SINGAPORE – Asia's biggest warehouse operator, GLP, is targeting a $1.5 billion investment in Vietnam over three years via a new venture to tap rising demand for logistics facilities in the Southeast Asian country, an executive at the Chinese-owned firm said.
Even before the novel coronavirus pandemic, Vietnam and other low-cost Asian countries had seen increased business from international manufacturers looking to diversify supply chains away from China, and also to escape higher tariffs.
"Now globally, because of COVID and also the trade war, you are seeing that companies don't want to put all their eggs in one basket," said Kent Yang, who founded Vietnamese company, SEA Logistic Partners, with two other executives.
GLP has 50% of the company.
"So Vietnam becomes a very good option to set up an alternate supply chain solution," Yang, a former president of GLP China, told Reuters in an interview.
The venture has secured land in Greater Hanoi and Greater Ho Chi Minh City to develop three logistics assets.
These will have a total of 210,000 square metres (2.26 million square feet) of net leaseable area when they are completed, by the first quarter of 2022.
This marks the first expansion in Southeast Asia by GLP, which had 64 million sq m of logistics real estate in 16 countries, the majority in China and Japan.
It has $89 billion of assets under management in real estate and private equity funds.
GLP, owned by a Chinese consortium, is benefiting from a global boom in the logistics sector, especially in emerging markets, spurred by rapidly growing e-commerce sales.
"We had targeted about 250,000-300,000 square metres in the first 12 months and right now, in the first six months, we've almost already achieved that," Yang said.
GLP sees big potential to expand business in Vietnam, given the early growth stage of its fragmented logistics real estate industry.
The venture is leveraging GLP's expertise and global network of 1,700 customers, and has received pre-leased commitment from JUSDA, the former logistics unit of Foxconn group, an existing GLP customer.
"Already, there are a lot of customers from Europe, Japan and China that are interested in this new market," said Yang.
Singapore state investor Temasek's Mapletree Investments and a venture of buyout firm Warburg Pincus are some of the large players in Vietnam's logistics real estate segment.($1 = 1.3571 Singapore dollars)