▲ Donghaeng E&C / CEO Sunghoon Kim

[Prospects for Logistics Real Estate]

Logistics real estate is growing fast in South Korea. Experts predict the growth will be made steadily this year also through increased demand and supply for fresh foods and goods alongside massive investment. Another fact that backs this prospect up is that transformation of the existing industrial structure. The demand for logistics centers that keep and deliver foods such as vegetables, fruits and raw fish and meats is especially high. The correlation between online fresh food market and logistics real estate lays at the boundary limits of the offline market. Offline market is limited in terms of services and market expansion as opposed to online market on which around 13 trillion won ($11 billion) goods are being traded yearly at the moment. This explosive growth partly ascribes to the evening order for late night delivery and the late night order for early morning delivery. These two bullet-fast services are especially designed for fresh foods. This is leading to a rapid growth of low temperature logistics centers with expected 40 to 50% yearly growth rate. 

[Location, Location and Location]

When it comes to logistics center, location is crucial. It can decide success or failure of the business if it is behind of the ‘speed distribution’ competition. In this respect, a fast rising South Korean lower temperature logistics services company Donghaeng E&C is worth an attention. Donghaeng E&C is building a 27,929 square meter big low temperature logistics center on the North Port in Wonchang-dong, Seo Distriect, Incheon, in partnership with Ilgoon Engineering and KB Real Estate Trust. The center is immediate distance to and pro Incheon International Airport and Gimpo International Airport. It takes 15 mins (6km) to the mouth of the Port of Incheon, 20 mins to the Ah-Am Logistics Complex, 35 mins to Songdo-dong, 20 mins to Jeongseojin, 17 mins to Gyeongin Expressway IC and 35 mins to Mok-dong and Yeongdeungpo, Seoul. Also in the vicinity are Incheon Free Economic Zone in Cheongra-dong, Juan National Industrial Complex, Seobu General Industrial Complex, Gyeongin Harbor, Incheon City Hall, Bupyeong National Industrial Complex, Incheon Free Economic Zone in Yeongjong-dong, Namdong National Industrial Complex and Songdo Knowledge Information Industrial Complex. In addition, Incheon is working with Seoul and other cities in the capital region to improve or build roads that can efficiently connect each other. In terms of the capacity of the center, when completed in 2023, it will have 1 story underground and 7 story above and can accommodate 70 vehicles for parking. The rent is 89.6% cheaper than the low temperature logistics centers in the vicinity. Sunghoon Kim, CEO of Donghaeng E&C, says that the supply demand in Incheon is creasing steadily alongside the number of the logistics centers of more than 33,057 square meters. He also points out that the population of Incheon has surpassed 3 million and the growth seems to keep increasing due to closeness of Seoul. 

[Logistics Real Estate Systems]

Donghaeng E&C is to use most of its innovative vertical transfers and freight elevators to store and distribute goods. 6 vertical transfers will be installed alongside 2 freight elevators to maximize efficiency of storing and distribution. “Big shots like Coupang, Ottogi, Chevrolet, GM Korea, CJ Logistics, and Korea Logis Pool are using logistics centers of more than 3,305 square meters in Incheon. In other words, there have been a steady logistics demand which will increase explosively alongside high demand for HMR (Home Meal Replacement) and fresh foods that have shown explosive 50% growth recently. It means that the city will need more logistics centers and Donghaeng E&C will answer with efficient logistics real estate systems” says Kim. It is expected that South Korea is to invest 2.2 trillion won ($1.8 billion) to R&D of HMR while big logistics companies like CJ is working on securing low temperature logistics hubs nationwide. “Early morning delivery and HMR will undoubtedly lead the logistics real estate market in the nation alongside rapidly increasing single households. HMR has shown yearly 30% growth since 2016 but early morning delivery has grown surprising 80 times with 800 billion won ($675 million) sales in 2019 compared to 2015 where the sales were around 10 billion won ($8.4 million). This makes the low temperature logistics real estate market is highly promising and Donghaeng E&C will take a great part” says Kim. (PowerKorea)

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