China's industrial real estate market is likely to see massive growth in the coming years, driven by strong manufacturing and retail activities, according to industry players and consultants.

Industrial real estate, which generally includes logistics, industrial parks and business space, is increasingly emerging as a new investment hot spot in China's real estate market, they said at a recent industry forum.

"China's industrial real estate market is still in its infancy," Leonard Ng, managing director of leading real estate services firm CB Richard Ellis in Shanghai, said at the China Industrial Real Estate Summit, a two-day conference held in Shanghai recently.

"Most of the investors (in the industrial real estate market) and facilities are currently clustered in the country's eastern and coastal areas," Ng said.

"But about 800 million people are living in China's vast central and western region where such logistics infrastructure is to be improved, which points to huge potential in this market," he said.

Logistics market

In particular, China's logistics market, which includes freight, warehousing and distribution facilities, is set to grow massively in the coming years, driven by dynamic retail activities, analysts at the conference said.

Related readings:  Property still a focus for foreign capital  Real estate transactions total US$9 billion in 2006  Officer held for torturing innocent real estate staff  Real estate: New home prices jump 5.9 percent

China's logistics market is expected to grow by almost 30 percent a year in the next three to four years, according to Trent Iliffe, director of global real estate money management and services firm Jones Lang LaSalle's Industrial Property team in China.

The booming manufacturing and retail sectors, Iliffe said, would serve as major engines for the expansion of the logistics industry in China. But he said the retail sector would be the biggest driver of logistics expansion.

The number of foreign retailers in China has more than tripled from 314 in 2004 to 1,000 by the end of 2006, according to Iliffe.

At the same time, retailers such as Wal-Mart, BestBuy and B&Q have all set ambitious expansion goals in China and are frantically expanding their retail networks in the country, creating huge demand for logistics needs, Iliffe said.

For example, Gazeley Properties Ltd, the logistics unit of Wal-Mart, recently burst onto the scene in China, building a 42,000-square-meter distribution center in the port city of Tianjin. It will not only service Wal-Mart but also other retailers and manufacturers, the company said.

And the booming manufacturing, especially automotive, industry also contributed significantly to the take-off of China's logistics industry, Iliffe said.

1

2

(For more biz stories, please visit Industry Updates)