CDH Investments has announced the successful closure of a RMB 5 billion (USD 700 million) logistics infrastructure fund, managed under its real estate investment arm. This fund, designed to focus on modern logistics parks in key economic hubs such as the Greater Bay Area and the Yangtze River Delta, reflects a growing emphasis on specialized logistics assets within the broader real estate sector.
The fund operates under a joint general partner structure co-managed by CDH and JD Property, with its limited partners primarily comprising insurance companies such as China Post Insurance and Generali China. This collaboration underscores the increasing integration of institutional capital within real estate private equity.
This development follows policy adjustments initiated in November 2022 by the China Securities Regulatory Commission (CSRC), which introduced measures aimed at optimizing equity financing for real estate enterprises. These measures, complemented by guidelines released by the Asset Management Association of China (AMAC) in February 2023, addressed longstanding industry challenges. Key reforms included permitting investments in commercial residential properties and relaxing equity-to-debt ratio restrictions, thereby enabling broader participation in real estate private equity initiatives. CDH was among ten institutions granted pilot qualifications under this framework.
The newly established logistics fund distinguishes itself through experienced management, a consistent track record, and a global outlook. Established in 2009, CDH’s real estate investment division has been a pioneer in private equity real estate in China. Over 15 years, the division has managed approximately 20 funds across markets in China, the US, and Japan, with assets under management nearing RMB 10 billion (USD 1.4 billion).
CDH closed its first logistics-focused fund in March 2024. This fund, developed as part of the pilot initiative, targets the acquisition of logistics parks strategically positioned across China. Its portfolio includes over 400,000 square meters of warehouse space leased to leading express delivery companies, showcasing a commitment to high-quality infrastructure aligned with evolving e-commerce demands.
Two primary factors underpin the fund’s stable returns. First, the shift in consumer behavior driven by e-commerce has heightened the strategic importance of logistics parks, reinforcing their valuation potential. Second, CDH’s meticulous asset selection prioritizes premium locations and superior construction standards, which facilitate higher order volumes and operational efficiency.
According to Wang Wei, a partner at CDH’s real estate investment arm, the success of the fund reflects strong investor confidence in both the quality of the assets and the broader economic trajectory of China. Wang highlighted that the fund’s strategy balances high-credit tenants with premium properties, creating a reliable investment framework attractive to institutional partners such as insurance companies.
CDH’s experience extends beyond China’s borders, with a global portfolio that includes notable investments in the United States and Japan. In 2017, for instance, CDH acquired a large-scale industrial logistics asset package in the US, which was exited successfully in 2022, delivering robust returns to investors.
Addressing potential risks associated with structural adjustments in the logistics and warehousing market, Sun Dan, managing director at CDH, emphasized the disciplined approach of insurance investors. These stakeholders focus on the underlying fundamentals of projects, the credentials of fund managers, and the operational capabilities of asset managers to ensure alignment with their long-term investment strategies.
Insurance firms have historically favored yield-generating real estate assets due to their ability to provide steady income streams, aligning with the insurers’ long-term liability structures. While real estate allocations among leading Chinese insurers currently average only 4–4.5%, compared to the 10% widely deemed healthy, this figure highlights the untapped potential within the sector. By contrast, insurers in Western markets typically allocate up to 20% of their portfolios to real estate, underscoring room for growth in China.
Other institutions are also intensifying their focus on real estate investments. Hillhouse Capital closed an industrial logistics fund in December 2023, supported by numerous insurance investors. Similarly, in January 2024, New China Life Insurance committed RMB 99.99 billion to a new real estate-focused fund launched by CICC Capital.
Real estate investments within the primary market are distinguished by their substantial deal sizes, long cycles, and close ties to various industries. What sets this asset class apart? How are structural opportunities evolving in this space? 36Kr explored these questions in a conversation with Sun Dan, managing director at CDH Investments.
The following interview has been edited and consolidated for brevity and clarity.
36Kr: A RMB 5 billion investment is significant in today’s market. How did CDH secure such substantial backing from insurance funds?
Sun Dan (SD): This RMB 5 billion fund is indeed sizable, particularly in the current environment. Insurance funds are the backbone of real estate investment in China. Insurers seek long-term, stable returns and exhibit rational decision-making and patient capital. Our fund’s focus on warehousing and logistics aligns well with these requirements.
36Kr: What is the investment rationale for insurers in the warehousing and logistics market?
SD: First, logistics is fundamental infrastructure that supports the real economy and is encouraged by policies.
Second, this fund’s projects are concentrated in the Greater Bay Area and Yangtze River Delta, with tenants that are industry leaders, ensuring stable operations over the long term. This alignment resonates with the objectives of insurance funds.
36Kr: Why CDH?
SD: Our real estate team was established in 2009 and has managed investments across China, the US, and Japan, earning recognition for our track record. As one of the first entities to receive pilot qualifications for real estate private equity in China, our initial fund acquired premium logistics parks in major logistics hubs, serving top-tier tenants with strong results. These factors underpin our ability to continue delivering stable returns by balancing premium assets and high-credit tenants.
36Kr: How does the joint GP model with JD Property work in practice?
SD: Joint general partnerships require alignment in industry understanding and cooperative principles, ultimately focusing on optimizing returns for investors. Our collaboration with JD Property is built on transparency, mutual trust, and clear role division, underpinned by market-driven management to maximize investor benefits.
36Kr: After 16 years in real estate investment, what do you see as the core challenges?
SD: Real estate investment requires careful matching of asset pricing with value, maintaining cost control, and aligning asset attributes with funding characteristics to avoid cash flow challenges. Moreover, transaction arrangements must address all stakeholders’ concerns, maximizing asset value under a rational framework. Challenges vary across projects and economic cycles, necessitating flexible, adaptive strategies.
36Kr: Asset pricing is crucial. How does CDH approach valuation?
SD: Our global presence allows us to compare and validate market information across China, the US, and Japan. For income-generating assets, we meticulously assess project cash flows for sustainability and growth potential while applying appropriate valuation methodologies tailored to asset types and economic cycles. Our investments in US logistics assets during a low-interest environment demonstrated the value of stable income assets, reinforcing our focus on such infrastructure.
36Kr: Does insurers’ enthusiasm for real estate investment change with market conditions?
SD: I believe insurance funds will remain a vital force in the real estate market. The Chinese market is becoming increasingly mature and rational, partly due to the active participation of institutional investors like insurers. Short-term fluctuations may occur, but in the long run, there is still significant room for insurance funds in real estate and infrastructure allocations.
36Kr: Previously, CBridge Capital CEO Fu Wei described mergers and acquisitions as a “blue-collar job.” If M&A is blue-collar and equity investment is white-collar, how would you classify real estate investment?
SD: Real estate investment is both blue- and white-collar. It’s a multifaceted process where each project forms a complete ecosystem. From construction and leasing to property management and financing, every element must be meticulously planned, leaving no blind spots. Physical stamina is also a critical factor. I recall a trip in 2023 where our team visited eight cities in just five days.
Real estate investments typically involve substantial sums, and each transaction comes with significant responsibilities. We are deeply committed to ensuring that our efforts consistently deliver strong returns for our investors.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Xu Muxin for 36Kr.