The industrial and logistics real estate market is soaring
Australia appears likely to be the main beneficiary of the boom in investment in the logistics and industrial property market, according to a new report from JLL.
Driven by the need for large warehouse spaces for things like pure e-commerce, the logistics and industrial market has broken investment records nationwide over the past 12 months, JLL notes .
They predict that the trend is expected to continue with expectations that there will be a further acceleration in transaction activity over the next five years.
JLL forecasts indicate that logistics and industrial transaction volumes in the Asia-Pacific region will reach $ 50-60 billion between 2023 and 2025, compared to $ 25-30 billion in 2019-2020, with Australia proving a key market.
“In the Asia-Pacific region and globally, we are seeing large institutional investors looking to increase their capital allocation to the logistics and industrial sector,” said Tony Iuliano, Head of Capital Markets, Manufacturing and Logistics at JLL, Australia .
“Australia’s strong investment fundamentals, including a highly transparent market, stable revenue collection and strong prospects for short-term rental growth, are encouraging more groups to consider expanding into our markets. keys nationwide.
“The challenge most of these investors currently face is having access to products that are large enough to meet their needs.
“Large portfolios like Milestone take time and expertise to compile, and when significant opportunities are presented in the market, they are always hotly contested. “
Competition for large blue chip assets in Australia has seen yields in most key markets decline significantly over the past 12 months.
Blue-chip market returns compressed by up to 100 basis points in parts of Melbourne and Sydney during the year through the second quarter of 2021, according to JLL Research.
Annabel McFarlane, senior director of industrial research at JLL, said the level of yield compression seen in Sydney and Melbourne over the past 12 months was unprecedented.
“As both markets came off a higher base than most established global cities, we are now seeing market-equivalent returns shifting to 3.”
“It was exclusively the territory of large population centers like New York (3.77%), Paris (3.60%) and London (3.25%).
“However, along with the expectations of further squeezing over the remainder of 2021, this demonstrates that the Australian logistics and industrial investment market has rapidly grown in importance on the global stage,” said Ms McFarlane.