Thursday Nov 21, 2024
Thursday Nov 21, 2024
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Global industrial and logistics transactional activity is rebounding post-COVID-19, with $41.5 billion raised globally in H1 2024, a 30% increase over the pre-COVID-19 average despite a 16% decline compared to H1 2023, according to Savills.
Savills notes that US$78bn of industrial and logistics deals were completed globally in H1, representing over 9% growth from the 2015-19 average. While down by 16% compared to H1 2023, the transactional market is tracking higher than pre-COVID-19, with US$41.5bn raised globally in H1 2024 by funds specifically targeting industrial and logistics assets. This represents a 30% increase on the pre-COVID-19 average, despite the wider challenges around raising capital.
The Q2 average individual industrial deal rose by around 11% in size compared to Q1, suggesting that scale investors are returning. This is supported by a recovery in buy-side activity from cross border investors, the only major investor group to be net buyers of industrial and logistics space in 2024 to date.
Across Asia Pacific, Q2 total investment of US$8bn was down 34% on the year. Like in the other regions, a large decline in portfolio deals underpinned weaker turnover. The half-year comparison is stronger: total investment was down just 11% on H1 2023, underpinned by a solid start to 2024. Australia and South Korea are the best performing major regional markets, while Singapore is broadly stable.
Savills World Research Director - Global Capital Markets Oliver Salmon said: “Assuming Q1 2024 represented the trough in this cycle, then we expect the market to rebase higher in the future. This is supported by the shift in investor allocations favouring industrial and the fundraising data. Prime yields look to have stabilised across Europe and North America, with some markets already seeing some yield compression, despite the scarcity of core money in some markets.”
Head of Global Cross Border investment Rasheed Hassan said: “There remains a shortage of committed industrial vendors, as the majority want to wait until there are more datapoints to provide strong pricing comparables, but this is generating greater buyer interest when something is marketed and leading to more pricing tension. Given the fundraising activity tracked so far this year, we hope that the busy end of year trading season will give the markets what’s needed as a backdrop for this money to be deployed in 2025.”
The prime logistics net initial yield for Singapore in the second quarter stands at 6.35%, Dubai stands at 7.5%. The yield is projected to grow over the next 12 months.
Savills Singapore Executive Director, Research & Consultancy, Alan Cheong said: “There is interest in Singapore’s industrial properties, especially logistics space. However, most real estate investors face a flurry of questions and delays in turnaround time when answering to the questions posed by the authorities and this has stymied investments in this sector from reaching highs.”
