
ESR and GIC’s $2.9 bil buy of the Milestone Logistics portfolio was APAC’s biggest industrial deal of 2021
Asia Pacific’s industrial real estate market outpaced pre-COVID levels for the second year in a row in 2021, with the value of shed purchases in the region soaring 82 percent from a year earlier to reach a record-high of $56.4 billion, according to Real Capital Analytics.
Acquisitions of warehouses and manufacturing assets exceeded the region’s five-year average from 2015 to 2019 by 141 percent to set a historical growth peak, the property information provider’s figures show.
Though office continued to be the most active sector in terms of acquisitions by property type in 2021, its transaction volume exceeded the 2015 to 2019 average by 5 percent, while the value of industrial deals in the region has nearly tripled over the last half-decade. The record performance reflects industrial’s status as the fastest-growing mainstream sector, with the market for sheds even surpassing office transaction volume in some of APAC’s largest markets — including Hong Kong and Australia.
As demand for income-producing properties has grown globally, the hunt for new economy assets — including warehouses, business parks and data centres — has emerged as another driver of the industrial boom, said RCA’s head of real estate research for Asia Pacific David Green-Morgan. The investment value of these properties serving tech-linked businesses more than tripled to $36 billion in 2021 compared with the approximate $10 billion record set in 2016, the data firm pointed out in the same report.
Industrial Gains on Office
Transaction volume of office properties in Asia Pacific saw an uptick of 10 percent in 2021 from a year earlier, although the $86.7 billion in desk space deals recorded last year still represented the largest segment of RCA’s tally of income producing real estate transactions. In that same period, the volume of industrial transactions rose to $56.4 billion, which was up 47 percent compared with a year earlier.

David Green-Morgan of Real Capital Analytics
During the the fourth quarter of 2021, while office deals continued to represent the industry’s most active segment in terms of transactions, the $21.1 billion in office deals recorded from October through December fell by 20 percent compared with the same period one year earlier while industrial deals surged 39 percent over the same interval.
Industry analysts predicted regional investors will continue to allocate more capital to logistics in Asia Pacific, with JLL forecasting in its latest Asia Pacific Capital Tracker report that such commitments will grow to 20 to 23 percent of total allocations over the next two to three years, up from the current 16 percent, which could bring total APAC industrial deal volumes to $60-70 billion a year by 2025.
Hong Kong Demand Shifts
Hong Kong, which recently lost its crown to London as the world’s most expensive place to park staff, saw investment transactions in its office market hit an all-time low of $2.3 billion last year, according to RCA’s data.

Benjamin Chow of Real Capital Analytics
In contrast, investors spent $4.6 billion purchasing industrial properties in the city last year, which more than tripled 2020’s total of $1.4 billion and was also more than double 2019’s volume of $2.2 billion, according to RCA’s head of real estate research for Asia Benjamin Chow.
Contributing more than half of last year’s record were cross-border buyers who, for the first time, splurged more than $500 million on Hong Kong sheds. “In the past, cross-border investors were more active in the office, retail and hotel sectors; even in 2020 they spent $3 billion on the office sector alone,” Chow told Mingtiandi. “However, by 2021, they have shifted to focus almost exclusively on the industrial sector, which accounted for over 85 percent of their allocation in the market.”
Quickening sales of Hong Kong’s self-storage facilities last year were fuelled by a pair of US private equity firms, including AEW, which paid HK$305 million for a half-stake in a Chai Wan industrial building in August, and Blackstone, which made a November purchase of a HK$500 million storage building in Shau Kei Wan. That Blackstone buy came only three months after the investment giant acquired an industrial property in Fanling for HK$282.6 million.
Aussie Sheds Rise
As Australia’s major cities were hit by multiple waves of lockdowns and travel restrictions throughout 2021, the country’s industrial market went into overdrive, following a pattern similar to Hong Kong.
In terms of full-year transaction volume, the $28 billion in Australian industrial deals last year surpassed the $21.9 billion spent on office properties. Industrial rose to the top Down Under thanks to a 99 percent upswing compared with the five-year average before the pandemic, while office tumbled 11 percent compared with the same metric, RCA said in a separate report.
Last year’s industrial high tide was largely driven by a set of megadeals, including ESR and GIC teaming up to purchase the Milestone portfolio from Blackstone for $2.9 billion in April.
The US-based fund management juggernaut finished the year by paying GIC $2.5 billion for a nearly half stake in Dexus Australian Logistics Trust, which manages 77 properties across Australian cities.
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