Chilled Space on the Boil
As China’s society has become more affluent over recent years, so consumer demand for a greater variety of food, greater quality food, food with a greater amount of nutrition, and food with a greater variety of taste has also increased significantly. Much of this food is fresh and needs to be transported, processed, stored and distributed in a cold or frozen state and this has led to a continually burgeoning cold chain industry in China.
According to the China Cold Chain Committee and The Intelligence Research Group, the cold chain industry sector in China has enjoyed double digit growth. In 2020, the market size reached RMB415 billion, a year-on-year growth of 22.38%. Considering the future growth momentum, China’s cold chain logistics market is expected to further increase to about RMB897 billion by 2025.
The underlying factors which are having an influence on the growth of the cold chain industry sector in China are many, but some of the more important reasons include:
- Greater consumer spending power
- A further emphasis on food safety
- Continued importance placed on food security
- More value being added to goods during the time between when they enter and exit the cold chain system
- Even though playing a small role in cold chain services demand, an increasing need to transport, store and distribute medicines
When examining information and data from Warehouse In Cloud, and focusing on seven selected city markets in China, (Beijing, Shanghai, Shenzhen, Guangzhou, Wuhan, Chengdu, and Chongqing), Shanghai has the largest stock of cold storage warehouse space, at 902,286 sq m. The next two sizable markets in the city group are Guangzhou and Beijing.
Given the continued demand for this type of space, we expect available space for lease to be limited, with rentals anticipated to see uplift in a number of markets.
When considering investment and in this case, investment deal number, according to RCA data, the industrial property sector took the top spot regarding investment volume in China in 2021. Of the 37% registered, 96% of deals were recorded as ‘other industrial’, while cold storage logistics warehouse facilities, at 16 transactions for the year, made up 4% of industrial deals in 2021.
Finally, apart from the industry drivers, there are a number of underlying trends influencing the cold storage logistics warehouse market in China and three major developments are:
- Advances in warehouse design