RESILIENT LOGISTICS

Logistics has proved to be one of the most resilient sectors in China’s real estate market over the last few years. China’s Logistics Prosperity Index (LPI) reached 57.3 in April 2021, the highest since the breakout of COVID-19.

International trade has continued to grow despite the pandemic disruption—China’s exports in 2020 were RMB17.9 trillion (+4% YoY), while imports were RMB14.2 trillion (-0.7% YoY), with the Shanghai accounting for approximately 8% of export volumes. The government, in response to COVID-19, trade tensions and self-dependency, has also invested heavily into new economy sectors, which will require additional build-outs of supply chains and infrastructure to support it. 

Another driver of demand has been domestic consumption (Dec 2020: RMB39.2 trillion; -4% YoY) and the steady rise in online sales of goods (Dec 2020: RMB9.8 trillion, +14.8% YoY). The government is continuing to promote domestic consumption as a new driver of economic growth in order to reduce reliance on foreign investment and exports. The latest iteration of this is the Dual Circulation System, which emphasises domestic consumption and selfreliance in critical industries. The need to build infrastructure to meet expanded needs has led to a surge in logistics and warehouse land transaction volume, particularly in Shanghai, where sales rose threefold in 1H/2020 YoY, with most land plots located in Songjiang and Lingang.