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Demand for ultra-cold, specialised freezers spiked globally prior to the roll out of the COVID-19 vaccines, which comes with complex and rigorous cold-storage requirements.
Asset manager M&G Real Estate expects cold storage facilities to shine as an alternative property investment, reported The Business Times (BT).
A type of specialised logistics property, cold storage facilities are capex (capital expenditure) intensive, particularly in Singapore’s hot humid climates, said M&G Real Estate Head of Research for Asia Jonathan Hsu at a virtual roundtable on Wednesday (20 January).
However, he believes that such facilities will become more important amid global warming and climate change.
“We’ll also need to store redundant medical or food supplies to survive future catastrophes,” he said as quoted by BT. And given the hike in online shopping for groceries, demand for cold storage could get “overwhelming”, he said.
Demand for ultra-cold, specialised freezers spiked globally prior to the roll out of the COVID-19 vaccines, which comes with complex and rigorous cold-storage requirements.
In fact, Richard van den Berg, fund manager of the M&G Asia Property Fund, feel “most comfortable” with cold storage among the various alternative assets available, said BT.
He explained that from a risk perspective, the cold storage facilities’ locations are attractive for normal logistics buildings – an investor only needs to worry of the additional expenditure for the temperature-control features. This means that investors can fall back on reverting the facility into a pure logistic use once the cold storage sector begins to underperform.
Meanwhile, Hsu also expects data centres and life sciences to gain prominence as alternative property investments.
This comes as the pandemic has underscored the need for governments and the private sector to spend more on research and development (R&D) on vaccines and medical treatments.
With this, demand for real estate that are suited for life sciences industry, which covers pharmaceuticals, biotechnology and medical devices, is expected to increase, said Hsu.
On data centres, van den Berg highlighted their “very high risk” nature, by saying: “Ten or 20 years ago, we didn’t know what computers would look like. Are the same developments and technologies in data centres going to be the same in the next 10 to 30 years?”
He noted that there is the possibility of data-centre investment becoming obsolete over the next decade or so.
As such, he advised that extra care be taken to ensure that there is indeed a long-term prospect of data centre buildings maintaining their value.
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