, known as Cikarang I Logistics Park and Cikarang II Logistics Park, are situated in the key industrial zones of Greenland International Industrial Center and Kawasan Industri Terpadu Indonesia China. The assets are under development and expected to be completed this month and in June, respectively, with a planned GFA of 70,545 and 43,000 square metres.
The Karawang asset, dubbed Karawang I Logistics Park, is in the Suryacipta Industrial Estate of the Eastern Corridor near Jakarta. Construction of the park’s planned 103,319 square metres of GFA is set to begin in June.
The collaboration aims to take advantage of the extensive network and expertise of MCUDI, with its nearly 70 affiliated companies in Indonesia, to further develop the warehouse market.
ESR and its subsidiary Logos are set to deepen their collaboration with INA, as the parties are keen to explore additional joint mandates to develop Indonesian assets and other strategic initiatives that could create more than $1 billion in modern logistics space over the next five years.
“Today marks a significant milestone for INA as we venture into the real estate asset class with a strong focus on Indonesia’s modern warehouse facilities,” said INA CEO Ridha Wirakusumah. “We recognise the immense potential of the logistics market, spurred by the robust growth of the e-commerce, 3PL, and automotive industries in our region. Our strategic partnership with ESR and MCUDI not only aims to meet the evolving needs of the logistics industry but also reflects INA’s commitment to sustainable development and economic growth.”
Room to Grow
ESR manages $861 million in assets spanning GFA of 795,000 square metres in Indonesia, where the group sees strong potential to expand its logistics and industrial portfolio amid burgeoning e-commerce sales.
The country’s undersupply of modern logistics space led Jakarta-based retail developer NWP Property, backed by former ESR investor Warburg Pincus, to launch a joint venture with Japanese warehouse builder CRE last year. The JV has been seeded with a pre-leased, built-to-suit warehouse in the capital that began construction in the second half of 2022.
Also last year, regional developer Hongkong Land teamed up with its sister firm PT Astra International and Logos on a joint venture to develop and manage warehouses in Indonesia.