| Logistics sector set to deliver for investors
While the coronavirus pandemic means large sections of the real estate sector – and the office market in particular – are facing an uncertain future, some sectors seem set to benefit from the crisis. Two new studies out this week, from Scope and Catella, suggest that logistics properties will be on the winning side as the world adjusts to life after lockdown.
Scope says that due to the recent trend towards online shopping, which has been accelerated by the crisis, logistics investments are considered to be much more robust than the retail and hotel sectors, for instance. But savvy investors have also acknowledged that while online retail, food and pharmaceutical logistics are relatively crisis-resistant, the letting risks in the automotive industry for instance, including its suppliers, and in mechanical engineering, have increased.
Almost three quarters of those surveyed by Scope though (73 per cent), expect rental prices for logistics properties to increase in the next three years, a positive outlook echoed by the results of Catella's analysis of the European logistics market.
Professor Dr Thomas Beyerle, Head of Research Catella Group, says: "The still existing excess returns compared to other asset classes and the constant shortage of space continue to drive investor demand. This metamorphosis, away from a niche segment to a sustainable investment class, is continuing almost exponentially."
Sticking with logistics, we also have news of a new strategic partnership between Kajima Properties Europe and Savills Investment Management which has completed its first acquisition, a 144,880 sq m logistics park in central Poland. And there could be more to come too, with both companies actively targeting the acquisition of additional assets to satisfy the increased appetite of Asian investors for opportunities in the European logistics sector.
Nedgroup Investments meanwhile, is also bullish about post-pandemic real estate opportunities and has launched two new share classes for its Global Property Fund. The company says recent strong performance is a result of early allocations to sectors that were resilient during government policy responses to Covid-19, such as logistics, data centres and life science offices. “Going into Covid, we had about 50 per cent of the portfolio in the ‘winners’ segment of the market and only about 11 per cent in the ‘losers’ segment, so we were well positioned," says Andrew Parsons, CIO of Resolution Capital, which runs Nedgroup's Global Property Fund.
Alpha Real Capital meanwhile believes that the impact of Covid-19 will create attractive investment opportunities for investors in the long income real estate sector. The company says it expects 'significant growth' in refinancing and M&A activity over the next six to 12 months, where ground rents may offer an attractive financing option.
And finally, we report on a 'game-changing' development from smart buildings specialist OKTO Technologies, which says it's new OKTOair AI-powered air filtration system can eliminate 99.98 per cent of Covid-19 particles from indoor spaces in just 10 minutes and 100 per cent in 45 minutes. "We fast-tracked the launch of this system as a result of Covid-19 because we feel it will have a positive and helpful impact for hotels and businesses across the country as they reopen their doors," says OKTO Technologies Managing Director Philip Dowd.
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