JD Property Acquires Hong Kong Industrial Building from M&G for $232M

JD Property, the infrastructure investment and management arm of Chinese e-commerce giant JD.com, has acquired the LiFung Centre in Hong Kong from London-based M&G Real Estate for HK$1.8 billion ($232 million), in the city’s largest en-bloc industrial transaction so far this year.

Beijing-based JD Property paid HK$3,693 per square foot to acquire the 487,350 square foot (45,276 square metre) logistics property in Hong Kong’s Sha Tin area from M&G’s Asia Property Fund, with the asset having attracted multiple bidders over a 12-month sales process, according to law firm Mayer Brown, which advised M&G on the transaction.

“We are excited about this institutional-quality property, strategically located in a convenient, last-mile neighborhood,” Richard Law, the company’s head of Asia Pacific said in a statement on Friday. “We believe this project will continue to deliver efficient and reliable logistics services to Hong Kong. This investment allows us to benefit from secular growth trends while interest rates are moderating. We will continue to actively explore other opportunities in key markets across Asia Pacific.”

JD’s acquisition follows a quiet first half of the year in Hong Kong’s logistics sector, with industrial transactions accounting for just 5 percent of total investment in the city during the second quarter, according to a July report by Cushman & Wakefield. Capital values of prime warehouses in the city have declined 9.1 percent from last year’s peaks through 30 June, according to JLL, with overall vacancy having edged down to 6.5 percent at the end of the second quarter from 7.5 percent as of 31 December, according to Cushman.

Shifting Focus

Acquired over 15 years ago as one of the initial investments of the M&G Asia Property Fund, the property at 2 On Ping Street is fully leased and has delivered double digit annualised net returns over its holding period, according to M&G.

M&G Real Estate, the property investment unit of British investment manager M&G’s private assets and alternatives division, pointed to the disposal as enabling the fund to focus on developed markets in Asia Pacific with “robust” long-term growth potential.

“This transaction is part of our ongoing objectives to optimise the Fund’s portfolio and continue delivering performance and value for its investors,” said Richard van den Berg, fund manager of M&G Real Estate’s flagship core Asia Pacific property strategy. “It also enables the Fund to focus on countries offering robust long-term growth potential, particularly those aligned with structural and demographic trends.”

Van den Berg added, “We remain highly confident in the logistics market, and this transaction reinforces our commitment to seizing growth opportunities in key developed markets across the Asia Pacific region.”

Last year, M&G sold a western Sydney logistics complex to ESR, nearly a year after acquiring a majority stake in a Greater Tokyo distribution centre from the HKEX-listed industrial specialist. That same year, M&G completed its purchase of four car showrooms in Singapore from auto distributor Jardine Cycle & Carriage.

In April, M&G divested the Icon Yeoksam office building in Seoul to Korea’s Capstone AMC as it booked a 44 percent appreciation in value on the deal, with that disposal coming months after the fund manager acquired a Tokyo multi-family residential tower from LaSalle Investment Management.

JD Expansion

The LiFung Centre is JD Property’s latest logistics acquisition as the property investment unit of the mainland e-commerce giant has been expanding its footprint in Southeast Asia and Europe since 2022.

“We are pleased with the addition of this logistics infrastructure in Hong Kong,” said the company’s chief executive, Cao Dong. “It reflects our team’s ability to source and complete transactions efficiently, and we are well-positioned to continue expanding our business across the region.”

Last year, JD Property teamed up with Singapore-based industrial developer and fund manager EZA Hill to acquire a portfolio of five logistics assets in the Lion City from SGX-listed ESR-Logos REIT for S$350 million.

The firm has also been active on the development side, with logistics park projects currently underway in Hai Phong and near Ho Chi Minh City in Vietnam. The company also recently completed a 23,000 square metre shed in Indonesia’s Greater Jakarta area.

Outside of Asia, JD Property has made a series of acquisitions in Europe after having entered the UK market in 2022 with the acquisition of a 361,000 square foot warehouse in Milton Keynes. Since that time the company has expanded its UK footprint with the purchase of a shed in Preston and an investment in a logistics development in Coventry, while also having ventured into the Netherlands with the acquisition of a smart logistics park in Utrecht.