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Tianjin Property Insight

Warehouses are one of the best investment asset classes in the Inner Bohai Economic Rim

The warehouse market is one of the least discussed real estate sectors in China. However, over the last couple of years it has offered some of the highest gross yields of any commercial real estate asset in the country, particularly at a time when domestic institutional investors have been purchasing office buildings at gross yields between 4 and 5%. The Inner Bohai Economic Rim (IBER) has been a prime area for warehouse investment and has offered investors some favorable returns with recent transactions occurring at gross yields between 7-9%, which is a much higher range than can be found in the office and retail markets in the region. Going forward, yields are expected to compress as the market faces a warehouse supply crunch, causing capital values to grow faster than rents. Thus, investors and developers should be looking to invest now in IBER warehouses before warehouse prices and yields begin to resemble other commercial property markets in China.

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