Nuveen Real Estate continued its focus on northern Asia this week as the Chicago-based fund manager announced the $122 million (KRW 145 billion) acquisition of a last-mile logistics facility near Seoul.
The purchase of the 84,300 square metre ( 907,397 square foot) warehouse complex in the Uiwang Techno Park south of South Korea’s capital is Nuveen’s fifth acquisition under its Asia Pacific Cities strategy, with the affiliate of US financial giant TIAA pointing to accelerating growth in e-commerce during the pandemic as a key to its investment rationale.
“South Korea is one of the biggest e-commerce markets globally, and the sector has seen a further expansion due to COVID-19,” said Louise Kavanagh, Nuveen’s managing director for Asia Pacific, adding that she sees the pandemic spurring demand for modern logistics platforms in the country.
Connecting With Korean E-Commerce
Nuveen purchased the seven-storey logistics hub from a local developer as its second warehouse pickup in South Korea, betting on a connected project some 25 kilometres (15.5 miles) south of Seoul.
The asset is located within the Uiwang Techno Park complex close to the city’s Inland Container Depot, an inland port which handles about 45 percent of the container traffic in and out of the South Korean capital.
Nuveen pointed to the project’s location within the logistics hub, along with the limited number of government permits issued for logistics projects near the Seoul area as major factors driving the acquisition. “We see an opportunity in ‘last-mile’ delivery, particularly in the Greater Seoul area where the southern population is under-served,” Kavanagh added.
At the purchase consideration, the fund manager is paying the equivalent of just over $1,447 per square metre for its latest South Korean asset.
More Seoul Sheds
Nuveen had also chosen Seoul-area warehouses for its first Korean purchase under its Asia Cities core strategy, having acquired a 263,000-square foot facility in Namyangju, northeast of the city, for an undisclosed sum in August 2019.
“Seoul continues to be one of the principal cities for the platform as it has an investable market that is also core, liquid, transparent and highly institutional,” noted Kavanagh.
The Namyangju property is occupied by South Korean e-commerce giant Coupang, as well as by convenience store chain Emart24, both of which are described as ramping up same-delivery services in around the capital.
While investment in most real estate sectors has been muted this year due to COVID-19, a CBRE report surveying South Korea’s logistics market during the first six months of 2020 found that the pandemic is spurring demand for logistics space from e-commerce platforms as well as from third-party logistics operators.
Combined, these occupiers drove vacancy in Korea’s warehouses down to just 5.7 percent on 30 June 2020, compared to 9.9 percent vacancy a year earlier, despite an additional 5.7 million square feet of new supply coming online during the period.
Staying with North Asia
Nuveen launched its Asia Pacific Cities platform in November 2018 when it was still branded as TH Real Estate, and has been busy deploying capital fund around the region in recent months.
TIAA had seeded the fund with $200 million, and Nuveen had set an equity target of $2 billion. In June this year Nuveen announced that an unnamed Dutch investor had committed $65 million to the APAC core strategy.
In March of this year Nuveen had committed $140 million of its core cash to purchasing a portfolio of 10 multifamily assets in Japan from Hong Kong-based private equity firm PAG.
That residential deal followed soon after the fund manager’s January acquisition of seven central Tokyo apartment building through its Tokyo Multifamily Partnership strategy for $224 million.
Japan was also on Nuveen’s itinerary in December last year with the company having paid $370 million to purchase a 2.1 million square foot logistics facility in the city of Odawara, some 87 kilometres southwest of Tokyo, from Blackstone.
So far Nuveen has allocated 66 percent of the capital in its Asia Cities strategy to logistics, 23 percent to residential and 11 percent to office assets. As of June 30 the company had $127 billion of assets under management worldwide.