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Despite uncertainty ‘it’s the best time’ for logistics investors

Current geopolitical and economic issues are causing uncertainty in the market but also creating the perfect conditions for a thriving logistics sector, experts agreed at Real Asset Media’s Trends 2022 briefing, which took place recently at Savills’ headquarters in London and on the REALX.Global platform.

Michael Hughes, CEO, Verdion Group

“For investors and developers in the logistics sector the best time is now”, said Michael Hughes, CEO, Verdion Group. “It’s an exciting time. The low-hanging fruit is gone but there are great opportunities to find value”. 

The fundamentals are all there: occupier demand remains strong, vacancy rates are extremely low, we’re seeing double digit rental growth and there is a lot of capital chasing logistics assets.

“The last twelve months have been extraordinary and we’ve seen huge changes”, said Hughes. “In times of disruption, specialists have a chance to shine. You have to invest well, make the right choices and use your brain the old-fashioned way, instead of relying on the magic market to do the work for you”.

It is a time of natural selection in the logistics market. There will be a differentiation between the real experts with a deep knowledge and people who have jumped on the bandwagon because the sector was successful.

A more selective sector 

“The winners will be people who know what they’re doing”, said Marcus de Minckwitz, Head of EMEA Industrial & Logistics, Savills. “The current environment has opened the door to a  more sophisticated and more selective sector, which favours the big established operators”.

The specialists are the ones who will be able to spot the opportunities in the market while others sit on their hands and wait for the uncertainty to pass.

“There’s more advantage in investing well in a market with proper challenges”, said Hughes. “It’s a fantastic opportunity to create value. We’re focused on best-in-class edge of town logistics, dynamic investments that generate income and rental growth”.

After years of favourable market conditions, rising prices and low interest rates, the adjustment to the new normal has not been easy for many.

“We got used to good news on everything from rental growth to vacancy rates, so the first bit of bad news has been a shock”, said de Minckwitz. “But when you look closely, the supply and demand dynamics are still extremely favourable. There is still a lot to be positive about”.

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