Indonesia Attracting International Logistics Investments
Category: Column By : Todd Lauchlan Read : 299 Date : Thursday, May 04, 2017 - 10:30:29

International Logos Property has entered the Indonesian market, the first major international warehouse operator to invest in the country. It is likely to be the start of several similar announcements. The company is making its move with backing from two of the largest institutional investors in the world, the Canada Pension Plan Investment Board and Ivanhoé Cambridge. These two have fronted up to $400 million in funding for Logos, which is also expanding in Singapore thanks to the partnership.

Logos competitors Global Logistics Properties from Singapore and the Goodman Group from Australia both have extensive warehouse operations in China. With growth there slowing, Indonesia presents an attractive diversification. As the world’s largest archipelago, Indonesia and its 17,000+ islands present plenty of logistical opportunities. President Joko “Jokowi” Widodo’s administration is committed to improving the country’s infrastructure. The government on March 31 concluded a nine-month tax amnesty program that resulted in the declaration of $365 billion in assets that will now enter the “official” economy.

Indonesia certainly has its quirks. The Indonesian motorbike-hailing app Go-Jek is competing fiercely with its car counterpart, Uber. Go-Jek and its peers may be the answer to the “last mile” delivery crucial in logistics, a role filled by courier companies in developing countries such as China. Sydney-based Logos was founded in 2010 to manage property for the Singaporean sovereign wealth fund GIC. It has properties in Australia and China. The Australian investment bank Macquarie Group and then Ivanhoé Cambridge itself have subsequently bought major stakes in Logos.

Logos said it has identified a “strong pipeline” of opportunities for modern logistics facilities in Indonesia, and now has opened an office in Jakarta. It recently entered the Singapore market, where it already has two warehouses and a development site. Logos is developing new warehouse facilities to own and operate in Indonesia. It has found deep-pocketed partners. With $202 billion in assets under management, Canada Pension is the ninth-largest pension plan on the planet. Ivanhoé Cambridge is the real-estate arm of the Caisse de dépôt et placement du Québec.

Their backing has helped fund the Logos purchase for $23 million of a 10.7 hectare industrial property in Bekasi. Logos will then spend another $130 million to develop a three-level warehouse on the plot, which at 1.7 million square feet would be one of Indonesia’s biggest logistics spaces. The first phase of construction should be completed by the end of 2018. Logos chose the spot since it believes the site offers easy access to Jakarta’s central business district, the city’s international airport, its port and nearby toll roads.

Surabaya is a likely second destination for warehouse operators. Beyond that, Bandung and Medan are potential cities for expansion. Jones Lang LaSalle’s Industrial and logistics team worked with Logos to purchase the site, which is being developed with a major international car manufacturer as the anchor tenant. JLL is also currently leasing space in the project to other prospective tenants on a pre-commitment basis.   



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