Nuveen Real Estate’s Asia Pacific Cities fund has acquired a logistics complex in Namyangju in South Korea, a city 20km north-east of Seoul. The transaction price was not disclosed.

It is the second asset for the fund, which was launched in November last year and seeded with an A$180m (€109m) Sydney office block.

“Seoul is one of the principal cities for investment” for the fund, said Louise Kavanagh, managing director for Asia-Pacific at Nuveen Real Estate, “offering a core, liquid, transparent, highly institutional and investable market”.

Although South Korea ranks as one of the most connected and technology-driven markets in Asia-Pacific, with an online penetration rate of 90%, Kavanagh said less than 5% of its logistics stock is considered modern by global standards.

“We anticipate that the rapid expansion of e-commerce and associated third-party logistics demand in Asia-Pacific, in particular in South Korea, will underpin structural resilience in the sector,” she said.

As Nuveen’s local partner, the Korean company Sang Investment will provide investment operations and capability on the ground in South Korea.

Sang Han, CEO of Sang Investment, said: “Given the dynamics of the Korean logistics industry, this last-mile distribution centre has the potential to provide substantial rental growth, driven by the country’s increasing demand for same-day delivery services.”

The state-of-the-art property, which comprises dry storage combined with a portion of designated cold storage, allows for 24-hour operation and serves the north-eastern population of Seoul’s metropolitan area, equating to approximately 20% of the city’s total inhabitants.

Demand for logistics assets in South Korea is strong. Most recently, a Credit-Suisse-managed fund bought two logistics centres there for KRW120bn (€88.4m).

In December 2018, Singapore sovereign wealth fund GIC acquired two distribution centres within the Hwaseong Dongtan Logistics Complex of Gyeonggi Province in South Korea for US$570m (€508m).