Logistics properties continue to be one of the most popular asset classes with investors, and this is not forecast to change in 2017. The interest in this class is also reflected at EXPO REAL.
It is the sixth record in a row: warehouse and logistics properties with a value of 4.5 billion euro changed owners in 2016. This rate is set to continue.
The popularity of logistics properties with investors has been constantly increasing for some years. This is firstly because products in other asset classes are in shorter supply, and secondly because the returns for distribution centers and warehouses are still really attractive. However, the gap is slowly starting to close. Hardly any of the best logistics sites are still available to buy, so players have to switch to locations outside of the top 5 of Berlin, Düsseldorf, Frankfurt, Hamburg and Munich.
Logistics properties interesting in spite of falling returns
The profits for investors are also decreasing. For example, the prime returns for logistics properties slipped below 5% for the first time in 2016. According to experts, the increasing pressure on net initial returns for premium properties in the established top markets is resulting in a further reduction in returns to a current level of 4.90%. However, investments in logistics properties remain extremely interesting in comparison with the traditional property investment classes of office and retail.
The “hype” continues
Commercial real estate agents therefore predict that 2017 will also be a good investment year. Peter Kunz, Head of Logistics at Colliers, even talks about a “hype” and thinks that this will also continue this year. However, according to BNPPRE, whether the 4 billion euro mark will be exceeded for the fourth time in succession will mainly depend on the supply available. And at JLL they are acting on the assumption that managers of larger portfolios will look for an exit on the capital or property market this year, meaning that the supply for other investors will increase. Therefore another record on the logistics property market cannot be ruled out.